4A Public Hearing 2014 1006 - Laserfiche WebLink

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WORKING DRAFT FOR HCD REVIEW NEEDS ASSESSMENT 3-18 SAN LEANDRO HOUSING ELEMENT  A single mother in San Leandro with an income of $36,800 a year would need to spend 58 percent of her income to live in a typical two-bedroom apartment or 46 percent of her income to live in a typical one-bedroom apartment.  A family of four (including two working parents and two school aged children) with a combined income of $60,000 a year would need to spend 46 percent of their income to rent a typical 3-bedroom, 2-bath house in San Leandro.  A senior citizen on a fixed income of $16,000 a year would need to spend 60 percent of his income to live in a typical studio apartment. Whereas income was increasing faster than rent between 2001 and 2010, the reverse has been true for the last four years. Until 2010, most market rate apartments in San Leandro would have been considered affordable to low income households (e.g., a household earning 80 percent of areawide median income), even without restrictions on rent. However, as of 2014, the median price two-bedroom unit would require a monthly income of about $75,000 to be considered “affordable.” While this is still within the range of affordability for “moderate” income households, it is no longer within reach for “low” income households without a cost burden. Rising rents have been especially challenging for those earning less than 50 percent of the area median income (very low and extremely low income households). A very low income household of two persons would be considered to be “overpaying” if they spent more than $920 a month on rent. Of the 65 units currently listed for rent on Craigslist, only two were less than $920. A very low income household of four persons would be considered to be overpaying if they spent more than $1,150 a month. There were only five advertised vacant units meeting this benchmark in August 2014, and all were one bedrooms or studios. For prospective homeowners, San Leandro continues to be a more affordable option than most cities in the region and is still more affordable than it was in 2006, but rapid inflation is increasing the cost burden for first-time buyers. In today’s market, most lower- income households could not afford the median- priced San Leandro home (roughly $450,000). Assuming a 10 percent downpayment, a 4.5 percent interest rate, and a 30-year term, the monthly payment on such a home would be $2,052. Once property taxes and homeowners insurance are added, the monthly payment increases to over $2,550. Such a payment would generally be considered “affordable” to a household with an annual income of $100,000 or more. This price point would make such housing affordable to some (but not all) moderate income households. Less expensive options for ownership, such as condominiums and cooperatives, may need to be emphasized for future first time buyers, particularly those in the $60,000-$100,000 income range.