The Missing Middle: Event Recap

Last Wednesday, Alex Lofton, Head of Growth and Co-founder of Landed moderated a discussion that helped clarify what the Bay Area’s housing crisis means for the middle class and highlight potential policy solutions for a segment of the population that is being priced out of the region but doesn’t qualify for affordable housing. Zac Shore (Panoramic Interests) and Elizabeth Brady (Oak Brook Partners) walked us through a new approach to construction, Laura Duran (Menlo-Atherton High School) shared insights from what she’s seeing in Bay Area schools, and Kate Hartley ( SF Mayor’s Office of Housing and Community Development) shed light on challenges and solutions the city of San Francisco is working on.

Let’s start with some numbers that will help frame the conversation from this event. The average median income (AMI) in the Bay Area for a single income earner is about $80K. For a family of four, it’s around $103k. Most government-run affordable housing programs target those in the 60–80% AMI range. In order to buy a home in the Bay Area, our panelists estimate that you need to make 150% AMI or higher. This leaves a huge gap in the housing market — financing options and affordable housing for those making 80% AMI-150% AMI are few and far between.

Laura shared first hand the effect she sees this having in schools. Many of her students are moving out of the district. Their parents can’t afford rent and certainly can’t afford to buy a home. For her fellow educators, she’s seeing a high turnover rate. They can’t afford to lay down roots here and if they are new to the area, there isn’t a lot of incentive for them to stay. Couple this with the rapid decline in state funding for housing development and that national housing policy largely subsidizes upper income homeowners (through the mortgage interest tax deduction), and the prospects for solving this challenge look bleak.

But there are rays of hope. Though a major impediment to building more housing is construction and land costs (something we’ve heard over and over again at all of our housing events), Oak Brook Partners and Panoramic Interests have found unique ways to get around this problem. Zac Shore explained that by vertically integrating their supply chain for building units and functioning like an auto manufacturer, they are are able to cut construction costs by 30%, passing the savings directly to renters. Oak Brook Partners partner with another construction company, working to bring construction costs down similarly with modular building.

On the financing side, Landed is helping middle class buyers, starting with teachers, put a down payment on a home. Their model finds investors to commit half of a down payment, sharing the gains — and potential losses — with the homeowner when they sell. Kate Hartley also clued us in on San Francisco’s Mortgage Credit Certificate Program (MCC). Through the use of a MCC, eligible home buyers increase their ability to qualify for a mortgage loan and reduce their effective mortgage interest rate. The city also offers a loan assistance program for first time homebuyers.

While the evening began with a stark outlook for a very real problem that has implications far beyond housing affordability, it was inspiring to hear how our panelists and those they work with are rallying to build solutions. As the discussion wrapped up, Alex asked each panelist to share with audience one action item. Here’s the list:

1. Lobby your employers for housing. This doesn’t have to be explicitly building employee housing, but with so many new jobs in the area, it’s important the employers who are creating the most jobs — and attracting the most workers — begin to contribute to housing solutions.
2. Join and follow organizations driving impact in housing. TechEquity is our first suggestion, but organizations like SPUR are also doing important work on housing policy.
3. Read you local ballots and take the time to understand what you’re voting for. Ballot measures around housing policy are almost always on Bay Area ballots. Sometimes the wording for these measures can throw us off or we skip them completely, but they have a huge impact on our communities. Make sure to understand them — and vote in local elections.
4. Show up at a very local level. Do you have a neighborhood association meeting or a town hall held regularly? Show up so you can understand the diverse perspectives driving housing decision-making in the region — and to make your voice heard.

Thanks to all who attended — first-timers and veterans alike — for yet another dynamic conversation on a very important topic.

Join us September 7th, Rent Control in California

Rent control is one of the most controversial issues in urban development. In 1995, The Costa-Hawkins Act barred rent control in California on homes and apartments built after that year. In an era of extreme housing costs, what has this law meant for Bay Area renters and what effect does rent control have on the economics of housing? We’ll be joined by Rob Bonta, State Assemblyman for CA-18 (East Bay) and author of the Costa-Hawkins repeal bill, as well as other housing experts and renter protection advocates.