Shortfall: Unpacking the Bay Area's Affordable Housing Crisis

The Bay Area’s longstanding housing crisis has significantly worsened since the early 2010s, primarily driven by the region’s underproduction of housing. This persistent shortage has been exacerbated by an overstated focus on market-rate and luxury developments, which have eclipsed the urgent need for affordable housing options. As a result, many residents are grappling with mounting difficulties in securing affordable places to live, underscoring a critical disconnect between the housing market and the needs of communities.

By Ryan Fukumori and Michelle Huang

Contents

1. Introduction
2. Data and Methods
3. Findings
4. Recommendations
5. Authors
6. Acknowledgments
7. Related Resources

Introduction

The Bay Area has been grappling with a decades-long housing crisis, and it’s no secret that the situation has become dire. Despite Silicon Valley and the tech sector helping fuel the region’s economic boom in the past few decades, the development of new housing has failed to keep pace with population and job growth. A 2021 analysis by the San Francisco Bay Area Planning and Urban Research Association (SPUR) revealed a staggering shortfall of nearly 700,000 housing units between 2000 and 2018, exacerbating the ongoing housing shortage. The ramifications are widespread, resulting in some of the highest housing costs in the nation, a surge in the unhoused population, and the exodus of residents from both the region and the state.

This analysis examines the ongoing state of the housing crisis across the nine-county Bay Area since 2010, focusing on the overall development of housing and the construction of affordable housing in particular.

Our key findings include:

• Since 2010, the Bay Area’s population growth has outpaced housing development.

• Recent housing construction has leaned toward larger owner-occupied homes, while smaller renter-occupied units have become less prevalent.

• There has been a noticeable rise in overcrowded households, particularly affecting renters, residents of color, and low-income families.

• Although vacancy rates have decreased since 2010, they remain disproportionately high for newer housing units and large multifamily buildings.

• Cities in the Bay Area have struggled to produce enough affordable housing to meet demand while overproducing market-rate and luxury options.

• Most affordable housing built during this period has been limited to large multifamily buildings and accessory dwelling units.

Based on our findings, we elevate the following recommendations:

• Prioritize public investments in affordable housing development, especially for very low-income households. 

• Enact local policies that facilitate the preservation and protection of existing affordable housing stock.

• Incentivize, safeguard, and implement recent state policies that promote the development of below-market-rate accessory dwelling units and smaller multifamily buildings.

• Enact and enforce policies that remove barriers for low-income residents seeking access to affordable rental housing. 

• Make data on the ownership and management of rental housing publicly accessible.

• Incorporate standards from the impending Affirmatively Furthering Fair Housing (AFFH) rule into local housing element plans.

• Explore financing and development options for mixed-income social housing projects.

• Avoid approaches to addressing homelessness that criminalize unhoused people for sleeping or sheltering in public spaces.

• Amend the state Constitution to recognize housing as a fundamental right.

Findings

Since 2010, the Bay Area’s population growth has outpaced housing development.

At the heart of the Bay Area’s housing crisis lies a persistent underdevelopment of housing: the region simply hasn’t built enough homes to meet demand. One effective way to gauge improvements in the housing supply is by analyzing the average number of residents per housing unit. Ideally, if the housing supply were improving, we would expect to see a decrease in the average number of people per unit over time. However, data reveals that since 2010, the average number of people per housing unit has increased in seven of the nine Bay Area counties. Notably, the East Bay (comprising Alameda and Contra Costa Counties) and Solano Counties experienced relatively large gains in this metric, resulting in some of the highest averages across the nine-county region.¹

The two outlier counties, San Francisco and Santa Clara, had relatively higher rates of housing development alongside higher rates of population decline since the start of the Covid-19 pandemic. As illustrated in the graph below, both counties have accounted for the largest shares of housing built since 2010. However, they also experienced the largest population losses during the early years of the pandemic, with each county losing an estimated 65,000 residents between 2020 and 2022. While the average number of people per household in Santa Clara County has remained unchanged since 2010, it still stands as the highest in the Bay Area, with more than 2.7 people per housing unit.

In contrast, much of the North Bay (comprising Napa, Sonoma, and Marin Counties) has experienced below-average rates of housing development since 2010. Although all three counties have seen an increase in the average number of people per housing unit during this period, their relatively low population densities contribute to lower overall occupancy rates.

