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Housing Constraints Draft Housing Element 3-1 3 Housing Constraints Constraints to providing adequate housing for all income levels are caused by many factors, including the housing market and cost of construction, governmental controls, availability of infrastructure, and environmental considerations. These constraints may increase the cost of housing or render residential construction physically or economically infeasible for developers. According to Government Code 65583, local governments are required to analyze governmental and non-governmental constraints to the production, maintenance, and improvement of housing for persons of all income levels and those with special needs and, where appropriate and legally possible, remove governmental constraints to the maintenance, improvement, and development of housing as part of housing elements updates.1 Where constraints to housing production due to the City’s regulations are identified, appropriate policies and actions to mitigate these constraints are included in the Housing Element. Local governments must also demonstrate in their constraints analysis local efforts to remove barriers to achieving regional goals for housing production and housing for persons with special needs. 3.1 Non-governmental Constraints The regional housing market affects several aspects of housing costs. For example, land value, cost of construction materials, and labor costs contribute to the cost of housing and can hinder the production of affordable housing. Additionally, the availability of financing can limit development or access to homeownership for some households. The following section is an in-depth analysis of market constraints. 3.1.1 Housing Market and Affordability Market forces on the economy and the subsequent effects on the construction industry may act as a barrier to housing production, supply, and affordability.2 As described in the Housing Needs Assessment, the median home value in 2022 in San Leandro was $1,000,000, which reflects a 62 percent increase over the City’s 2015 median home value (adjusted for inflation). San Leandro’s median home values rose at a faster rate than for Alameda County as a whole, which rose 52 percent from 2015, and was the second-highest increase among surrounding East Bay cities.3 San Leandro renters generally pay less in rent than other areas of the county (except for the City of Oakland). For developers, when considering a new construction project, this translates into less rental proceeds once a building is leased-up. This further translates into the inability of the rented property to support the debt that was needed to construct it. This reduces the potential profit margin of rental developments compared to neighboring cities when hard costs, such as construction and materials, are not dependent on project location. 1 State of California. 2021. California Legislative Information. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV&sectionNum=65583. Accessed October 29, 2021 2 National Association of Home Builders.2021. Material Cost Affect Housing Affordability. https://www.nahb.org/advocacy/top- priorities/material-costs. Accessed October 27, 2021. 3 Redfin.2022. https://www.redfin.com/city/17447/CA/San-Leandro. Accessed June, 2022