News

Permits for new homes sink in Santa Clara County

Survey data shows 2019 is off to a slow start for Bay Area housing growth

The number of permits for new homes fell across California and most of the Bay Area during the first half of 2019, despite concerns about a lack of housing supply and 10 straight years of sustained regional job growth.

Santa Clara County issued permits for 2,781 housing units from January through June this year, a precipitous drop from the 3,808 permits issued over the same period in 2018, according to preliminary data collected by the U.S. Department of Housing and Urban Development (HUD). Housing advocates and developers alike point to the region's high cost of construction, labor shortages and tariffs as factors in the decline.

Mountain View appears to be an outlier, with the preliminary data showing the city still leads the way on housing among suburban Peninsula cities.

Alameda, Contra Costa and San Mateo counties also saw permits fall over the same period, contributing to the sudden reversal of otherwise consistent growth across California extending back to the 2008 recession. An analysis by the Public Policy Institute of California found the state is on track for a 16% decline in new housing this year, raising questions over whether the state can meet its goal of adding millions of new homes by 2025.

"It underlines the need for a deeper understanding of housing markets and what, if any, action can be taken at state and local levels to move the needle," according to the report.

Part of the problem is that the price to build is through the roof, and residential projects that used to pencil out are no longer feasible, said Leslye Corsiglia, executive director of the nonprofit SV@Home. Despite the regional housing crisis and the need to build more homes, she said market forces are working against residential projects. High costs are causing some developers to revoke proposals, while projects that have already been approved are sitting inactive because of rising costs.

"What we've seen in San Jose in particular is they have about 7,000 units right now in the pipeline, but most are stalled," Corsiglia said, adding that a grand total of 1,400 units have been completely withdrawn from the city's planning process.

Housing developers in Mountain View have also cited the high cost of construction over the last year. A representative from FortBay, the developer that won approval for a massive 716-unit apartment project at 777 W. Middlefield Road last year, told Mountain View City Council members in October that the viability of the project was thrown in jeopardy after per-square-foot costs ballooned from $250 to $400 since it was originally proposed.

FortBay later agreed to partner with the Mountain View Whisman School District to share in the costs in exchange for units reserved for teacher housing -- a deal that was cited in a city staff report as the primary reason the project remained financially feasible for the developer.

An April report on international construction costs by the management and consulting firm Turner & Townsend found that the San Francisco Bay Area is, in fact, the most expensive place to build in the world, costing an average of $417 per square foot, followed by New York at $368. The report found a shortage of skilled labor, high hourly wages and U.S.-imposed tariffs on steel imports are all contributing to the sky-high costs, which are expected to increase by another 6% in 2019.

Commercial development, particularly tech offices, typically has a greater return on investment and appears to be unaffected by the high cost of construction, Corsiglia said, which could explain the consistent job growth numbers reported in the Bay Area through the first half of 2019. Data released last month by California's Economic Development Department shows that the South Bay metropolitan area -- defined as Santa Clara County and San Benito County -- added 27,500 jobs since June 2018, bringing employment up to more than 1,160,000 as of last month. That amounts to roughly 3.8 new jobs for every housing permit issued in the two counties during the same period.

The tight construction market doesn't appear to be having much of an effect on Mountain View's housing growth, however. Data on the HUD website shows the city is still building far more housing than neighboring suburban cities in Santa Clara County, issuing permits for 589 housing units in the first half of 2019. Though preliminary and still subject to change, the early count places the city second only to San Jose, which issued permits for 1,239 units over the same period, meaning Mountain View had the highest growth of any individual city in the county when adjusted for population.

As of March, Mountain View had 1,832 new residential units under construction, 1,626 units recently approved by the City Council and nearly 3,000 units under review by planning staff. Assistant Community Development Director Wayne Chen said Mountain View has issued more permits this year than in all of 2018 -- when the city added 330 net new units -- and is still doing "quite well." He said he was hesitant to call the dip in regional permits a cause for concern.

"Although there needs to be housing production, this could be a year-over-year change. It doesn't necessarily mean a trend," Chen said. "So whether that maintains throughout the year or whether that's a longer-term thing, we would have to see."

Mountain View's internal permit numbers are different than what HUD has, Chen said, and last year indicates the federal agency's survey may be an undercount for the number of new housing units authorized. While city staff has heard concerns from developers and should be cognizant of how much it costs to build, Chen said, trends in housing growth are hard to pin on any one factor.

"It's probably objectively true that things are more expensive, but whether that translates into projects being able to pencil out can be a little murky," he said.

