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Nowhere to live

A housing crisis is clamping down on middle-income workers—teachers like Renata Sanchez—in prosperous California

Nowhere to live

Renata Sanchez (Gary Fong/Genesis)

Part one of a series on California’s housing woes

Renata Sanchez didn’t plan to be a teacher. When Sanchez signed up for Teach For America after graduating from Stanford, the plan wasn’t to remain teaching but to save money for law school.

Sanchez didn’t make it to law school. Instead, she fell in love with teaching. Her first day at an elementary school in downtown San Jose, she looked at the students and saw herself in them. Like her, they had first-generation immigrant parents who worked long hours—mostly as gardeners, harvesters, and housekeepers—to provide a better life for their children. College opened a world of opportunities for her, and she wanted that for her students, too. So after the teaching program ended, Sanchez kept teaching. She knew she would never become rich on a teacher’s salary—but earning a middle-class income while doing what she loves? That didn’t sound too bad.

Today Sanchez is in her 12th year working for the San Jose Unified School District (SJUSD). She’s 33 years old, has two master’s degrees, and currently makes about $80,000 a year as an instructional coach for the Allen at Steinbeck Elementary School—yet she can’t even afford to rent a studio apartment by herself in her own district.

Here’s a sense of how bad housing affordability has become in San Jose, the heart of Silicon Valley: In 2007, Sanchez paid $750 a month to share a two-bedroom duplex in Santa Clara, a city near San Jose, with a law student. Now she pays $1,900 a month to share a small two-bedroom apartment in north San Jose with a college friend. That’s more than double what she used to pay, and the duplex was much nicer: “It’s just crazy. It feels like it all happened overnight.”

Sanchez knows she should consider herself fortunate—she has met teachers who make daily four-hour commutes or crash at their parents’ home or somebody’s backyard or couch or in their cars. She knows teachers who got kicked out of their home after a sudden rent hike in the middle of a busy school semester. But she also wonders why, as a graduate of an elite university earning decent pay, she still can’t afford to rent her own pad in the city where she works, let alone buy a house one day. Sanchez has had 11 different roommates in five different houses over the last 11 years. As she watches the best teachers leave her school in search of cheaper housing, she wonders when her time to leave will come.

California’s housing crisis is hurting not just the poor but also median-wage workers like Sanchez. While 130,000 homeless Californians sleep in shelters or the streets every night, millions more people suffer constant stress about their housing situations. The housing crisis has severe economic and social repercussions for the state: The middle class languishes, the level of poverty deepens, and droves of young people with talent leave for more affordable states such as Nevada, Oregon, and Texas. It’s provoking social unrest, shaking an economy that’s the fifth largest in the world, and creating a feudalistic society in a state that claims to champion progressive values.

Gary Fong/Genesis

Renata Sanchez (Gary Fong/Genesis)

TO GET A SENSE of how the housing crisis affects Californians, I had coffee with teachers in San Jose, where even well-paid Google and Apple engineers have trouble finding housing. I visited agricultural farms and nonprofits in the Salinas Valley, an agricultural Central Coast community that’s losing much-needed farmworkers due to exorbitant rents and poor living conditions. I also attended neighborhood council meetings in Venice, a beach town that’s both one of the most expensive neighborhoods in Los Angeles and a prime homeless destination.

What I found is a warning tale for the rest of the country: California is an extreme case, but other booming metros such as Seattle, New York, Denver, Indianapolis, Boston, and Atlanta are also facing “crisis level” housing shortages, according to Zillow.

Sanchez has been on a Zillow rabbit trail lately, which happens whenever she’s stressed out about rent. She browsed around neighborhoods in other parts of the state, sighing, “Oh man, I could afford something so much better elsewhere.” Such is the housing situation in San Jose that a fire-gutted house—a useless wreck of charred roof, burned-out walls, and weeds—recently hit the market for $800,000.

‘It’s just crazy.’—Sanchez

That’s because the house is located close to a neighborhood destined to be the next Googleville, escalating its raw property value. And herein lies a classic Silicon Valley conundrum: Google will soon build a million-square-foot office complex in downtown San Jose that could bring up to 20,000 new jobs into the area—a boost to local businesses and city coffers, but where would those new residents live when there’s barely enough housing for current residents?

