How poverty and politics affect the Valley’s housing crisis

This article appeared in the Silicon Valley Business Journal on August 3, 2017

Guest opinion: How poverty and politics affect the Valley’s housing crisis

By Brian Brennan and Erica Wood

For every ten new jobs created in Silicon Valley between 2010 and 2015, we built just one new housing unit.

That is the core of the Bay Area’s housing problem, and it goes a long way to explaining why, as documented in a recent report by our two organizations, Silicon Valley’s median housing price in 2015 was $935,000, while in competitor regions like Seattle and Austin it was $380,000 and $249,000, respectively.

We cannot expect the housing market to moderate until we build more housing at all income levels.  To do that, we need robust action on two fronts:  poverty and politics.

First, we need to dedicate public funds to support housing for the neediest in our region.  The housing crunch affects everyone, but government has a particular role with respect to our low-income residents.  Healthy communities have space for people at all income levels, but the cost of land in the Bay Area means stand-alone low-income housing rarely pencils out.   That is why we need affordable housing funding measures like Senator Toni Atkins’ SB 2, which would establish a permanent funding source of affordable housing, and bond measures such as that proposed by Senator Jim Beall’s SB 3.

Perhaps counter-intuitively, however, addressing the housing needs of the poor means building housing for all income levels.  The shortage of middle- and upper middle-income housing leads to gentrification: buyers at those levels look in markets that used to be for lower middle- and low-income residents.  Thus, not only are we not building enough new housing for low-income residents, but the supply that we already have is being squeezed by inadequate new housing at other income levels.

Building more housing means addressing a second issue:  housing politics.  While new housing is in the interests of the entire region, it makes sense for individual cities to wait for their neighbor cities to bear the costs of building it.  The local politics are all the more challenging because our housing crisis is less of a crisis for those who already own a home.  They might want their kids to live nearby, or be concerned about the region’s economic vitality or the well-being of friends or coworkers – but many homeowners are counting on the steady increase of housing prices as their nest egg.   We don’t talk about this much, but it adds to the complexity of housing politics, and helps explain the opposition to new housing in a region that so clearly needs it.

Part of the answer lies in re-thinking the way we make decisions about housing.  Senator Scott Wiener is making a courageous effort to move the needle with SB 35, which would prevent those local governments not building their share of housing from rejecting new housing projects that have gone through the proper environmental review, community engagement and permitting processes.  We agree with Senator Wiener: “Local control is about how a community achieves its housing goals, not whether it achieves those goals.”

When a region builds just one new housing unit for every ten new jobs, it’s no surprise that housing prices skyrocket.  That is supply and demand.  To address it, we need to focus public dollars on low-income housing while putting in place political structures that are conducive to new housing at all income levels.

Erica Wood is Chief Community Impact Officer at Silicon Valley Community Foundation.  Dr. Brian Brennan is Senior Vice President at the Silicon Valley Leadership Group.  They wrote this piece for the Business Journal.