I support prioritizing more housing options for all income levels.

What a terrific post. I'm so glad you put this up Steve. The Weekly tried to falsely shape this as an issue of millennials v. seniors and in doing so tried to create a divide in our community that doesn't exist. More than half of the people who spoke on this issue were h older than millenials. It's a topic that you make clear is of serious consideration for everyone, not just millenials. It has to do with what sort of city we want to be in the future and the kind of people we want to attract. It's really a divide between those who want to dismantle the city's economy and turn it into Atherton, a place where a bunch of rich people live but there are no jobs and there's nothing to do, and people who want Palo Alto to remain a cradle for innovation, attracting bright, hard-working people and young families from far and wide to build amazing world-changing things. As you rightly point out, if we don't build more housing, we are de facto choosing the former rather than the latter. We are sadly already starting to see this. The 18-44 population in Palo Alto has already dropped from 43% of the to to 32% between 1980 and 2010. Web Link

Housing prices all over the Bay Area are extremely high. The only way to buy a home in Palo Alto is to first sell another home in the Bay Area (or have amazing stock options and/or wealthy, generous parents). However, rentals are another story. There are plenty of affordable rentals here, they just require having roommates.

Fact Check: a young family with kids needs at least a two bedroom apartment. The median rent for a 2 bedroom as of today is $3475. That's $41,700 a year in rent. Web Link To be considered affordable, it would have to constitute 30% of their income. 30% of after tax income means they need to make $139,000 AFTER tax, which means they'd roughly have to make more than $270,000 a year before tax (this can obviously differ depending on who is bringing in more money and various deductions, etc). That would place you in the 1% of richest Americans in the country. So, no, I would not say our rentals are "affordable." We have been either the most expensive or second most expensive housing market in the country for the last two years.

You're not suggesting that Palo Alto "quality of life" means that young families with kids should find strangers off of Craigslist to live on their couches, are you?

You've hit the nail on the head, Steve!

In addition to being problematic from a social justice perspective, our "pull up the ladder" policies contribute to make our community less interesting. In order to have a wide variety of restaurants, cafes, shops and services, we need a variety of people-- both to work in these places, and to provide customers to those places. The cities that are considered interesting and vibrant (both big and small) are usually interesting and vibrant because of the variety of people who live there.

My wife and I spent our student years in Cambridge, MA. As the area around Harvard Square became wealthier and wealthier, the grad students, writers and researchers got pushed further afield (into Sommerville and beyond) and the quirky places that used to serve this group got replaced with far more upscale (and boring) establishments. This is happening to us along University Ave... it's not just the rents that cause beloved quirky businesses to get replaced with luxury competitors: it's the customers and the employee base.

The people who are complaining about "entitlement" are missing the point: we *want* the variety that comes with youth and age, rich and not rich.

The people who are complaining that policies to make Palo Alto more affordable will "change Palo Alto" are also missing the point. We *used* to be more diverse. It is our restrictive policies that have been changing Palo Alto.

This is such a complex issue....

I don't see how you can grow the housing here enough to make a dent on pricing without already taxing an over burdened infrastructure.... for example, I had to go to the city the other night for a meeting, I left my house at 5pm, it took me 40 minutes to get onto 101 from Midtown area.... and than another 40 minutes to get to the city.... we cannot grow population density without major investment into roads/transportation. Also, none of my friends want to go to lunch in downtown anymore, parking is impossible.... even California street is a mess at peak times...

As long as the tech giants want to keep their workforces here and not place resources into lower cost of living markets, there will be an insatiable demand for housing with people who can afford to pay the price, so.... no matter how much I would like the city to be a place where anyone can live, the market is going to decide otherwise. I little bit of below market housing is not going to have any impact....

The lessor of two evils, right now, it to maintain some quality of life for those people who live here now and hope that the tech sector gets comfortable with distributed work environments..... giving into uncontrolled housing development without the infrastructure fix is simply irresponsible leadership.

btw, Eric, we already lost so much of quirky character, some of the best, one of a kind dive restaurants in the area are gone... and not coming back....

In Japan, after the war the major department stores invested in the subway systems to bring people to their stores.... with the investments required here to move the number of people in and out of the city, we really should see something similar happen with the tech giants here....

Anyway.... I also have two college kids who will most likely never be able to buy a house here.... they will have to make decisions on where they think it best to make their career/home... in all likelihood, where they settle will most likely be where we move for retirement when we get to that point....

At that point, we will end up opening up another property for sale or lease....

Our decisions are based on market realities.... I have not been impressed with situations where our city council has tried to force the market to follow their agenda....

I am not opposed to increasing the height limit on apartment buildings in some corridors the little bit some architect/developers are asking for, I am opposed to large scale creation of housing in a place where we have little or no room to support that growth.

