In Sonoma County, building a single affordable apartment can now cost more than $700,000, an ever-escalating price that makes it even more difficult to alleviate the region’s chronic housing shortage.
A series of development challenges are driving up that record amount, from rising land and material costs during the pandemic to a lengthy local approval process for many projects.
“With construction costs escalating, I suspect we have to be prepared for those numbers (per unit) to increase,” said Efren Carrillo, vice president of residential development for Burbank Housing, the largest housing developer. county affordable. .
Costs are even higher in large metropolitan areas, more than $1 million per unit for half a dozen apartment projects in San Francisco, Concord, Oakland and San Jose, the Los Angeles Times reported in June.
Affordable developers like Burbank reserve units for low- and middle-income residents at below-market rates and typically rely on government subsidies to make projects financially viable. Market-rate developers, meanwhile, sometimes also include a percentage of limited-cost units in their projects, often in exchange for zoning concessions or in lieu of paying fees for new affordable housing. In most cases, the cost of living in housing deemed “affordable” is capped at 30% of household income.
Even before the pandemic sent housing rents and prices skyrocketing, half of renters and nearly a third of landlords in Sonoma County were spending more than 30% of their income on housing, leaving less than money for necessary expenses and making them “cost-burdened,” according to researchers with Bay Area Stock Atlas.
If policymakers and developers fail to find ways to encourage the construction of more affordable housing in the face of rising development costs and scarce public funding, thousands of local residents are likely to continue paying too much for housing. housing and will be stuck on years of waiting lists for the few homes they can comfortably afford.
“The housing affordability crisis is undermining the California dream for families across the state and threatening our long-term growth and prosperity,” Gov. Gavin Newsom said last year in a statement outlining a new program. funding for affordable housing.
Exorbitant costs of materials, land and labor
In 2019, the average cost to build an affordable housing unit in Sonoma County was just under $500,000, according to a analysis by the Bay Area Economic Institute. But as the pandemic has continued to upend the global economy, that cost per unit today can reach between $650,000 and $750,000, according to Burbank Housing’s Carrillo.
One of the main reasons for the increase, Carrillo said, is soaring building material prices due to supply chain issues and other inflationary pressures. For a Burbank project, 3575 Mendocino Avenue in Santa Rosa, this sent the estimated price for the second phase of construction on the 162-unit project up to $737,000 per unit.
“It’s forcing developers to scramble to fill those funding gaps,” Carrillo said.
The limited land available in Sonoma County, which has doubled in value over the past decade and has only become more expensive amid the pandemic housing boom, presenting another underlying challenge to building affordable housing.
In order to free up more land for development, local jurisdictions are increasingly looking to use public property for affordable housing. In western Santa Rosa, construction is underway on a proposed redevelopment of an abandoned county government complex on College Avenue in 164 public housing apartments.
A state law passed in 2019 also requires government agencies to identify underutilized public land for affordable housing. But the state has made slow progress offering its own surplus properties for development, according to a state auditor. report.
Another challenge for building affordable homes is the cost of labor, which has increased due to a shortage of construction workers. Unlike market-rate developers, many affordable developers are required to pay workers higher union-scale wages to receive state and federal subsidies, further increasing construction expenses. Proponents of such “current salaryThe rules state that the pay rise is essential to support an essential workforce.
In response to exorbitant construction costs, some developers have begun turning to pre-engineered “modular” construction companies that assemble units offsite. Modular projects, such as a supportive housing site for the homeless in Rohnert Park, can save up to 20% of total project costs by reducing construction times and using materials more efficiently , according to a report by McKinsey and Company.