Our analysis of the share of newer housing within each city reveals two additional trends. Nearly all of the cities with the highest percentage of housing built since 2010 are concentrated in Silicon Valley and the southern edges of the San Francisco Bay, as well as the inland valleys of Alameda and Contra Costa counties, east of the Diablo Range. Moreover, nearly all of these cities are suburban satellite cities (such as Dublin, Milpitas, and Morgan Hill), exurbs adjacent to agricultural areas (Gilroy and Brentwood), and small suburbs (such as Rio Vista, Emeryville, and Atherton). Among the 16 cities with populations exceeding 100,000, only Santa Clara has constructed more than 10 percent of its housing since 2010.

Recent housing construction has leaned toward larger owner-occupied homes, while smaller renter-occupied units have become less prevalent.

Not only has housing construction in the Bay Area failed to keep pace with population growth, but newer rental homes also are smaller on average. As illustrated in the graph below, a breakdown of the region’s occupied housing by tenure and year of construction reveals that recently developed rental units tend to have fewer bedrooms overall. A majority (51 percent) of occupied rental units built since 2010 consist of studios or one-bedroom units, compared to 40 percent of all occupied rental homes. In contrast, apartments with three or more bedrooms account for only 15 percent of units built since 2010, compared to 25 percent of all rental units.

Owner-occupied homes, on the other hand, have been steadily increasing in size. While only 6 percent of owner-occupied homes built before 1990 have five or more bedrooms, that figure has more than doubled to 14 percent from owner-occupied homes built afterward. In contrast, smaller two- and three-bedroom homes have become a shrinking share of the homeowner market, making up 65 percent of homes built before 1980, but only 46 percent of those constructed since 2010.²

A key factor contributing to the recent downsizing of apartment units is the rising prevalence of large multifamily buildings with 50 or more units, which now constitute a growing share of the region’s housing stock. As illustrated in the graph below, 60 percent of all occupied rental units built since 2010 are located in these large complexes, compared to just 21 percent of all occupied rental units. Homes in these large developments tend to be smaller, with 65 percent of all occupied rental units in 50+ unit complexes being studios or one-bedroom apartments, compared to 40 percent of all occupied rental units.³

In contrast, smaller multi-unit apartment buildings make up a disproportionately small share of new rental construction. Only 5 percent of occupied rental units built since 2010 are in duplexes, triplexes, or fourplexes. Zoning restrictions that favor either single-family homes or large multifamily complexes have contributed to this imbalance, prompting California policymakers to enact statewide upzoning reforms for single-family parcels in 2022.

There has been a noticeable rise in overcrowded households, particularly affecting renters, residents of color, and low-income families.

One consequence of the ongoing underproduction of housing and the trend toward smaller rental units is the rise in overcrowding. The US Census Bureau defines overcrowded housing as units with more than one person per room, excluding kitchens and bathrooms. As the chart below illustrates, the share of overcrowded households in the Bay Area increased from 5.4 percent in 2010 to 6.7 percent in 2022 across all nine counties. By 2022, only Marin and Sonoma were the only counties with overcrowding rates below 5 percent.

Disaggregating overcrowding rates reveals that renters experience significantly higher overcrowding than homeowners in every county. In all but San Francisco, where homeowners face the highest overcrowding rate, renters are at least twice as likely to live in overcrowded conditions. The situation is particularly acute in San Mateo and Santa Clara Counties, where 13 percent of rental households are overcrowded, and renters are nearly four times more likely than homeowners to live in such conditions.

Low-income households are more likely to live in overcrowded housing due to high housing costs and the limited supply of affordable housing. These factors force some residents to live in spaces that are too small for their needs. In 2022, about 12 percent of households earning less than 200 percent of the federal poverty level lived in overcrowded conditions, compared to 6 percent of those with incomes above 200 percent of the federal poverty level. Despite these disparities, overcrowding rates among low-income households in the Bay Area interestingly slightly decreased between 2010 and 2022, while overcrowding for households above 200 percent of the federal poverty level rose from about 4 percent to 6 percent. This trend highlights that overcrowding is increasingly affecting a broader range of households, not just those with the lowest incomes.