While factors like federal trade policy are completely out of the hands of local policymakers, there are steps that cities can take to ease the burden on residential developers, Corsiglia said. Cities can peel back barriers by reducing fees, streamlining the development process and ease zoning restrictions. Reduction of parking requirements and allowing higher density on a property can also help in making a housing project feasible, she said.

"Construction is slowing at a time when we need (housing) now more than ever, and we need to figure out ways to help developers move forward and deal with these challenges," Corsiglia said. "And I think that's through some streamlining and ways that cities themselves can help reduce costs."

City-imposed fees have been a sticking point in plans to build thousands of homes in the city's North Bayshore office park, which was recently rezoned to allow up to 9,850 housing units. Property owners in the area -- namely Google and Sobrato -- warned last year that the requirement to set aside 15% to 20% of the units as affordable housing, on top of escalating park and schools fees imposed on residential development, could threaten the financial viability of the housing-heavy vision for the area. Municipal fees were likely to exceed $100,000 per unit, according to a city staff report, pushing the total building cost to $645,000 per unit.

Giving up those fees may be a hard sell. Representatives from the two school districts serving North Bayshore, the Mountain View Whisman School District and the Mountain View-Los Altos High School District, have long argued that there simply isn't enough money to build classrooms for the students who will live in the area. Mountain View Whisman school board members in particular have asked for dedicated land for a school site and funding to construct school facilities, which is one of the primary reasons for the escalating fees. The board has shown no support for a bond measure to pay for the anticipated influx of students, insisting that the developers -- not the taxpayers -- should foot the bill.

What is community worth to you?
Support local journalism.

Comments

18 people like this
Posted by m2grs
a resident of another community
on Aug 9, 2019 at 12:31 pm

Isn't it so obvious that the real reason is the relentless effort on rent control legislation? AB 1482 is about to become law, even though Californian voters soundly rejected Prop 10 last year.

In addition the ever more stringent requirements, higher impact fees, and more demands on BMR units make multi-unit development simply uneconomical. Labor and material cost is a small factor in comparison.


2 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Aug 9, 2019 at 3:33 pm

The Business Man is a registered user.

Just understand, by simply having the attitude that those who own the balls in the game will simply leave if they can't have the games rules be designed to benefit them is not the way to get the situation to change.

In fact, that practice will incrementally eliminate the private housing sector because the public housing industry will simply be forced to take over.

THe fact is this was in the works ever since 1995 when the promise of the free market free of rent control by passing Costa Hawkins. These people made false promises and probably paid large sums of money to have influence on the legislative system.

No they resort to acting out in what can be considered a violent assault on the very people they claim they care about. THreating to evict those who have a constitutional right to influence their representatives or cast a vote. By enacting radical increases in costs of rent only so that they can force tenants to subsidize their political actions. And finally, there are reports of landlords threatening tenants that can "appear" to be not citizens by saying they will be reported to the Immigration and Customs Enforcement.

Why can't these owners get off their "butts" and show good faith efforts to provide more affordable housing? Becasue they simply only market to a "preferred" customer regarding luxury housing.

Since there is only luxury housing being built, that is the major failure of the free market. As I described before, if you only sell 93 octane Gas for that price in the state of California, you better expect a lot of vehicles running out of gas.

The facts are we have a glut of luxury homes, condos, and apartments. Study after study has proved this. All of the Real Estate news demonstrates that the glut of high priced homes even with low interest rates, are now not being bought seen in this news (Web Link)


12 people like this
Posted by m2grs
a resident of another community
on Aug 9, 2019 at 4:42 pm

If one really want to solve the housing crisis one should look at Dallas. The city population grows like weeds. Yet housing is still affordable. For example a suburb town there called Frisco has grown from about 30K residents in 2000 to about 200K residents today. The metro grows so fast that companies move there in order to access the labor market.

California has no shortage of land to build housing, or to build new cities. It's just too many regulations and other government interventions.


3 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Aug 9, 2019 at 6:15 pm

The Business Man is a registered user.

In response to m2grs you said:

“If one really want to solve the housing crisis one should look at Dallas. The city population grows like weeds. Yet housing is still affordable. For example a suburb town there called Frisco has grown from about 30K residents in 2000 to about 200K residents today. The metro grows so fast that companies move there in order to access the labor market.”

