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Economy: Housing

Why is this Important?

San Mateo County has some of the highest housing costs in the nation. A lack of affordable housing limits the ability of people to live in the county and can reduce the availability of qualified workers for local jobs, thereby constraining economic growth. In response to high housing prices, many workers are forced to either live outside the county and face long commutes or stretch themselves financially and pay more than they really can afford for housing. Approximately 60% of those employed in San Mateo County commute in from other counties for work, which leads to increased traffic congestion and vehicle-related emissions.

After declining for several years, housing prices and rents in the county are on the rise. Increased property values may be welcome news for many current homeowners, but for first-time buyers or people relocating to the area, it only exacerbates the difficulty of purchasing a home in the county. At the same time that housing costs are rising, median household income in the county has been on a declining trend, down 7% from 2005–2012.

The county’s housing supply shortage is a primary driver of high housing costs. The Regional Housing Need Allocation (RHNA) is part of a state-mandated process that creates housing production targets for each county in order to increase the supply of housing throughout California. The 2014-2022 RHNA target for San Mateo County is 16,418 new housing units, with 43% of them required to be affordable housing (for very-low and low income residents).

What is a Sustainable State?

In a sustainable state, a sufficient supply of housing is available to all members of society, and new housing supports diverse communities and healthy environments. Local governments consider the housing needs of people of all income levels when planning for new development. Zoning regulations allow for higher density housing located in downtown areas and along transit corridors to meet the needs of our growing population, build community, support transit ridership, and help reduce greenhouse gas emissions.

Key Findings

  • Housing prices are beginning to rise after several years of declines. In 2013, the median sales price for a single family home in the county was $912,000, up 21% from the year prior.
  • In December 2013, market average rent for a 1-bedroom unit was $2,114 (+8% year over year), while market average rent for a 2-bedroom unit climbed to $2,412 (+10% from year over year).
  • Only 47% of households in the county can afford the mortgage for an entry-level home, compared with 71% in all of California.
  • Over 38% of households in the county with a mortgage are paying more than 35% of their income on housing; and 44% of renters in the county pay more than 35% of household income on their gross rent.
  • Nearly 45% of the county’s housing stock was built before 1959, and only 22% has been built since 1980. This makes the county’s housing stock considerably older than California’s.
  • The most recent Regional Housing Needs Allocation production target for San Mateo County is 16,418 new housing units between 2014 and 2022, with 43% of these required to be affordable housing (very-low and low income), 17% for moderate income, and 40% for above moderate income.
  • Housing construction is on the rise after reaching a low point in 2010. In 2012, 820 building permits were issued in San Mateo County, up 14% from the year prior. Multi-family housing units made up 72% of these permits. New housing construction will need to increase significantly in the coming years to meet the production targets of the Regional Housing Needs Allocation.


Indicators and Trends
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Housing Affordability

  • Housing prices rose sharply in 2013. The median sales price (MSP) of a home was up 21% from the year prior, while the MSP for condos increased 30%.
  • The median sales price of single family homes rose in all but two San Mateo County cities in 2013. The largest year-over-year increases were in East Palo Alto (+46%), Millbrae (+32%), and Woodside (+28%).
Market Average Rent SMC  2004-2013
  • Market average rent continued to climb in 2013, up 8.2% for a 1-bedroom and 10.3% for a 2-bedroom from 2012 (adjusted for inflation).
  • Since 2004, average rent is up 39% for a 1-bedroom and 38% for a 2-bedroom (adjusted for inflation).

Out of Reach

The National Low Income Housing Coalition’s 2014 Report “Out of Reach” documents the shortage of affordable housing throughout the United States. Over half of all renters in the country are cost-burdened, meaning they pay more than 30% of their income on housing.

According to the Report, in order to afford a 2-bedroom unit at fair market rate in San Mateo County, a renter would need to earn an hourly wage of $37.62 (equivalent to annual income of $78,240 or 4.7 full-time jobs at minimum wage). San Mateo County is tied with San Francisco and Marin Counties for having the highest rental costs in the U.S.