“I think about moving away all the time,” Sanchez said with a laugh that died off as she considered the reality of that situation. San Jose has been her home for 15 years. All her friends are here. Moving would mean teaching at a district that pays less or finding a new job. She worries constantly about the future: Forty-five percent of her paycheck goes to rent, she’s still paying off her student loans, she doesn’t have any savings, and her 2002 Toyota Avalon is about to fall apart. “I don’t know how much longer I can keep going.” 

Dai Sugano/Bay Area News Group/TNS/Newscom

Sarah Chaffin advocates for teacher housing in Silicon Valley (Dai Sugano/Bay Area News Group/TNS/Newscom)

OVER THE LAST TWO YEARS, a new idea has been floating around various parts of the nation: Since teachers are struggling to live in the communities they serve, why not provide affordable housing for them? 

In May 2017, Sarah Chaffin approached the San Jose City Hall with that idea: She offered to build eight to 16 apartment units—all earmarked for local teachers—on a private lot she had bought years ago in San Jose. The idea: Teachers would pay $2,000 a month for a two-bedroom apartment (each tenant pays $1,000), and they would be required to put $1,000 into a savings account for a down payment for a house. When someone saved enough for a down payment, he or she would move out and another teacher would move in. Chaffin plans to launch similar projects for other people in the “Missing Middle” such as firefighters, police officers, and nurses.

Chaffin has little experience in teaching or politics, but she’s well-versed in real estate and finances as a mortgage adviser living in Los Gatos, a residential town southwest of San Jose. Chaffin first became concerned over rising housing prices about three years ago when she found out that the mother of her daughter’s friend, who was making over $100,000 a year working for a tech company, couldn’t afford the down payment for a condo. Instead, she was paying $3,500 a month in rent, which is the median rent price in San Jose. Then one year, five teachers left Chaffin’s daughter’s school. Chaffin asked the principal why, and the principal said they moved out of the area because of housing costs.

That seemed “absurd” to Chaffin. So she did some research, and she found that the low-income housing tax credit program only serves people who make less than $55,000 in the Bay Area. Meanwhile, 88 percent of new housing built in the Silicon Valley is luxury-style for high-income households, and 10 percent is government-funded for low-income and very low-income households. Only about 2 percent of new housing caters to median earners, who make too much to qualify for housing subsidies yet not enough to buy a house.

When a nonprofit housing developer suggested to Chaffin that she come up with a housing model that doesn’t involve government intervention, she ran with it.

By the time Chaffin presented her proposal to the City Council, she had already done all the work—she had the land, her own funds, a financing model, and innovative technology that would slash construction cost by 20 percent. Her project doesn’t involve government intervention or public money—all she needed from the city was its blessing.

But she missed one necessity: political will. The council members said no to her proposal. Chaffin’s land is zoned for commercial use, they said, and the city needs more jobs. So they refused to change the zoning laws for Chaffin’s project. What they left unsaid is that commercial units bring in more tax dollars than residential units. Chaffin was flabbergasted. She stewed and tossed in bed for days until her then-8-year-old daughter rustled her awake: “Mommy, don’t let them defeat you. You have to move forward with teacher housing.”

Since then, Chaffin founded Support Teacher Housing, a nonprofit that advocates for teacher housing in Silicon Valley. To raise awareness about the issue, she organized town halls and invited the school board members and elected officials to hear the real-life struggles of teachers in their district. Soon after, Los Gatos gave her a piece of underutilized public land to build four housing units so she can test her teacher housing model. She estimates it’ll cost less than $250,000 to build each unit (typically, one unit costs $350,000), and she’s mobilizing private companies to sponsor it to avoid relying on government money. Her plan also inspired Santa Clara County Supervisor Joe Simitian to spearhead a proposal to construct 60 to 120 affordable teacher housing units on a vacant plot of land in Palo Alto.

