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The price of housing in Mountain View has gotten so high that the City Council is now looking for ways to help people earning up to nearly $275,000 a year afford a home, with the limit going higher for couples and families.
Last week, the City Council reviewed a plan that staff has been developing to try to expand homeownership opportunities for the so-called “missing middle,” moderate-income residents who typically make too much to qualify for subsidized housing but still struggle to get a foothold in the real estate market. Recognizing the high cost of housing, city staff recommended targeting support at those earning up to 200% of the area’s median income.
In Santa Clara County, the median income for an individual is $136,650, according to state data. That means that someone earning up to $273,000 annually would fall into the income bracket that the city is looking to find ways to assist. For a couple, 200% AMI equates to $312,300 annually. For a family of four, it’s $390,400.
The City Council backed the staff’s recommendation, which also included a particular focus on encouraging condominium developments.
“I’m very excited to be talking about expanding our portfolio and what we can offer for homeownership,” Mayor Ellen Kamei said at the Dec. 16 council meeting. “No matter where someone is in their housing journey, I want them to feel like they can do that here.”
Currently, homeownership is far out of reach even for families earning well above the area median income, according to Julie Barnard, the city’s affordable housing manager.
A two-bedroom condo in Mountain View costs an average of $972,000. For a two-bedroom rowhome or townhouse, it’s $1.3 million, according to a city analysis.
“Although the numbers start to pencil out on paper at around about 150% AMI, this does not reflect the real hurdles that home buyers face, such as saving for a 20% down payment, competing in bidding wars and qualifying for financing in a very volatile market,” Barnard said.
A couple earning 150% AMI could generally only afford a house costing up to $750,000, according to the council report. If they earned 200% AMI, they could buy a place costing up to $1.07 million.
Another challenge facing prospective homebuyers in Mountain View is the city’s housing supply. Approximately 60% of total housing units in Mountain View are rentals while 40% are ownership units, the council report said. In most cities, that proportion is inverted.
City looks to encourage condo development
For those looking to buy a home, condominiums are often seen as the most attainable path to ownership. Typically smaller in size, condos have a lower price point than rowhomes, townhomes and single-family homes. They also are well-suited for first-time buyers and older adults looking to downsize, according to the council report.
The issue is that Mountain View has not seen a lot of condominium construction. Developers generally have preferred to build rowhouses and townhomes, which are pricier than condos and tend to yield a lower number of units. One recent exception has been a proposal for a 195-unit rowhouse development in East Whisman.
As Bernard noted, the city can’t force developers to build ownership units, as opposed to apartments. There are other challenges to getting them built as well, like construction costs, insurance requirements and a state law that protects buyers from bearing the cost of fixing defects in newly-built homes.
“It does seem like every time you talk to a builder about condos, construction liability is the first or second thing out of their mouth,” Council member Pat Showalter said.
On the flip side, the council report highlighted ways the city could facilitate the construction of more condos. City staff plan to take a close look at development standards, regulations, approval processes and fees that could offset or reduce some of the barriers to getting condos built.
Council and public weigh in on homeownership strategy
On the whole, the City Council supported the plan for a homeownership strategy, describing it as a positive step forward for the city.
The strategy sets out seven specific tasks, including information gathering, community outreach and exploring funding and partnership opportunities. The city also plans to evaluate the feasibility of developing a city-owned site in North Bayshore as an affordable homeownership project.
However, Council member Lucas Ramirez questioned whether it was necessary to do so much planning for a plan.
“I’m happy to support it,” Ramirez said. “Do we really need to do it, though? Can we just start doing the work?” he asked.
A few public commentators also questioned whether a focus on homeownership would detract from some of the city’s other housing priorities.
“We shouldn’t be looking necessarily at home ownership as opposed to rental units,” said Mountain View resident Daniel Hulse. “It should really be about enabling homeownership where rentals wouldn’t really make sense.”
Hulse urged the council to take a close look at AB 1033, a state law that enables homeowners to sell accessory dwelling units separately from the primary residence. It would require a local ordinance to implement it but could increase the number of starter homes in the city, he said.
Responding to some of these concerns, Council member Emily Ann Ramos noted that the homeownership strategy was not detracting from the city’s other affordable housing priorities and instead was filling a gap.
“I am addicted to Zillow,” she said. “The current ownership market right now does not meet the needs of those who are making even 120% AMI.”