However, that are is significantly abundant of unused land, your comparison is simply not realistic. Frisco Texas consists of 62 square miles or 39680 acres in comparison to Mountain View which has 12 square miles or 7680 acres. 200,000 people divided by 39680 acres leaves 5 people per acres in Frisco. Mountain View has 83,500 people divided by 7680 acres leaves only 62 square miles makes for a density of 11 people per acre in Mountain View. That is twice the population density. You also said:

“California has no shortage of land to build housing, or to build new cities. It's just too many regulations and other government interventions.”

Until you can provide some kind of mathematical facts, this is just a blind claim. But here are some real facts. Santa Clara County has 1,290 sq miles, or 825600 acres. But there are large areas of land not useable. There are large parts of the county that are mountains as much as 50%, There is as much as another 10% of the land that should not be developed because they are part of EPA pollution Superfund sites, areas that are determined unsafe for people. So that reduced the usable land becomes 516 sq mi. or 330,240 acres, but its population is 1,937,570. Thus there are 6 persons per acre in the County. The County Frisco is in has 886 sq mi. or 567040 acres. You look at that county’s map and see no geographic barriers. Their population is 1,005,146. There population density is Dallas is part of has 2 persons per acre.

Thus Santa Clara County land is 3 times the value of Frisco’s County, thus it costs 1/3 the price to develop. Let’s look at San Francisco County. It has 46.89 sq mi or 30009 acres, but it has 883,305 people, thus it has 29 people per acre. Thus the land in San Francisco is more than 10 times more expensive. These counties cannot just take over land from their neighbors. Los Angeles County has 4,751 sq mi. or 3,040,640 acres, but if you look at the county map about 50% of that land is not useable, so you have 2,375 sq mi. or 1,520,320 acres. It has a population of 10,105,518, thus it has 8 persons per acre. It is 4 times as valuable as Colin County Texas.

Please provide us with some mathematics to substantiate your claim?


15 people like this
Posted by m2grs
a resident of another community
on Aug 9, 2019 at 10:19 pm

@The Business Man, your math is way off. Converting to acres is a needless showoff while obscuring the facts.

Santa Clara county is about 20 times the size of Frisco. So with same density if Frisco has 200K residents Santa Clara County can support 4 million residents, which is double its current population of 2 million.

While Santa Clara has more reserved natural open spaces, which I do support, Frisco is predominantly single family housing.

Furthermore if you look at the big picture, as this report is all about, the permit decline is state-wide. There are plenty of places in California that are suitable for large and affordable residential development.


1 person likes this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Aug 10, 2019 at 10:07 am

The Business Man is a registered user.

In response to m2grs you said:

“@The Business Man, your math is way off. Converting to acres is a needless showoff while obscuring the facts.”

The calculation was done from this website (Web Link) 1 square mile is equal to 640 acres. You said:

“Santa Clara County is about 20 times the size of Frisco. So with same density if Frisco has 200K residents Santa Clara County can support 4 million residents, which is double its current population of 2 million.”

You cannot compare a City to a County, you can only compare a City to a City and a County to a County. You know that.

Frisco Texas has 61.8 Sq. Mi.(My resource was using Wikipedia, I cannot have too many URLS, you will have to search it yourself). Mountain View has 11.995 Sq. Mi. (My resource was using Wikipedia, I cannot have too many URLS, you will have to search it yourself). Mountain View is 20% the size of Frisco. Frisco Texas is in Colin County. Colin County has 886 Sq. Mi. (My resource was using Wikipedia, I cannot have too many URLS, you will have to search it yourself). Santa Clara County has 1,290 Sq. Mi. (My resource was using Wikipedia, I cannot have too many URLS, you will have to search it yourself). Santa Clara County is 140% the size of Colin County.

Frisco Texas has a population of 188,170 living in it, Mountain View has a population of 83,377 living in it. Given the ratio of lands in comparison, that Mountain View has 20% of the land of Frisco the ratio to make them equal would establish that only 37,634 people could live in Mountain View with an equivalent land allocation. Mountain View has 220% of that ratio of people living in it.

Colin County has 1,005,146 living in it, Santa Clara County has 1,937,570 living in it. Given that the ratio of lands in comparison (NOT TAKING INTO ACCOUNT THE MOUNTAINS) has 140% that would establish that only 1,407,204 could live in Santa Clara County with an equivalent land allocation. Santa Clara County has 140% of of that ratio of people living in it.

If we propose to populate Santa Clara County with 4,000,000 people given the land I just discussed, you would have a 280% utilization of land equivalent to Colin County.