Rich Pedroncelli/AP

Ellen Tara James-Penney, a lecturer at San Jose State University, was homeless in this 2017 photo. She stayed the night inside her station wagon in the parking lot of Grace Baptist Church in San Jose, Calif. (Rich Pedroncelli/AP)

MEANWHILE, SJUSD ALSO GAINED an incentive to create teacher housing. For years, SJUSD had been losing 200 of its teachers every year, mainly due to housing costs. The district’s budget is limited—82 percent already goes to salaries—so the district is unable to simply raise pay. But if this drain of teachers continues, “there won’t be classroom teachers in San Jose Unified,” warned SJUSD Deputy Superintendent Stephen McMahon, pointing out that the anticipated Google development in downtown San Jose will further drive up housing costs. They need to act—fast.

Last October, SJUSD revealed a proposal to turn nine district-owned properties into new units of affordable housing for its teachers and employees. Officials identified eight schools with old buildings and declining enrollment and suggested bulldozing them and building hundreds of new housing units in their place. The schools would move to another location. Two of those schools, Leland High and Bret Harte Middle, are highly rated schools built in the 1960s in Almaden Valley, a wealthy residential neighborhood in south San Jose—and neighbors roared their displeasure over SJUSD’s proposal.

At the next district meeting, enough alarmed parents, students, and community members from Almaden Valley packed the room that some got locked out. The residents voiced concerns about increased taxes, traffic congestion, construction, their kids’ ability to walk to school, and decreased property values. Most had only just heard about the district’s plan a few days before. The residents felt left out of the decision process, and rumors spread across social media that SJUSD would shut down their schools. Nobody really knew what was going on.

What happened with SJUSD is a classic example of why California’s housing crisis is worsening: Jobs are increasing, but the number of housing units is stagnant. Wage increases are not keeping up with housing cost increases. Many cities are happy to vote for jobs, but not houses. And when officials finally decide to build more housing, they botch it—their typical idea for funding housing projects is to increase taxes or borrow money through bonds, and they fail to engage the community during the planning process. When community members find out about the plan, it comes as a shock. They then push back, fueled by misinformation, stereotypes, and fears, and in the face of such community opposition, city officials back down.

That’s what the residents of Almaden Valley are ready to make happen. Buford Barr, a 75-year-old retired marketer and longtime Almaden Valley resident, told me they’re ready to “fight that to death.” An online petition named “Save Leland and Bret Harte” gained more than 6,450 signatures. Like many others, Barr worried that the district would build high-rise complexes, thus changing the quiet, residential atmosphere of his neighborhood: “It certainly scares me to death. … Huge, huge communities would not fit into Almaden Valley. Look, I’m not trying to hide it—this is an affluent area. This is a very affluent part of the world that shouldn’t be punished because others have unfortunate lives.” Instead, Barr suggested the district should pay their employees more: “We want to support our teachers. This is just not the way to do it.”

Barr bought his house in 1985, just half a mile from Leland High. He saw his two children and two grandsons graduate from that school. Now that school could be demolished to make way for affordable housing, and he worries it would be “a horrific change to my way of life. It’s just going to change everything and make it difficult to enjoy living in Almaden Valley. That may sound superficial, but that’s what life is all about, isn’t it—happiness?”

But for teachers like Sanchez who were also present at that October meeting, the opposition felt more like discrimination. An older couple who sat behind her leaned forward and said to her, “You know the housing isn’t just for teachers, right? It’s for all employees.” As Sanchez sat at the meeting listening to neighbors shout and yell at school district officials, she felt hurt: “It’s like we’re good enough to teach your kids, but we’re not good enough to be your neighbors. … That’s something I will remember forever, that that’s what these people feel about us, even though we work with their kids.”

For now, Sanchez sometimes daydreams of going to law school as she originally planned, but she says she doesn’t regret being a teacher: “I’m going to keep teaching as long as I can. If it gets to a point where I can’t do it anymore, I may have to look at something else, but I hope that day never happens.”

Marcio Jose Sanchez/AP

New home construction in Roseville, Calif. (Marcio Jose Sanchez/AP)


Building blockades

Why is housing so crazy expensive in California? It’s about supply and demand, but also government actions that restrict supply. According to a study between 2000 and 2015, out of the 23 states that underproduced homes, California had the biggest shortage: It created 3.4 million fewer homes than needed to keep up with demand and population growth. The vast majority of this housing shortage exists in coastal cities such as Los Angeles, San Francisco, and San Diego.