Overcrowding is also a racial equity issue, as multiple communities of color experience disproportionately high rates of overcrowding. This is particularly evident among renters of color: 24 percent of Latinx renters, 19 percent of Pacific Islander renters, and 15 percent of Asian renters live in overcrowded units, compared to 12 percent of all rental households and just 4 percent of white renters. While homeowners generally experience lower rates of overcrowding, Latinx and Pacific islander homeowners are about three times as likely as the average homeowner to live in overcrowded conditions. These disparities are influenced by cultural and familial trends, as AAPI and Latinx households are more likely to live in multigenerational homes, with three or more generations sharing a residence. These familial arrangements increase the likelihood of overcrowding.

While multigenerational living may help some families remain in their homes despite rising housing costs, overcrowding poses significant risks to physical, emotional, and mental well-being. The rise in overcrowded households throughout the 2010s left many more residents at risk during the shelter-in-place period of the Covid-19 pandemic, when overcrowding conditions made it harder to self-isolate, increasing the risk of virus transmission. These constrained spaces also created challenges for children trying to learn remotely in already complex settings.

Although vacancy rates have decreased since 2010, they remain disproportionately high for newer housing units and large multifamily buildings.

Between 2000 and 2010, the vacancy rate in the nine-county Bay Area more than doubled, rising from 3 percent to 7 percent. This spike was largely driven by the foreclosure crisis in the late 2000s and early 2010s, as many newer homeowners defaulted on their mortgages and lost their homes. However, during the 2010s, the region experienced a net loss of about 3,500 vacant housing units (a 0.6 percent drop in the regional vacancy rate). The recovery from the recession and historically low interest rates during the Covid-19 pandemic also contributed to a surge in homebuying.⁴

Although the Bay Area’s vacancy rate has seen a modest overall decline since 2010, individual counties have experienced more dramatic shifts. Contra Costa and Solano Counties — among the fastest-growing counties during the 2010s — witnessed a nearly four-percentage-point drop in vacancy rates, indicating a rapid spike in housing demand. In contrast, counties like Napa, San Francisco, San Mateo, and Santa Clara which have seen population declines since the pandemic, have experienced a growing share of vacant homes since 2010. Interestingly, the counties with the highest vacancy rates represent both ends of the population density spectrum: San Francisco, with more than 18,200 people per square mile, and Napa, with just 180 people per square mile.

Amid the ongoing regional housing crisis, it is notable that newer units exhibit higher vacancy rates on average. In 2022, 10 percent of Bay Area housing units constructed since 2010 were vacant, compared to 6 percent of all units. Only Contra Costa and Solano Counties — the two jurisdictions with the lowest overall vacancy rates — reported vacancy rates for newer units that were at or below the regional average. The issue of vacancies in newer housing is especially pronounced in the western part of the North Bay and the Peninsula; in San Francisco, nearly one in five (19 percent) of units built since 2010 remained vacant.

Another significant trend is that housing units in large multifamily complexes account for a disproportionately high share of vacant units constructed since 2010. In fact, a majority (55 percent) of vacant units built during this period are located within these large multifamily complexes, compared to only 18 percent of all vacant units. In contrast, single-family homes represent just 22 percent of vacant units built since 2010, while they make up 42 percent of the overall vacant housing stock.

The ongoing regional housing crisis underscores the troubling trend of vacant newer housing units, indicating that much of the recent construction has failed to address the needs of residents. Unfortunately, existing data does not clarify whether these vacant units were intended for rental or market-rate sale. Further research is necessary to determine whether these vacancies stem from an overproduction of market-rate and luxury housing in recent years, as discussed in the following finding.

Regardless, the presence of a significant number of vacant newer homes represents a critical mismanagement of environmental resources, particularly given the substantial carbon footprint associated with constructing new homes. Because the Bay Area must build more homes, increased CO2 emissions from new developments are somewhat unavoidable. This reality emphasizes the need for new housing to effectively meet residents’ needs and be accessible to local families. If newer units remain unoccupied, we risk exacerbating the climate crisis while failing to adequately address the housing crisis.

Cities in the Bay Area have struggled to produce enough affordable housing to meet demand while overproducing market-rate and luxury options.