If Colin County allows for 1,005,146 people with 567,040 acres you have 2 persons per acre. Now if Colin County has a standard of 50% Residential land use and 50% Commercial/Industrial/Other use, you will adjust that to 4 persons per acre. If Santa Clara had 4,000,000 people with 834,560 acres you would have 5 persons living per acre. But given that this area has as maybe 40% Residential land and 60% Commercial/Industrial/Other use, you would have to change that to 10 person living per acre.

Now lets say that 2 people on average live in a house in Colin and Santa Clara Counties, and you allocate ¼ acre per house. Thus every acre has a land allotment of perhaps 4 houses per acre, than Colin County can build up to 8 person per acre and not have any problems. But Given that you have only 4 houses to allocate per acre and that Santa Clara has 10 people per acre, you have a shortage of one house per acre.

Simply put, this comparison is wrong.

My data was not from a primary source I admit. But it was verified by the Wikipedia page by indicating it was linked to a primary source. A map that can prove that more than 50% of the land in Santa Clara County is not usable is found here (Web Link). To me you are making assumptions without any data to back it up. What evidence do you have to support your argument? You said:

“While Santa Clara has more reserved natural open spaces, which I do support, Frisco is predominantly single family housing.”

Again given the vastly larger resources that Colin County has for Frisco that is “feasible”. But the facts are at least where there are metropolitan areas in the state of California, they simply cannot be compared without real data and real breakdowns of what is “usable” land. You are simply making a claim with no scientific evidence. Please provide some? You said:

“Furthermore if you look at the big picture, as this report is all about, the permit decline is state-wide. There are plenty of places in California that are suitable for large and affordable residential development.”

The State, nor County, or Cities are NOT restricting permits. The PRIVATE sector is CHOOSING to stop development. There is no evidence presented in this report that indicated that the Governments where interfering with this process. You are making up a claim with no facts to support it.

The bottom line is that it is not wise to make claims without doing some homework.


10 people like this
Posted by m2grs
a resident of another community
on Aug 10, 2019 at 1:41 pm

@The Business Man, I'm not sure how you infer that I compare Frisco with Mountain View? My post is *short* and easily understandable.

I pointed out that Dallas has affordable housing while growing quickly, and used Frisco as an example of the Dallas metro area.

Your logic is, on the other hand, too mathematically challenging for us average readers.


Like this comment
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Aug 10, 2019 at 3:56 pm

The Business Man is a registered user.

In response to m2grs you said:

“I pointed out that Dallas has affordable housing while growing quickly, and used Frisco as an example of the Dallas metro area.

Your logic is, on the other hand, too mathematically challenging for us average readers.”

Ok lets do a mathematics experiment:

The current breakdown of housing in Mountain View is found here (Web Link). Mountain views residential breakdown is 43% Single Family Homes, 8% Duplexes thru Quadplexes, and 45% 5+Unit structures. These are combined owned and rented units. We can calculate the land use breakdown in the City of Mountain View.

The Average is that 3 persons per unit is a good average, with 27,793 units. If 43% are Single Family Units than 11,951 units exist in Mountain View, which lets say take up an average .1 acres. This means these units take up 1,195 acres in the City of Mountain View. If 8% are Duplexes thru Quadraplexes which comes to 2,224 units, which take up .25 acres. This means that these units take up 556 acres. If 45% are 5+ Units then there are 12,507 units and lets say that a 10 unit building takes up .4 acres. This means that these units take up 500 acres.

This estimation indicates that 1,195 + 556 + 500 acres comes to 2,251 acres are used by Housing units in Mountain View. Given that the City has 7,676 acres means that the rest of the land is 5,425 acres. That means only 30% of the City land is used for housing.

Now let’s estimate that at least 10% of that land is used for roadways. That means that 40% of the land is accounted for. Now let’s estimate that another 5% is in free spaces like parks that means the land is accounted regarding 45%. Then it can be said that 55% of the land is used for Commercial/Industrial purposes.

If we are not going to reduce the Non-Residential land allotment and we use the current breakdowns, in order to achieve a 4,000,000 population in the valley. Then you are going to need to have an increase of 687,477 units, the City of Mountain View will need to provide 4.3% of that which means the City of Mountain View will need to add an estimated additional 29,561 units.

Where are you going to get the new land when if you do this work 43% are going to be Single Family Homes that take .1 acres, 8% of Duplexes thru Quadraplexes take .25 acres and 45% are 5+ Unit structures which can require .4 acres per 10 units.

