Stuck in the middle

Redwood City has a number of apartment buildings that accept Section 8 vouchers. However, you have to earn below a certain threshold to qualify, and of course pretty much all of these “affordable” units are taken. Although more projects aimed specifically at low-income earners are in Redwood City’s construction pipeline, such as the 125-unit apartment building planned for 353 Main St. or the 20-unit Habitat for Humanity condominium project planned for 612 Jefferson Ave., there will never be enough to satisfy demand.

On the other end of the income scale, there is also a limited supply, and, incredibly, more demand than can be satisfied by that supply. Here we are generally talking about high-end homes selling for many millions of dollars, condominiums costing $1.5 million and up, and apartments renting for many thousands of dollars per month. Even though our real estate market is cooling off, plenty of people seem willing and able to pay these astronomically high prices because of our still booming economy.

I don’t worry about the high-income earners, and the low-income earners at least have some level of support. I do think a great deal, however, about those in the middle. These folks earn too much to qualify for some form of assistance, but earn too little to afford most of our for-sale and for-rent houses, condominiums and apartments. Historically, these folks have rented apartments in older buildings, or bought older homes. But “flipping” is making many older homes too expensive, and some older apartment buildings are being upgraded after which their lease rates go sky high. Although the area’s middle-income earners don’t necessarily need or want direct government assistance, they absolutely deserve consideration when we consider housing solutions.

As of May 2018, the median annual income for a family of four in San Mateo County was $118,400. Whereas in much of the country that amount would easily enable a family to live comfortably, here in San Mateo County it’s a very different story. If such a family were to allocate the recommended 30 percent of their income to housing, they would have $2,960 each month to spend. A quick internet search shows that although there are some market-rate apartments to be had for that figure, those apartments are generally either very small or are in a less desirable part of the county. As for home ownership, that’s possible, but just. In some places, such as San Bruno, a condominium can be had for $500,000, which, with 20 percent down and a 30-year mortgage, works out to around $2,300 per month. But that 20 percent down is $100,000, and that condo is likely to be too small for a family of four. Plus, they’d still have to pay homeowner’s dues, insurance and taxes.

Our housing is so expensive in large part because we have such high land costs, driven by a limited supply and high demand. In addition, labor and materials are very expensive around here. Finally, the various governmental fees do add up. So, what can be done?

The only real solution to high land costs is to increase density, building single-family homes on smaller lots and building more multi-family housing. Those high governmental fees? Well, they could be reduced, although that would squeeze our already challenged local and state budgets. It’s hard to avoid material costs, although builders can certainly use cheaper finishing materials and appliances. As for labor costs, although they must be paid, creative thinking might find ways to reduce the amount of labor needed. For instance, an increasing number of companies are making high-quality prefabricated homes that surely require less labor than a typical stick-built house.

Whether these strategies together would be enough to produce housing affordable by the average San Mateo County family is hard to say. Clearly, though, we need some out-of-the-box thinking to enable those who find themselves stuck in the middle of the earnings scale to rent or buy a home that meets their needs while still having enough left over to live a respectable, middle-class American life.

Greg Wilson is the creator of Walking Redwood City, a blog inspired by his walks throughout Redwood City and adjacent communities. He can be reached at greg@walkingRedwoodCity.com. Follow Greg on Twitter @walkingRWC.