Also, if the intent of this post is to justify increased housing to reduce costs, thats not going to happen... there is simply to much demand in this market. It sounds like a hollow cry of people trying to change public opinion in the favor of developers....

My 2 cents as someone who lives and breathes the multi dimensional challenges this problem poses to our residents.

What is interesting to me is that this implies Palo Alto is an island. In fact, Palo Alto is one area within a Peninsula of many areas which is in a region called the SF Bay Area. Within this region there are many different types of communities. Some of these communities are wealthier than others, some are much more blue collar. Sometimes, you drive 10 minutes to find a wealthier area in one direction, or a more blue collar area by driving in the opposite direction.

This is not a City in the middle of a desert. We are part of a much larger community. There are plenty of areas around here that are very different from Palo Alto. I am not saying we are superior or wealthier, just that there is no reason to make each area carbon copies of each other. We can allow ourselves to continue to move in whatever direction market forces and tastes allow. We do not have to conform to a standard all around the Peninsula.

The market for housing in Palo Alto is highly regulated. Zoning rules which govern how tall a building can be (4 stories in all of PA and 3 or less in many places) and how many units it can have dramatically limits the supply of housing possible in Palo Alto (only 3% of our land is zoned for multifamily housing). Prices are a function of supply and demand. So pretending like the market is some sort of god-like creature that we don't influence and can't control is silly.

If LA of all places can dedicate itself to building out numerous metro lines and doubling down on complete streets that are a joy for car users as well as bicyclists and pedestrians, then so can PA. Transportation is also not immutable. We can make those investments if we want to. In fact City Council be discussing exactly that on October 13.

You say that our decisions are based on market realities, but in fact our regulations and how we choose to invest our tax dollars is what has created those market realities in the first place.

This blog post is about Palo Alto, but the same issues are happening in every city on the Peninsula. My adopted city of Menlo Park is showing a good example of what can be done.

Menlo Park is upzoning the "M-2 industrial area", our equivalent of the Stanford Research Park, to allow basically four-story mixed-use development with offices, housing, and retail. But it's doing it on two conditions: the companies in this area commit to bringing in half their staff without cars, and the developers find public benefits that offset the additional impacts they bring. The biggest public benefit that has been talked about is bringing transit between the RWC Caltrain station and this area along the Dumbarton rail corridor.

As part of the mixed-use development, Menlo Park is allowing 4500 units of housing in what used to be office parks and parking lots. This will be a huge help to the housing shortage on the Peninsula. Mountain View is pursuing a similar goal for a mixed-use neighborhood in North Bayshore near Google.

Imagine allowing Stanford to create a real mixed-use neighborhood in the Research Park - essentially an extension of the Cal Ave downtown - on the condition that the additional employees arrive by train or bus. Wouldn't that be a great thing for Palo Alto?

Great post; I work as a postdoc and now scientist at Stanford, and 99% of my colleagues cannot to afford buying a home in the surrounding area, let alone Palo Alto; even rent is a huge tough. Not sure if this can be fix though.

Stanford is doing a good job of making the area affordable more for 2 groups: grad students (subsidized townhouses in EV for families and subsidized shared housing for students w/o kids in various campus buildings) and faculty (low interest loans and lower-cost homes on Stanford-owned land). They also provide free CalTrain passes and commuter club incentives for post-docs and staff to allow them to commute to campus from other communities without driving. Perhaps some of the tech companies like Palantir should consider these sorts of options to make it more affordable for their employees to live in or near Palo Alto.

Better transportation is the key to ensuring that anything else can happen in Palo Alto.

We should really have a subway system or something, and then we could reasonably have increased density, which is the only real way to reduce prices: increase supply.

This is a good discussion. A couple of responses to comments made above:

@the Market decides: I agree that this is part of a complex problem. We also need investment in transportation infrastructure and schools. However, again, these are policy choices and priorities. So far, though, transportation and housing has not made it on to the Council agenda. This has to change, and we have to take these challenges seriously. However, it's a stalling tactic to say that we cannot contemplate more housing until we significantly upgrade our infrastructure. The right housing in the right places would probably _relieve_ pressure on our infrastructure by increasing school revenues, lowering auto-dependance, and helping local retailers with customers and staff.

@Resident: you're completely right that we're not an island. Cities up and down the Peninsula are grappling with a similar issue. Ideally, we want the centers of these communities located along the Caltrain line to be where the majority of people work. Palo Alto's surveys have now shown decisively that people that work close to Caltrain have very low rates of car transportation-- ultimately, this is what we want. A set of vibrant cores that are not car dependent, while protecting most of our R-1 neighborhoods. Those cities that choose their policies in a forward-thinking way will benefit by having significantly more diversity and vibrancy. Those who decide to pull up the ladders will eventually decline into retirement.

Really making a difference in the housing stock requires adding new acreage to residential use and then emphasizing higher density. lower cost housing.