The land requirement for Single Family homes will be 29,561 X .43 X .1 which comes to 1,127 more acres. The land requirement for Duplex thru Quadraplex homes will be 29,561 X .08 X .25 which comes to 591 more acres. The land requirement for 5+ Unit Buildings that on average are 10 units with .4 acres will be 29,561 X .45 X .10 X .4 which comes to 532 more acres. The grand total of new land allotment will be an estimated 2,250 acres for the City of Mountain View.

This indicate a serious needs to change in the proportion on land between Commercial/Industrial and Residential land in Mountain View. This indicate a serious needs to change in the proportion of Single Family Homes, Duplexes thru Quadraplexes are going to have to be reduced. The real picture is that Single Family Homes and Duplexes thru Quadraplexes cannot survive if that kind of population growth will occur. And it doesn’t matter if they are owned or rented. The City MUST understand that.

SO THIS IS THE REAL CAUSE OF REDUCTION OF HOUSING PERMIT APPLICATIONS. NOT GOVERNMENT. THE MARKET IS FORCING THE AREA TO REMOVE SINGLE FAMILY HOMES AND DUPLEXS AND QUADRAPLEXES BECAUSE THER ARE INEEFIECIENT USE OF LAND. AND THE CURRENT PRIVATE MARKET DOES NOT WANT TO BUILD APARTMENTS OR ANYTHING SIMILAR.


Like this comment
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Aug 11, 2019 at 11:19 am

The Business Man is a registered user.

Ok lets do a mathematics experiment regarding Santa Clara County now:

The current breakdown of housing in Santa Clara County from 2010 is found here (Web Link). There are (376,659 + 26,974)= 403,633 Single Family Units, (183,568 + 4,479)= 188,047 Multi Family Units, and there are (19,102 + 645)= 19,747 Mobile Home Units. There is a total of 611,427 Units. And that population was 1,781,642,

The percentage of housing in the valley is 66% SFU, 30% MFU, and 4% MHU.

Since a SFU takes an average of .1 acres, MFU takes up .4 acre, and a MHU takes up .05 acres.

Thus the housing utilization of the County comes to (403,633 X .1) + (188,568 X .4) + (19,747 X .05) which comes to 116,778 acres of Santa Clara County.

Santa Clara County has 825,600 acres in total. But Santa Clara County has 15% Parks and 50% Mountains if you look at any Google Map. So you have to reduce the total land from usable land which comes to 288,960 usable acres.

Thus only 40% of the land is used for residential purposes. If we are going to increase housing without cutting Commercial/Industrial land usage, the housing unit density must increase.

Today we have a population of 1,937,570, an increase of 9%. Thus there has to be an increase of land use to the sum of 127,288. Where does it come from? Since during this time there has been a jobs increase from 860,300 to 1,114,000, an increase of 13%. So there has to have been a shift to more land used for business than for residential use. And we can’t move the Mountains can we? Are you suggesting we develop the Parks?

Simply put there is no new land to use. Unless you are going to have to take down SFU and replace them with MFU. Of course the current owners of the SFU’s are going to fight that. Why can’t people understand this information?

THIS IS THE CONGESTION. THERE IS NO WAY TO ACCOMMODATE FOR THE INCREASE IN JOBS IN THE VALLEY.


Don't miss out on the discussion!
Sign up to be notified of new comments on this topic.

Email:


Post a comment

Posting an item on Town Square is simple and requires no registration. Just complete this form and hit "submit" and your topic will appear online. Please be respectful and truthful in your postings so Town Square will continue to be a thoughtful gathering place for sharing community information and opinion. All postings are subject to our TERMS OF USE, and may be deleted if deemed inappropriate by our staff.

We prefer that you use your real name, but you may use any "member" name you wish.

Name: *

Select your neighborhood or school community: * Not sure?

Comment: *

Verification code: *
Enter the verification code exactly as shown, using capital and lowercase letters, in the multi-colored box.

*Required Fields


Stay informed

Get daily headlines sent straight to your inbox.

Round Table Pizza bites the dust in downtown Palo Alto
By Elena Kadvany | 18 comments | 6,172 views

Local Transit to the Rescue?
By Sherry Listgarten | 32 comments | 3,464 views

Eating Green on the Green – August 25
By Laura Stec | 6 comments | 1,410 views

"The 5 Love Languages" by Gary Chapman
By Chandrama Anderson | 1 comment | 932 views

 

Register now!

On Friday, October 11, join us at the Palo Alto Baylands for a 5K walk, 5K run, 10K run or half marathon! All proceeds benefit local nonprofits serving children and families.

More Info