Housing affordability is a problem in cities all across the nation, but the crisis is a lot worse in the Golden State due to factors unique to California:

3 Geography: California’s coastal and mountainous geography means less suitable land for development.

3 Zoning: The local finance structure incentivizes cities and counties to restrict residential and high-density development by using zoning laws and stringent approval processes. Each anti-growth policy adds about 3 to 5 percent more to housing costs. Some state legislators are trying to force underperforming cities to approve more housing with affordable units in areas already zoned for high-density development, but expect strong pushback from local communities. 

3 Fees and costs: Local governments enact higher government fees on development than other states. The average development fee amounts to over $22,000 per single-family home in California compared to $6,000 per single-family home in other states. Costs for construction labor and building materials are also much higher in California. Altogether, it costs about $50,000 to $75,000 more to build an average single-family home in California’s metros than outside of California.

3 Environmental policies: California’s aggressive climate change policies add about $150,000 per unit to development costs and many, many more months of wait time for approval. One such policy is the California Environmental Quality Act (CEQA), a 1970 statute signed by then-Gov. Ronald Reagan that requires all state and local agencies to study and mitigate the environmental impact of any project should there be such concerns. CEQA forces projects to undergo onerous, time-consuming reviews to test for environmental effects involving such things as traffic, air and water quality, endangered species, and historical site preservation.

CEQA is also the one avenue through which the public can weigh in on local land use decisions. Anyone can file a CEQA lawsuit, even if the complaints are minor, and they can do so anonymously—and many use it. Recently, an attorney filed a CEQA lawsuit against an affordable-housing project on a vacant lot in Redwood City, claiming the new 20-unit building could increase traffic and block the view from his home’s back windows. That lawsuit has cost the nonprofit developer both money and time. (A Legislative Analyst’s Office report found that local agencies took an average of about 2½ years to approve housing projects that required an environmental impact report.)

Meanwhile, a new bill requires the state to meet a “zero emission” goal by 2045. That policy is estimated to tack on an extra $25,000 to building costs.

3 Local opposition: Developers tell me local resistance to housing—or NIMBYism, short for “Not In My Backyard”—is their greatest challenge. Local communities that fear change use whatever political clout and resources they have to clamp down on new housing developments, such as voting out elected officials and misusing CEQA. Such opposition lengthens the review period or prevents a project’s approval, which increases housing costs and discourages developers from building in that area in the future. —S.L.

Sophia Lee

Sophia Lee

Sophia is a senior reporter for WORLD Magazine based in Los Angeles. Follow Sophia on Twitter @SophiaLeeHyun.

Comments

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  • John R wine
    Posted: Fri, 01/18/2019 11:50 am

    How does less than $24,000 for rent equal to 45% of an $80,000 salary? Were you referring to after taxes income?

  • Big Jim
    Posted: Mon, 01/21/2019 03:04 pm

    I was wondering the same thing. $22,800 per year in rent = 29% of gross annual wages. That is not out of line with conventional norms. Most landlords will accept an income of 25% to 30% of gross wages to qualify to rent a place. So things don't seem out of range here.

  • news2me
    Posted: Fri, 01/18/2019 03:13 pm

    If a teacher in Calif. is making $80,000 and can't afford to live in a 2-bed $1800/mo. apt. when sharing that apt. Just think about a person who is now living on Social Security and only getting $1000/mo. minus $130 for medicare. Where are they living? 

    This is very scarey! 

  • news2me
    Posted: Fri, 01/18/2019 03:19 pm

    When you build high rise apartments you aren't just getting new neighbors that you will never meet, you are getting LOTS of traffic. 

    Maybe someone needs to make better plans like building a rent controlled high rise for teachers next to the school they will teach in. Then they can walk to work. 

  • HS
    Posted: Mon, 01/21/2019 06:33 am

    Thank you for that timely article. The term "affordable housing" can be a bit of a lightning rod, and it is poorly understood by the general public.

    I love that the article came out just now. I teach AP Microeconomics in a Florida high school. Several years ago a member of Urban Land Institute approached me to offer a simulation that deals with the challenges of revitalizing a decayed urban core. It costs them quite a bit ( I don't know how much), but they don't charge the school or the kids any money, and they are very generous with their time as well. All they want in return is that we take the issues seriously. The simulation, Urban Plan II, requires resolutions to the revitalization that include affordable housing. It's thrilling to witness kids speaking in a way that displays that they have a visceral understanding of some of the causes of housing shortages, and some of the solutions in affordable housing.