One thought is the put the trains underground, use the surface rights above it for housing in the stretches between stations and use the surface above the stations for transit connections and parking. The surface area of the current right of way is very valuable land - particularly in Atherton - and could generate a lot of the needed capital.

Why not take this as an opportunity to design a multi-dimensional, multi-purpose system that uses the existing right-of-way that includes CalTrain, HSR, utility conduits for telephone and internet cables, surface housing with high density housing around each station. And add a pedestrian path and a separate bicycle path on the surface along the entire right of way. And include 3 or 4 12" conduits for the technology of the future.

Good luck bringing back 1953.

I came here in 2003 for an $80,000 your job. This is not a company that hands out stock grants or significant bonuses. I now make about 170K. I'm in my upper 40s and I will never own a house here. I'm not an entitled millennial nor anmU working on minimum-wage job. I make a good salary that amazes my friends around the country, but I can't afford to own here and never will.b i'm not sure how this is fixed in any sort of a free-market.

It amazes me that this is even an issue worth discussing. So why is it necessary that everyone needs to be able to live in Palo Alto? There are plenty of other places where a person can go according to their means. I am sure that not everyone can afford to live in Atherton, including most Palo Alto home owners! So what?

Diversity is one of the great strengths and one of the glues of a democracy.

A community which has no economic diversity is, in my opinion, less socially rich and less interesting and less resilient and is dramatically more dependent on other communities for most of the things that it needs to survive much less to thrive.

I'd like to see some specifics as to how many new housing units, and what kind of housing units, would be needed to result in the market changing so that prices could come down enough to make a significant difference. My guess (which is admittedly just a guess) is that the majority of current voter/residents of Palo Alto, no matter what their age or situation, would balk at the specifics if it turns out that such a change in the character of Palo Alto would adversely affect the ability of the schools to accommodate the growth, traffic, parking, water resources, etc. -- i.e., a massive change to the very quality of the city that makes people want to live here.

"Do we want a Palo Alto where only the rich can move here to live?"

I hate to break this to you Steve, but we're already there. I fully support the City's below market rate (BMR) purchase and rental programs, and I think if developers want to reap the benefits of putting in more uninviting high-density housing that looks like projects and walls off the street, they need to pony up and offer a greater percentage of their units as BMR than they currently do. To qualify for BMR in Palo Alto, I think you can still make up to $75k a year. That in itself should illustrate how blown out this city already is.

Also, enough with this 'entitled millennial' crap. Outside of the Palo Alto bubble my generation has seen our economic and career opportunities continuously erode. We have to live with our parents until we're in our late 20s, a college education doesn't mean anything anymore, and an 'entry-level' job requires a degree and 5 years of experience.

So again, the sardine can approach is preached in Levy's blogs. Ignore the character and core of this town and make it as dense as possible, although the infrastructure can't support it, and the schools are already overcrowded. Pretend like this can be another Manhattan. The reason many long and not so long time residents chose to live in Palo Alto, and not in San Jose, Oakland or San francisco, was because it was not an urban, dense environment, because it had no tall buildings. Now Levy and his allies want to turn Palo Alto into the kind place we didn't want to live in in the first place. This is a suburban town, a gem, and Levy wants to turn it into an urban sardine can.

Not everybody who wants to, can live here. We are out of space, roads, schools and clean air to accommodate more residents. We need less of almost everything, less people, less traffic, less noise, less pollution and more than anything, less development. Personally, I'd much rather live in Woodside, but I can't, so I live where I can afford to and I never tried to bully the Woodside town council and residents to make it possible for me to live there, just like I never asked anything of Palo Alto, certainly not to densify and urbanize for my sake when I was saving, slaving and scarifying to buy a house here. Try to bully Woodside, Portola Valley or Los Altos Hills for more density and see the reaction.

Speaking of diversity, lack of proper laws have allowed mostly one ethnic group from a foreign country to move into Palo Alto, outbid others and drive property values sky high. This was not the fault of the "residentialists" and it's hard to blame selling home owners for accepting ludicrously high offers for their property. The pro development crowd never mentions that, the primary reason properties are so expensive now in Palo Alto. When people believe they have an intrinsic right to live here, although they can't afford to, and demand others to make it possible for them, it is absolutely a sense of entitlement, regardless of the denials.

Same subject, same old article. Can we get a little diversity?

The council can impact the lack of affordable rentals in a few ways. Now developers mostly build luxury apts targeting the top end of the rental market.
1) Require new housing developments to be 30% to be BMR, and 30% midrate, and 40% luxury rate. (or 20/60/20, or 30/50/20)
2) Build senior housing so that seniors are more willing to leave their 3/2's and 4/2's that are underutilized.
3) invest in some car-friendly roads, bike friendly routes
4) invest in transportation options that gets more to Caltrain, Bart, light rail, etc
5) rent control preventing increases more than X% over inflation.
6) allow development of taller buildings with conditions

It will take a multi-pronged approach to ensure some minimal level of diversity in P.A. and nearby cities so that more than the 1% can live near here.