To plan for the housing needs of local residents, the Association of Bay Area Governments (ABAG) partners with local communities and state officials to produce the regional housing needs allocation (RHNA). This framework outlines the housing requirements for each county and city over an eight-year period, ensuring that local jurisdictions understand the demands they must meet. County and city governments incorporate these housing needs into their housing element plans, which are subsequently updated and approved by California’s Department of Housing and Community Development (HCD) following each new RHNA publication.

During the most recent housing element cycle from 2015 to 2023, HCD identified a need for nearly 188,000 housing units across the nine-county region. Notably, 40 percent of these units (75,600) were designated for very low-income and low-income households. ABAG allocated the required 188,000 units to jurisdictions throughout the nine counties based on its regional assessment of housing needs.

During this period, local governments approved the construction of nearly 218,000 housing units, surpassing the overall assessed need by 16 percent. However, permits for above-moderate income housing accounted for more than twice the allocated need, with all nine counties exceeding their assessed targets for this category. In contrast, the issuance of permits for very low-income and low-income housing fell short, reaching only 40 percent and 55 percent of the allocated needs, respectively. Notably, eight out of nine counties did not meet the required permit levels for very low- and low-income housing. Contra Costa and Solano Counties were particularly lacking, permitting less than one-quarter of the assessed need for very low-income housing between 2015 and 2023.

Napa County was the only jurisdiction to permit more housing than required across all income levels during the 2015-2023 cycle. However, its allocated housing needs were relatively modest, with fewer than 600 units designated for very low and low-income households combined, and fewer than 1,500 units overall. Similarly, Marin and Sonoma Counties faced small allocations for low-income housing, with only 367 and 1,094 units, respectively. These figures likely reflect an allocation formula for the 2015-2023 Regional Housing Needs Assessment that underestimated low-income housing needs in Napa County and other areas of the North Bay, allowing these jurisdictions to more easily exceed their housing thresholds.

Permitting trends at the city level highlight the extent of the imbalance between the demand for affordable housing and actual production. Between 2015 and 2023, none of the 101 Bay Area cities permitted enough units to meet their allocated needs for very low-income and low-income housing. Only three cities — Atherton, Los Altos Hills, and Piedmont, all small suburbs — managed to exceed 60 percent of their assessed needs. In stark contrast, 78 out of 101 Bay Area cities (77 percent) surpassed their allocation for above-moderate-income housing. In many instances, market-rate housing was produced at levels far beyond what was necessary, with the majority of cities (52) generating more than 200 percent of their allocation for these high-cost units.

The region’s failure to build sufficient affordable housing during the previous regional housing needs allocation (RHNA) cycle heightens the urgency of the current cycle. From 2023 to 2031, HCD has determined that the Bay Area must construct 442,000 housing units, with nearly 41 percent designated for very low- and low-income households. This figure more than doubles the regional allocation for the 2015-2023 cycle, reflecting an even greater emphasis on addressing the needs of those at the lowest income levels. If the Bay Area continues to underproduce low-income housing at the same rate observed from 2015 to 2023, the regional housing crisis will only intensify.

Most affordable housing built during this period has been limited to large multifamily buildings and accessory dwelling units.

In 2022, the majority of permits issued for very low- and low-income housing were for units in buildings with five or more units, followed by accessory dwelling units (ADUs). In contrast, permits for moderate- and above-moderate-income housing encompassed a wider range of building types. Most moderate-income permits were for ADUs, which are smaller secondary units built on single-family home parcels. For above-moderate-income housing, large multifamily buildings represented two-thirds (65 percent) of the permits issued; however, single-family homes accounted for 24 percent of this luxury housing. Notably, 97 percent of all single-family homes permitted fell into the above-moderate-income category.

The concentration of moderate-income accessory dwelling units (ADUs) reflects recent changes to the California Health and Safety Code. Since 2021, cities and counties are required to develop plans that promote the construction of ADUs for very low- to moderate-income families. For instance, Marin County has responded to this state mandate by prioritizing ADU policies aimed at supporting older adult residents who wish to downsize or need affordable housing. State-level data also indicates a sharp increase in ADU production in recent years, growing from 10 percent of new housing production to 20 percent in 2023. However, it is concerning that Bay Area governments have largely focused on ADUs at the highest allowable income level (moderate), while these units constitute a much smaller proportion of very low- and low-income permits. As a result, the shift toward ADU development has not adequately addressed the ongoing systemic underproduction of low-income housing.