Other council members agreed, backing the city’s plan to explore more homeownership opportunities with some also expressing interest in a local version of AB 1033.
City staff will bring the strategy back to the council for adoption at the end of next year, according to the council report.
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This is a very lengthy article, but I don’t think the City should be in the business of funding this. It isn’t fair.
Just like how some worked and paid their way through college (without loans, taxpayer grants), and now don’t particularly like the notion of paying for comparable others (who chose not to work) to have their tuition paid, it seems education, encouragement (including of builders, ADUs or etc.is fine, of course! – but actually subsidizing select people (as listed in the chart) is unfair and NOT the business of the City!
“It was hard for me, so I can’t support anything that might make things better or improve the lives of others”
I agree in disliking housing programs that seem like a lottery, “three lucky winners get half off their rent!” However, this appears to be different: removing barriers to building naturally more affordable (e.g., smaller) housing units.
Existing homeowners are subsidized by Proposition 13. There are homeowners who have inherited property and hence are paying property tax on tiny 1970s valuations. That’s not fair for new homebuyers.
City of MV should set priority on:
1. Enabling ADU
2. Stream lining development standards, regulations, approval processes and fees that could offset or reduce some of the barriers to getting condos built.
a) They should conduct audit of their city operations such a permitting and building inspectors. I have first hand experience of inaccurate inspections, redundant inspections, and processes that residents follow and then dead end then being told to start over, and out right wrong information, and city employees are not held accountable. Seem like our politicians want to chase the new shiny thing instead of making the city apparatus work effectively for their residents.
3. Seriously study why private sector developers don’t want to build condos. The article seemed to imply that developers objections such as “It does seem like every time you talk to a builder about condos, construction liability is the first or second thing out of their mouth,”
are not being taken seriously. I have more faith in the private sector to get thing done rather than our politicians. Solve their problems then get out of the way and let them build.
4. Do not subsidize home buyers with public money
5. The Council should consider factors outside their control which have driven up housing prices so they do not spend time on non-useful initiatives that spend a lot of public money and do not achieve results.
a) For example, there was a proposal to give home buyers $25,000 public money for a down payment. Guess what? The price goes up.
It sounds good, but the results are not good
5. This is obtuse, but increases in national money supply (such as M2) is directly related to higher asset prices (such as houses). This is outside the control of local government
6. Across the nation, housing prices are stalling or falling. Just as in 2008, prices will fall less in Silicon Valley than in other parts of the country. This assume there will still be demand for talented, well paid employees. This is also out of control of local government. I disagree with councilman Ramirez to not do a study. You may be getting involved in something over your head, and expend a lot of resources with no results.
Are condos really more affordable? Sure, the up-front cost is lower, but in MV the HOA fees are typically like $750 a month, and special assessments aren’t uncommon.
Also, condos don’t appreciate as much as other housing, if they appreciate at all. A lot of condo owners in MV are underwater if they purchased in the last 10 years.
Here is what is missing from the conversation:
1. Understanding why Developers prefer to build higher end buildings rather than Condos.
2. My real estate advisor tells me that developers are stopping approved project because the don’t pencil out in terms of profitability.
a) The city should roll of their sleeves and take a hard look at the income statement and see where they can take cost of the equation. And be honest about how much cost they are inserting into the equation.
3. Comprehend the financial environment. Despite the Fed cutting rates, the long end of the the Treasury Market is going up. The 10 year Treasury, which affect mortgage rates is going up. Sometime you need to accept the environment you’re operating in. With higher rates, the developers will have to focus on more profitable products.
4. Don’t use public assets (money or land) to make it easier for a few to buy houses.
All those horrible Grandma’s making $30,000 to $40,000 a year — if they’re lucky — on Social Security are so grateful for the chance to help out the needy.
Thank heavens the entitled generation can’t be bothered to do their homework to see why each affordable housing unit costs $1,000,000 to build here since they’re not worried about truly affordable housing or those who really need it.
Note YIMBYs never blame the high housing costs on COMMERCIAL Prop 13 exemptions because that might cost them campaign contributions from the developers, landlords, apartment owners association, etc etc because blaming Grandma is SO much easier.
And let’s not forget all the companies paying literally hundreds of millions of $$$$$ in lobbying costs to deny their gig workers any benefits including unemployment insurance WHILE hurting the restaurants and other small businesses with their huge markups.
“Greed is Good.”