Cities in Santa Clara County have approved hundreds of new homes, but construction hasn’t kept up, a data analysis by San José Spotlight shows.
There’s about 37% more housing being permitted than built, and even less affordable housing, based on a countywide six-year average. Experts say rising costs and scarce resources are delaying construction, and permit numbers are being inflated by companies who don’t plan to break ground at all.
Based on state housing goals, Santa Clara 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 2024, the area median income for a family of four in the county was $184,300.
Most municipalities are far off pace from meeting their state housing goals, and construction can’t keep up with local need.
Alison Cingolani, director of policy at SV@Home, said there’s usually a lag time of about two years between when a project is permitted and when it’s constructed. Based on that timeline, the spike of 9,182 homes permitted in 2022 should have been constructed last year — but Cingolani said that’s not the case, citing rising construction costs. Pandemic-era supply chain disruptions and labor shortages have driven building costs for housing higher, and the threat of tariffs on building materials such as steel and lumber are causing more fiscal uncertainty.
“Development needs certainty to be able to plan, because these plans are running four, five, six years into the future,” Cingolani told San José Spotlight. “When there is uncertainty, it’s likely to create kind of a bubble which moves through the system.”
Affordable housing is even harder to budget, since most affordable housing projects rely on tax credits and other subsidies. About 70% fewer affordable housing projects were constructed than were permitted based on the six-year countywide average, and that rate might get lower as funding gets tighter.
California is considering a $10 billion affordable housing bond for the 2026 ballot, but Cingolani said those resources would still be stretched thin across the state, meaning less for the Silicon Valley area compared to a regional bond.
Julie Mahowald, chief financial officer for the Housing Trust Silicon Valley, said available resources are dwindling as the county’s Measure A dollars have been disbursed and developers increasingly turn to the state for funding. The housing trust helps finance affordable housing projects by providing flexible loans designed to plug those small funding gaps.
She said ever since the COVID-19 pandemic, the housing trust has heard from developers how their construction prices or loan interest rates are going up after projects are permitted.
If federal tariffs, interest rates and other financial indicators continue to be unstable, Mahowald said there will likely be fewer developers applying for permits as they lose confidence in financing.
“We’re already seeing developers rethink how much they’re going to take on because of the reduced resources,” Mahowald told San José Spotlight.
Land use consultant Bob Staedler said on top of delays, there are developers who get projects permitted without the intent to build them. Staedler said these “flippers” maximize the land’s value and then sell it off after receiving permits. Once resold, the new builder usually has to re-design the project.
Catalyze SV Executive Director Alex Shoor said “flippers” waste government time and resources on projects not intended to move forward. He said these projects also hurt communities, which become confused and disengaged when a development gets permits but doesn’t actually begin construction.
“It’s just a real problem because community wants to work — as well as we do — on things that are actually going to happen,” Shoor told San José Spotlight.
Staedler suggested local governments could apply fee reductions at the construction stage rather than permitting. If a developer pulls out of a project after it gets approved, he said they could be made to repay previous permitting fee reductions.
“You just have to incentivize the actual builder,” Staedler told San José Spotlight. “That’s the key thing, there’s a lot of profit-taking that people do that takes a lot of the basis out for the builder.”
Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X.
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