In 2022, duplexes, triplexes, and fourplexes accounted for a minimal share of permitted moderate and above-moderate income units, while comprising 0 percent of very low- and low-income units. This data suggests that the impact of California’s recent upzoning laws, which took effect on January 1, 2022, was limited in the first 12 months. California Senate Bill 9, which allows homeowners to redevelop single-family parcels into up to four units, has faced significant opposition from numerous municipal governments, particularly those representing low-density, affluent suburbs. Even cities without organized resistance to SB 9 reported few applications for the upzoning of single-family homes. Further data from 2023 and beyond is necessary to determine whether duplexes, triplexes, and fourplexes become more common as a result of these state policy changes.

Recommendations

Solving the Bay Area’s housing crisis requires a collective, sustained effort across the entire region; a problem that has persisted for decades cannot be solved overnight. However, Bay Area counties and cities need to tackle this housing crisis with both urgency and diligence. Key elements of this response include:

1. Prioritize public investments in affordable housing development, especially for very low-income households. The systemic underproduction of affordable housing throughout the Bay Area demonstrates that market-based and supply-side solutions alone are insufficient to resolve the regional housing crisis. Significant public investment is essential to address this crisis and the accompanying rise in homelessness. The Bay Area Housing Finance Authority had initially authorized a multibillion-dollar bond measure for the November 2024 ballot to support the development of up to 72,000 affordable homes. However, the measure was withdrawn in August 2024 due to concerns regarding its electability and potential legal challenges. To prevent further displacement of low-income households and ensure inclusivity for all residents, coordinated, regionwide approaches like this must be integrated into future ballot initiatives.
   Affordable housing development must also consider the needs of residents who are extremely low or very low income, as housing within the low-income bracket (50 to 80 percent of the area median income) remains out of reach for many households. Furthermore, it is essential to include a diverse range of housing types in development efforts — not only large multifamily buildings but also smaller developments and single-family homes. Ideally, every household should have choices regarding their housing options, regardless of income level.

2. Enact local policies that facilitate the preservation and protection of existing affordable housing stock. While developing new affordable housing development is crucial, preventing the conversion of existing affordable housing into market-rate properties is equally important. Older low-cost housing may be especially at risk of being redeveloped into luxury housing. Municipal policies like community opportunity to purchase acts (COPA) can preserve affordable housing by prioritizing sales to nonprofit developers and landlords committed to the well-being of residents in under-resourced communities rather than focusing solely on maximizing profit.

3. Incentivize, safeguard, and implement recent state policies that promote the development of below-market-rate accessory dwelling units (ADUs) and smaller multifamily buildings. As previously noted, state initiatives aimed at local housing development have produced uneven results in the Bay Area. Cities have largely built moderate-income ADUs, often at the expense of options for lower-income households. Legislative efforts to override restrictive single-family zoning laws have yielded inconclusive outcomes thus far. Local governments must adapt to these state-level policy changes to ensure that ADU and multiplex construction addresses the needs outlined in the regional housing needs assessment across all income levels, not just the higher brackets.

4. Enact and enforce policies that remove barriers for low-income residents seeking access to affordable rental housing. Across the Bay Area, community coalitions have successfully pushed for the creation of city- and county-level policies that protect tenants and prevent the hyperinflation of rents, including rent stabilization, just cause for eviction, and tenant anti-harassment ordinances. More local jurisdictions need to implement these policies, particularly in suburban cities with growing shares of low-income residents. Local governments should also adhere to state laws that prevent landlords from discriminating against tenants with housing vouchers and establish tenant screening policies that prevent landlords from indiscriminately rejecting rental applicants with suboptimal credit scores, histories of eviction, or prior involvement in the justice system. These policies collectively help reduce housing insecurity and instability among low-income residents.