• The chart does not factor in the down-payment required to purchase a home, just the annual costs of owning the home (assumes housing costs are 35% of gross annual income).

• A median priced home in the county is out of reach for a household earning the county’s median family income (for a family of three).

Habitat for Humanity: Daly City

In April 2013, Habitat for Humanity Greater San Francisco completed a 36 unit, 100% affordable housing development at 7555 Mission Street, Daly City. This innovative Habitat development was made possible through the generosity of private, corporate, and civil partners, as well as Habitat’s dedicated crew of volunteers. In all, 11,400 people volunteered a total of 157,200 hours over two years. To learn more about Habitat for Humanity Greater San Francisco and volunteer opportunities, go to: www.habitatgsf.org.

First-Time Buyer Housing Affordability Index.eps
  • The first-time buyer housing affordability index tracks the percent of households in a geographic area that can afford an entry level home (defined as 85% of the prevailing median price).
  • After improving for several years, first-time buyer housing affordability declined in 2012 in all the areas shown above. In 2012, only 47% of county households could afford an entry-level home versus 82% of households nationwide.
  • Housing affordability continued to decline in the county in 2013. While annual data is not yet available, in the third quarter of 2013, first time buyer affordability in San Mateo County had dropped to 36%.
  • For personal housing costs to be at a sustainable level, they should be no more than 35% of gross annual income. In 2012, 38% of households in the county with a mortgage were paying an unsustainable amount of income on housing.
  • In 2012, for rental units in San Mateo County, 44% of residents paid more than 35% of household income on their gross rent.

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Housing Stock

Year Housing Structures Built SMC.eps

• Nearly 45% of the county’s housing stock was built before 1959, and only 22% has been built since 1980.

Year Housing Structures Built CA.eps

• In comparison, California has a much newer housing stock, with less than 30% built before 1959 and nearly 40% built since 1980.

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Housing Supply

The Regional Housing Need Allocation (RHNA) is part of a state-mandated process that creates housing production targets for each county based on existing need and forecasted population and job growth. The goals are to increase the supply of housing and to ensure that local governments consider the housing needs of people of all income levels.

Production targets are broken down by income, with housing goals set in each county by income levels. Each income level is defined as a percentage of area median income: e.g., very low = 0-50% of area median income.

  • The 2014-2022 RHNA for San Mateo County is 16,418 new housing units, with 43% of these required to be affordable housing (very-low and low income), 17% moderate, and 40% above moderate.
  • Housing construction in the county is on the rise after bottoming out in 2010. In 2012, 820 building permits were issued, a 14% increase from the year prior. In spite of the recent increase, the number of permits issued in 2012 is 47% lower than in 2002.
  • The percentage of multi-family units is on an upward trend. In 2012, 72% of building permits were for multi-family construction.

Housing our Growing Population

By January 2015, all twenty-one San Mateo County jurisdictions are required by the state to update the Housing Element of their General Plan. The Housing Element is a vital tool cities use to plan for housing to accommodate their growing and changing populations. It outlines strategies and locations where cities have the best opportunity to meet housing goals, while ensuring that new development enhances the qualities that make our communities livable and unique. To aid in this effort, the San Mateo County Housing Element Update Kit, otherwise known as “21 Elements”, is a collaborative project that aims to encourage and assist with the production and certification of high quality Housing Elements in the county. More broadly, this collaboration intends to strengthen local partnerships and develop solutions to housing needs throughout the county. For more information, visit www.21elements.com.

Public participation is an integral part of the Housing Element update process. Municipalities have held, and will continue to hold, meetings to provide the public with opportunities to help shape their communities. The best way to for members of the public to get involved is to contact your local city or town for a schedule of upcoming Housing Element workshops.

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From the 2014 Indicators Report

12.3% of county adults lack health insurance

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