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City of San Leandro 2023-2031 Housing Element Update 3-2 Housing affordability is also measured by the California Association of Realtors, which tracks housing affordability for first-time homebuyers. According to second-quarter results for 2020 (the latest available data), Alameda County’s median home price of $1,105,000 (which suggests a monthly payment of $5,310 including taxes and insurance) would require a qualifying household income of $159,300.4 According to the 2015-2019 American Community Survey, the household median income in San Leandro is $78,003; therefore, housing affordability is a significant constraint for San Leandro residents who would like to become homeowners if they are not already. The City will implement programs to support housing production affordable to households of all economic levels and support homeownership opportunities, as outlined in Chapter 6, Housing Plan. Construction Costs Construction costs depend on several factors, including the type of construction, custom versus tract development, cost of materials, site conditions, finishing details, amenities, size, and structural configuration. The International Code Council estimates the average price of labor and materials for typical Type V-A protected wood-frame housing, which is commonly used to construct newer apartment buildings where no visible wood is exposed. Estimates are based on “good-quality” construction, providing for materials and fixtures above the minimum required by state and local building codes. Since the 2008 recession, national construction costs for multi-family projects have risen by 25 percent, which can reduce the feasibility of housing projects.5 The International Code Council estimated in 2021 that the national average cost per square foot for good-quality housing was approximately $125 for multi-family housing, $139 for single-family homes, and $157 for residential care/assisted living facilities.6 The per-square-foot hard costs for constructing multifamily housing in California climbed 25 percent over the course of a decade, after adjusting for inflation.7 Cost increases have been most pronounced in the line-item categories for finishes and for wood, plastics, and composites. In a roundtable discussion hosted by the Alameda County Housing Collaborative on November 29, 2021, housing developers noted that uncertainty in construction costs are a challenge to develop housing. Wood is still the most cost-effective building material but cannot be used for construction beyond 85 feet pursuant to State law, which may pose challenges for development above six or seven stories.8 The Bay Area has consistently been an expensive area to construct housing, in part due to comparatively higher construction wages than elsewhere in California. In 2018, the average cost to construct multi-family housing in California and the Bay Area was $222 per square foot and $303, respectively. Materials and labor make up the hard costs of this construction. Several factors likely contribute to the rapid escalation of construction costs in the Bay Area. One contributing factor is that wages are higher in the region, reflecting higher costs of living. However, when adjusted for inflation using the local consumer price index (which considers the cost of living in the Bay Area by accounting for changes in gas, shelter, food, energy, and other consumer goods), wages in the 4 California Association of Realtors. 2021. Available: https://www.car.org/marketdata/data/countysalesactivity. Accessed October 25, 2021 5 Terner Center for Housing Innovation, The Hard Costs of Construction: Recent Trends in Labor and Materials Costs for Apartment Buildings in California. 2020. https://ternercenter.berkeley.edu/wp- content/uploads/2020/08/Hard_Construction_Costs_March_2020.pdf 6 International Code Council Building Valuation Data. 2021. Available: https://www.iccsafe.org/wp-content/uploads/BVD-BSJ-FEB21.pdf. Accessed October 26, 2021 7 Terner Center for Housing Innovation. 2020. The Hard Costs of Construction: Recent Trends in Labor and Materials Costs for Apartment Buildings in California. https://ternercenter.berkeley.edu/wp-content/uploads/pdfs/Hard_Construction_Costs_March_2020.pdf 8 Alameda County Housing Collaborative, 2021. Available at: https://drive.google.com/file/d/1XYrwZxd3Re0VFWGz119bj8uqS9VdUN4H/view