5. Make data on the ownership and management of rental housing publicly accessible. In light of the growing corporate consolidation of rental housing in the Bay Area, renters, community advocates, and elected officials should be able to access reliable data on who owns the housing in their neighborhoods, rental costs, and records of landlord noncompliance with fair housing and tenant protection laws. While some cities and counties have limited rental and landlord registries, establishing a region-wide, publicly accessible database of rental housing would empower community members to better understand the region’s housing landscape and effectively monitor landlord practices.

6. Incorporate standards from the impending Affirmatively Furthering Fair Housing (AFFH) rule into local housing element plans. The Biden Administration’s Department of Housing and Urban Development is expected to issue updated guidelines for implementing HUD’s fair housing standards, marking the first renewal of these standards since 2015. The California Department of Housing and Community Development (HCD) must coordinate with local governments to ensure that housing elements statewide plan for the timely integration of HUD’s new AFFH standards. This will facilitate access to federal housing funds and promote adherence to best practices for fair housing growth and preservation. Additionally, local governments should commit to ongoing community engagement around housing priorities and concerns in their housing element plans.

7. Explore financing and development options for mixed-income social housing projects. A systemic shift in affordable housing development will require an array of ownership and financing strategies within coordinated plans for equitable and inclusive community development. Social housing, which aims to link quality, affordable housing with local educational and economic resources, provides a viable framework for integrating public, nonprofit, and cooperative housing initiatives. This approach can ensure long-term affordability and promote residents’ financial mobility. Local and state lawmakers should actively pursue opportunities to expand the public funding pipeline for community-centered, ecologically sustainable solutions to the housing crisis.

8. Avoid approaches to addressing homelessness that criminalize unhoused people for sleeping or sheltering in public spaces. The recent US Supreme Court ruling in City of Grants Pass v. Johnson (2024) permits local jurisdictions to impose penalties on people for camping on public land. However, a punitive approach to homelessness is counterproductive to advancing long-term solutions. Formerly incarcerated people are more than 10 times as likely to experience homelessness than the general population. Imposing court fees or civic penalties on unhoused individuals further obstructs their ability to regain financial stability. In addition to significant investments in permanent supportive housing and rapid rehousing programs, local law enforcement, prosecutors, and courts must refrain from criminalizing the act of sleeping on the street, in vehicles, or in makeshift encampments.

9. Amend the state Constitution to recognize housing as a fundamental right. Lawmakers in California have proposed adding a tenth amendment to the state Constitution that would recognize housing as a fundamental human right. Enshrining housing as a constitutional right would empower voters to hold elected officials accountable for meeting the housing needs of residents, ensuring that housing production aligns more closely with those needs.

The recommendations outlined above represent just a fraction of the strategies local advocates are leveraging to address the region’s housing crisis. In this accompanying piece, we showcase the diverse array of housing justice programs and initiatives being led by the organizations of the Equity Campaign Leaders. Our community partners illustrate that achieving housing justice demands a multifaceted approach, encompassing everything from increasing housing supply and advocating for equitable policies to providing support for families navigating the rental market.

Acknowledgments

We are profoundly grateful for the invaluable guidance and insights provided by many individuals and advisors throughout this research.

We extend our heartfelt thanks to the members of our Equity Campaign Leaders advisory committee and their colleagues for their contributions, including Nikki Beasley of Richmond Neighborhood Housing Services, Tracey Breiger of Jobs with Justice San Francisco, Omar Carrera and Aaron Burnett of Canal Alliance, Suzie Dershowitz and Sam Tepperman-Gelfant of Public Advocates, Stasia Hansen and Vanessa Riles of the East Bay Alliance for a Sustainable Economy, Mariana Moore of Ensuring Opportunity, Megan Nguyen of East Bay Housing Organizations, Chris Schildt of Urban Habitat, Anya Svanoe of the Alliance of Californians for Community Empowerment Institute, and Elaine Yee of the Mission Economic Development Agency.

We also express our sincere appreciation to Tina Grandinetti, Tram Hoang, Rasheedah Phillips, Jasmine Rangel, and Nina Rosenblatt from the housing team at PolicyLink, who provided essential feedback and framing for the policy recommendations included in this analysis. Furthermore, we are thankful to Jennifer Tran and Gabriel Charles Tyler at PolicyLink for their meticulous editing and thoughtful contributions. Your collective efforts have been instrumental in shaping this research.

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