Why A Housing Shortage Hurts Everyone

Palo Alto is facing an extraordinary housing shortage that has driven rents and home prices to new heights.  The median home in Palo Alto costs $2 million, and Palo Alto now has the highest median rent of any city in the United States. Under the current combination of restrained construction and a booming economy, these trends are likely to push rents and home prices even higher, pricing out new and current residents alike.

If you care about the high cost of housing in Palo Alto, please sign this petition today and ask City Council to address the housing crisis.

In fact, the entire Bay Area is experiencing a decades long housing shortage. As a region, our population is growing, but our housing supply is failing to keep up.


What happens in a market where a housing shortage drives up prices? Take a look:



Over time, a housing shortage changes the demographics of a city; it slowly becomes a city for the extremely wealthy and a select few poor people who literally win below-market-rate unit lotteries. It loses its middle class and also becomes older as current homeowners age while younger residents cannot afford to buy.

A low-end home in Palo Alto today costs around $1.5 million.  That yields mortgage payments of about 40% of income for a couple making $250,000. Unless we provide lower cost options through increased density, smaller units, or a dramatic increase in supply, we are essentially saying that Palo Alto is only for people who make a lot of money. These high prices do not just lock out  newcomers of moderate incomes, they also push out the lower end of the 40% of current residents who rent.

A continued housing shortage will mean that our community will no longer have room for either the people who serve it - like policemen and nurses - or the people who make it interesting - artists, writers, people starting a new business in their garage. Nor will it have room for young families. Our retailers simply can’t pay their staff enough to keep up with skyrocketing housing costs. Unique and eclectic retailers as well as low-end restaurants are already closing up shop. Pushing the people who work in Palo Alto to find housing further away is also environmentally catastrophic because of the emissions that result from longer commutes, and because less population-dense areas have up to twice the average carbon footprint of more developed cities. For a city like Palo Alto, much of which is in a flood plain, a failure to build here will only hasten our own drowning.

If Palo Alto wants to remain a vibrant city, we need to add more housing. With our Comprehensive Plan being revised this year, we need to update our zoning codes to reflect the kind of city we want to be 15 years from now.

If you care about the high cost of housing in Palo Alto, please sign this petition today asking City Council to take immediate steps to address the housing crisis.  To learn more about how the housing crisis has been caused by city policies and what the city can do about it, check out our blog post Fix Palo Alto's Housing Crisis! 

This post is the first of a three part series. Read our follow-up posts on where we can add more housing in our city and on specific ways that we can permit more housing through better zoning!


get updates