This is part 1 of a series of articles on affordable housing in Redwood City. Part 2 can be found here. Part 3 can be found here.

I consider myself very, very fortunate to own a house in Redwood City—or almost anywhere in the Bay Area, for that matter—given the price of housing here. At the time my wife and I bought our current house, we could only do it by following two oft-quoted rules for home buying: 1) buy the worst house on the block, and 2) stretch, and buy as much house as you can possibly afford on the assumption that future increases in salary will make the mortgage payment easier to live with. We did that, and ended up with a somewhat run-down house that we couldn’t afford to upgrade for a number of years after we bought it. We endured, though, and it paid off: we now have a cozy, comfortable house that is worth considerably more than we paid for it. But for a long time my little family of four was living in a tired, drafty little house, and on more than one occasion I wondered if we had done the right thing in moving to Redwood City.

I was extremely lucky: I was working in the tech industry and was relatively well paid. But I am very aware that many people—even some in the tech industry—are not as fortunate. As I walk around the city and watch housing development after housing development spring up as if by some tectonic force, I cannot help but worry that sheer quantity of housing units alone will not solve our housing problem. All of the housing projects I’m seeing appear to be high-end, and few have any units set aside for low-income folks. As well, job growth has outpaced housing development in San Mateo county. The Department of Housing has estimated that the county’s housing supply will only meet between one-third and one-half of demand by the year 2025, and further notes that 40% of the new jobs generated within the county will pay lower-income wages. This will only make our current housing situation worse than it already is.

Lately I have been reading the 2015-2023 Housing Element for the City of Redwood City [pdf], a fascinating document that takes a look at our community from a housing perspective. It is full of numbers and graphs, which, as you might expect, can be summed up as “too many people in Redwood City cannot afford housing (either rental or ownership), and the situation is only going to get worse.” The document helpfully lists Redwood City’s “Assisted Housing Inventory”: those places where a renter or homeowner can obtain help in paying the rent or paying the mortgage. To help bring home the reality of our affordable-housing issue, I resolved to walk to each of the places on the list. Little did I realize when I started assembling the list just how far I’d be walking…

Between the lengthy document and the long walks, I came to realize that this issue was bigger than a single blog post. Thus, I’m going to use the remainder of this post to highlight the financial issues: what people earn, and what housing costs. Later posts will cover what affordable housing exists within Redwood City, from where assistance may be obtained, and what the city is doing to help ameliorate the problem.

So. Just what do people earn? Well, according to the Housing Element, Redwood City’s median household income in the year 2013 was $82,000. On the surface that sounds good, but that’s just a median figure: if each household’s income figure in the city was listed in order from lowest to highest, this would be the one in the middle. So half of the households in Redwood City make less than this (and half make more, of course).

Next, consider that the State Department of Housing and Community Development classifies income into five categories: “extremely low-income”, “very low-income”, “low-income”, “moderate-income”, and “above moderate-income”. Moderate-income households earn between 81 and 120% of the median figure. But if you are in one of the three low-income categories you earn 80% or less (in some cases, much less!) of the median. Do the math, and you’ll see that low-income households in Redwood City bring in $65,600 or less each year. And how many of us fall into that category? A whopping 46%, according to data collected between 2006 and 2010. Yes, almost half of the households in Redwood City are considered low-income, and bring in less than $65,600 per year. Which might not sound so bad if you lived elsewhere in the country. But now we need to consider the other side of the equation: the cost of housing.

Redwood City has about 29,500 housing units (as of 2013; this doesn’t count all of the residential buildings that have been springing up lately). Just about half (48%) are single-family detached homes; the rest are condos and apartments. Owners and renters are pretty evenly split: as of 2011 53% of our households owned their own homes, while 47% rented. Oh, and as long as I’m throwing figures around, I should mention that the total population of Redwood City in 2013 was estimated to be about 79,000 people (just about all of whom are living in the aforementioned 29,500 housing units).

Now on to costs. Apparently, in the third quarter of 2013 the median price for a single-family home in Redwood City was just about $950,000. The median price of a condominium was about $590,000. As for rentals, in 2013 the monthly price of a typical apartment in a complex with more than 50 units was as follows:

• Studio: $1,100
• One-bedroom: $1,900
• Two-bedroom: $2,200
• Three-bedroom: $3,800

The generally-accepted rule-of-thumb states that you should spend no more than 30% of your gross income on housing. So let’s look at how this plays out for a low-income household. If you were right on the border between low and moderate income, you’d be making $65,600 per year. Take 30% of that and divide it by 12, and you get  $1,640 per month. Looking at the rental prices, above, you can see that such a person could afford a studio apartment, but no more. Could they buy something? Not hardly. The Housing Element has a table that shows how much buying power such a person has, and it indicates that someone right on the line between low and moderate income could afford a home worth roughly $260,000. Which is less than half the median price of a Redwood City condominium.

If that wasn’t bad enough, I need to point out that the income figures are not per individual—they are per household. If you are a single person earning that $65,600 figure you at least could afford, and might be somewhat comfortable in, a studio. But what if you have a spouse and perhaps a child or two, and that figure represents your total household income? You can still afford that studio apartment, but how comfortable are you going to be, really? Finally, since nearly half of Redwood City households are below the median income line, they earn less than that mythical $65,600 figure and are thus going to be even more challenged.

Looking at it the other way, just how much does it cost to afford an apartment? I’ve done the math for you. Given the monthly prices quoted above, you would need to earn the following each year to be able to comfortably afford these average apartments:

• Studio: $44,000
• One-bedroom: $76,000
• Two-bedroom: $88,000
• Three-bedroom: $152,000

Since the monthly rents I listed are an average, there are cheaper apartments to be had, although the quality of the apartment likely goes down with the reduction in rent. So what do people do? Well, some probably ignore the “30% rule” and spend a higher percentage of their income on housing. But this means that they have less money left over to pay for food, utilities, clothing, health care, and such. Others might move in with friends and family, and split the cost of housing. This makes a great deal of financial sense, but of course depending upon the situation and the number of people living together things can get uncomfortable. Finally, they could look for subsidized housing: housing units that are provided at lower cost to folks with a demonstrated need. As I will go into in my next post, however, there is only so much of this type of housing to go around, so while this is a great solution for some, it only puts a small dent in the overall problem.

I want to close this post by again mentioning Redwood City’s Housing Element [pdf]. This document is full of details and is well worth reading if you are truly interested in getting more background on this subject. It is my source for the numbers I quoted above, and is also where I obtained the list of assisted housing units that I will explore in my next post. It also provides some guidance for our city leaders when they are making decisions regarding housing that can help lower-income folks. I plan to look at this guidance, along with other factors that will affect our housing situation, in yet another post.