    So, thank you again. I'll be offering the article to my students to help them wrap their heads around the various aspects of the problems and some possile solutions.

    Peace on Earth,

    H.A. Smith

  • AB
    Posted: Mon, 01/21/2019 12:48 pm

    Back in the days of the titans of industry, a company would build housing for their workers and their families.  I live in Central Pessnsylvania where there are good examples of this.  We have Hershey, PA where the founder of Hershey Chocolate built the town for his employees and provided them with access to affordable housing and entertainment.  Milton Hershey himself lived in the town, not in some walled off compound like the modern technology industry titans do. Also close by is the town of Cornwall, PA where much of the iron ore for the American Reveloution was mined.  The miners were provided housing in the town and surrounding areas.  These were not some rickety shacks, but very well built solid stone homes that still stand and are used to this day ( the mines closed in the early 1970s).

    My point is that the modern titans of technology should be held accountable to do the same thing.  If they are bringing 20,000 new employees into town, they should have the moral courage to provide the opportunity for housing for these people. I'm not sure it should be a government mandate that they build housing, but at least they should be held publically accountable for taking care of their own employees.  The Google's and Facebooks should be building new housing to accomodate their expansion, which would free up other housing for the rest of the community and keep prices down in the housing markets.

    What was important to men like Milton Hershey was their faith, which motivated them to take care of those who worked for them.  This may be lacking with the current day "Silicon Valley" industry leaders.

     

  • Bob R
    Posted: Mon, 01/21/2019 02:40 pm

    The author seems surprised that this situation is “…provoking social unrest, shaking an economy that’s the fifth largest in the world, and creating a feudalistic society in a state that claims to champion progressive values.”  What could possibly be shocking about that?  Progressive values are at the very core of this problem!  If you examine the governments, (state and city) that are in financial ruin they are overwhelmingly “progressive”.  There are also numerous examples of financially ruined governments being restored to ecomomic stability when the voters were wise enough to elect fiscally conservative leaders.

    I must say, that the educational system itself (excepting the many decent, dedicated teachers) also bears much of the blame, for promoting decades of “progressive indoctrination” in lieu of true “education”.  Now that many of their former “students” are voters, the chickens are coming home to roost.

  • NBrooks
    Posted: Mon, 01/21/2019 06:48 pm

    Sophia, I just wanted to say thank you for your articles.  I learn when I read them.  I appreciate so much that you get into the middle of issues and present the complexities, giving the reader a new understanding.  So helpful and refreshing after the popular "journalism" of today which is often just propaganda from one viewpoint or another.

    Thanks, World Magazine for hiring people like Sophia Lee!

  • Lizzy's picture
    Lizzy
    Posted: Wed, 01/23/2019 05:05 pm

    Isn’t this how the road to socialism starts?  A sympathetic “victim” and people with no skin in the game willing to decide who of the others get to be winners and who losers.  When did we become a culture that decided some people have to give so that others don’t have to make hard choices?  I get that it can be hard to make those choices at times I live in Seattle where we face some of the same issues regarding housing.  But it isn’t limited to just teachers - middle income earners of all walks of life struggle to afford housing.  Once you start privileging one group, why will it stop there?  And who gets to decide?  The NIMBY response exists because too often people who won’t have to deal with the consequences propose development that will destroy the character or stability of a neighborhood because they want to help one group at the expense of a different group that they see as having too much privilege.

    BTW  if she is teaching the children of immigrants  - how are they able to afford housing in this district?

  • RRN
    Posted: Mon, 01/28/2019 12:43 pm

    Greed is a reason rents are astronomical. The mortgage on the house next door is $1200 but the owner charges $3000 because she can get it. Rent control, as someone suggested, is not good economics. It is the result of a broken government system that limits home construction.

    On another point, I would protest too if my closest high school closed. From the farthest reaches of the school boundaries, it's 9 miles to the next high school. There is no public transportation out there, the school district may not necessarily send a school bus, and some drivers don't believe bicycles belong on the road.