Santa Clara County cities are failing to hit housing goals

Nearly all the cities in Santa Clara County — including San Jose — are moving so slow in meeting state housing goals that hitting the numbers looks like a pipe dream, a data analysis by San José Spotlight shows.

Every eight years, the state decides how many homes need to be built in order to keep up with population growth. That amount is divided across regions, counties and cities. The majority of cities in the county have grappled with meeting their housing goals and industry experts say they’ll continue to struggle, especially with affordable housing.

The county needs 128,773 new homes by 2031 across all its cities, 72,848 of which must be affordable, or below 120% of the area median income. In 2023, the area median income for a family of four in Santa Clara County was $181,300.

For the county to meet state housing goals, it would need to facilitate building about 16,09 homes every year, 9,106 of which must be affordable. But for the past five years the county wasn’t even close.

San José Spotlight compared housing progress data from 2018 to 2022 published by the state’s Department of Housing and Community Development to the county’s goals for the 2023-31 cycle, along with each city’s goal, which is established by the Association of Bay Area Governments.

Of all 15 cities in the county, only three have gotten close to the pace needed to achieve their 2031 housing goals: Gilroy, Monte Sereno and Morgan Hill. But none have come close to their affordable housing goals.

To meet its state-mandated housing goals, San Jose — the county’s largest city — would need to build 7,775 homes every year until 2031. In the past five years, the most the city gained in one year was 1,710. In January, the state approved the city’s housing plans covering the next eight years, with an outline of how the city hopes to add 62,200 homes by the deadline.

Most cities’ housing gains are well below the average. Santa Clara saw its peak housing production in 2020, when it added 1,432 homes to its stock, close to the 1,454 pace needed to meet its overall goal of 11,632 by 2031.

Other cities, like Cupertino, Palo Alto and Saratoga, have had years where no housing was built at all. Of the county’s 15 cities, nine have their housing plans approved. Cupertino, Los Gatos, Monte Sereno, Palo Alto, Santa Clara and Saratoga have yet to get state approval. The county’s housing plans have also not been approved yet.

Land use consultant Erik Schoennauer said it’s integral for cities to keep up a steady pace of housing development. If a city falls short in the first few years of a new housing cycle, the city has to make up that deficit in future years, which is difficult.

“You gotta create the environment so that the private market will build housing at a pace that achieves the goals,” Schoennauer told San José Spotlight.

Schoennauer said the largest barrier to building more housing is cost. Unfortunately, city governments are limited in what they can do. Streamlined processes and setting aside more land for housing are two major parts, he said, adding that the time it takes to build housing makes the cost of building more expensive.

Developers are also looking for a city’s process to be predictable, according to land use consultant Bob Staedler. He said cities need to put more resources into supporting the development process to meet the state’s goals.

“There hasn’t been a concerted effort to make housing a priority and to move heaven and earth to make it a reality,” Staedler told San José Spotlight.

Cost and process issues are compounded with affordable housing, Schoennauer said, and federal, state and local governments should do more to subsidize development.

“It’s mind-boggling that California, the fifth largest economy on the face of the earth, cannot set aside enough funding for affordable housing,” he said. “The No. 1 economy on the face of the earth and the number of dollars that go into the production of affordable housing is peanuts.”

Santa Clara County would need 9,106 new affordable homes each year to meet the 2031 goal, but in previous years, it has barely constructed more than 1,000 per year. San Jose would need 4,311 new affordable homes annually to meet its 2031 goals. The most it’s gained in the past five years was 259, in 2020.

For Sandy Perry, vice president of the board of the South Bay Community Land Trust, that’s unacceptable.

“Market rate housing doesn’t do anything to solve our affordability crisis,” Perry told San José Spotlight.

San Jose gains an average of less than one affordable home per 1,000 residents, based on housing and population data from 2018, 2020 and 2022. In those years, Morgan Hill had the fastest average, gaining about seven affordable homes per 1,000 residents.

Perry said affordable housing is what county residents actually need, and many cities don’t do enough to facilitate building it.

For example, he pointed to San Jose Mayor Matt Mahan’s March budget message, where Mahan suggested the city could explore pausing the city’s inclusionary housing rules, which mandate that new or renovated multi-family homes be 15% affordable housing. Perry said regulations like that are critical.

“So producing new housing depends on the rents rising, but that doesn’t help the people of San Jose,” Perry said. “The people of San Jose want affordable housing.”

Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X, formerly known as Twitter.