The Affordability Crisis

We’re in the middle of a housing crisis. New housing development isn’t keeping up with population growth in the bay area, and it impacts the affordability of housing for all income levels. The Association of Bay Area Governments (ABAG) estimates that from 2007-2014 permits were issued for just 57% of the housing needed.

This lack of supply is hitting people hard as finding housing becomes more competitive and skyrocketing prices reflect the demand. Many people making under 120% of the Area Median Income (AMI)—which is up to $138,000 for some Bay Area Counties—are finding their housing situation in jeopardy. The data shows that for people who are very low, low and moderate income only 29%, 26%, and 28% of the need was met. In many Bay Area communities, the housing need is not being met for any income level.

This lack of affordability is driving even middle class working people into homelessness, as people resort to doubling up, living on couches, or living in their cars.

Affordable First offers a new way to address the lack of affordable housing. The Affordable First model allows us to grow our supply of both market rate and affordable housing at the same time using the profitability of market rate housing to pay for the development costs of affordable housing in the same development.

In the current development model, a developer partners with an investor to build market-rate units for profit. By replacing the private investor with a public institution and building market-rate and affordable units together, we can change the goal from profits to affordability and growth.

The profits generated from the market-rate development are used to cover the costs of building affordable housing. The more profits are generated, the more we can apply that revenue to the persistent problems the housing crisis creates.

The problems created by the housing shortage affect everyone in any given community, not just those being priced out and displaced. The Affordable First model can help to deliver enough affordable units to stop displacement, house the homelessness, reduce healthcare costs, maintain a workforce, while delivering more market-rate units, and bringing down the overall cost of housing for everyone. Stable, affordable housing leads to a healthier community overall.