Shared housing may work for millenials, but it doesn't work for families.

Loco, I think these are all excellent suggestions, except rent control, that has many associated problems (see NY and SF). FYI, EPA has enacted many of these ideas, including rent control, and offers an attractive, lower cost option for those seeking to live near Palo Alto.

Palo Alto was never affordable to blue color workers and those on the lower end of the income structure. This is not going to change in our lifetime. Palo Alto is, and always will be, an upscale and expensive suburb, and it will always be expensive to buy and rent her, for obvious reasons: a desirable and beautiful area near one of the world's greatest cities and next door to a great university, fantastic weather, proximity to a great coastline and redwood forests, a few hour drive to Tahoe, Yosemite, etc. Pretending it can be affordable is like pretending that beverly Hills, Bel Air and the Upper East Side can be made affordable to all who want to live there.

Bearing all this in mind, Palo Alto is more diverse than any other upscale town/small city suburb I know. There are people from every corner of the world. I daily run into people from China, India, Pakistan, Russia, Ukraine, France, the UK, Israel, Brazil, Argentina, Holland, Italy, and the list goes on and on. I probably hear more foreign languages than English over the course of a day. In that sense, we are almost as diverse as Manhattan. Destroying Palo Alto in order to achieve what can't be achieved:making it affordable to everybody who wants to live here, is impossible and a pipe dream. It's guaranteed that even if we allow more density and height, the developers will sell to the highest bidders, and those will be mostly foreign buyers and foreign money launderers. Problem not solved, only made worse.

For whatever reason, I'm unable to select my PA neighborhood. Whatever.

The #1 thing Palo Alto needs is better transportation infrastructure.
A subway or similar mass transit system would be idea.
Busses are not acceptable. They're just too slow.

The #2 things Palo Alto needs, if we're only worried about who can live in Palo Alto, is increased housing density. This would need to go with a moratorium in office space increase.

I'm not sure I'd want #2, but #1 absolutely makes sense.

The two causes of the housing problem are
1- the dumping of foreign, mostly Asian, millions into our real estate, and
2- billion-dollar corporations that hire huge numbers of people and do not supply housing for them.
Some corporations do build housing, like Facebook, Apple, Google, etc. Other local billion dollar companies want Palo Alto to build for them.

Until these two causes of overdemand are addressed, the rest is a waste of energy just pretending to do something, meanwhile making more money for developers and architects.

IMHO. the demand is so great and Palo Alto so small, there is no amount of density, other than totally eliminating all single family housing, that might bring market rate affordable housing to Palo Alto. Anything new being built is super luxury housing. This type of construction makes Palo Alto even more concentrated with the super rich. Should we become like Manhattan, only affordable to the super rich and those few low income and middle class residents who win the lottery of subsidized housing? Building new dense luxury housing often means tearing down cheaper rental housing. And what a joke when the city frequently allows builders to pay money rather than include subsidized units - money that does not begin to pay enough to build such a unit.

My vote is that Palo Alto should not allow any more zoning exemptions for housing or office space, except for low to moderate income subsidized housing, until the jobs/housing balance is fixed to ABAG's satisfaction. That is the only way to make additional housing available for those earning under $100K a year or even $200K per year.

The only other solution I see is for large tech companies to follow Stanford's example and build subsidized housing on their own land for their middle class employees. The downside, of course, is that when you quit or are laid off, you not only lose your job but your housing.

How does more luxury housing for the .5% help anyone? Please, Steve, tell me of any new construction from Redwood City (which has very few zoning restrictions for building anything) to Mountain View where a new two bedroom apartment costs less than $5000 a month. Most people don't want to live in studios or one bedroom apartments. They prefer to live further away and have two bedrooms!!

Downtown worker, please tell me in what universe Stanford or any other apartment owner can find people who will agree not to ever own a car in order to live in their apartment? Even if they don't allow any parking, they will just find other places to park, making the parking situation even worse. What statute would allow any employer to dictate to their employees how they get to work? All they can do is offer carrots and sticks. When people are young and single, they can easily use mass transit, if it exists. Once you have middle class parents with middle class kids, who need to get to day care and school and after school activities, mass transit doesn't work. I guess wealthy people can use Uber for all their transport needs - many already use it for transporting kids to school - but how will that really help in the long run?

@Marie - I know many people who live and work in downtown Palo Alto and don't own a car. With a good transit option and a lively neighborhood, I can easily see other people doing the same in this neighborhood of Menlo Park. Employers obviously cannot dictate who goes where, but carrots and sticks work quite well. Note that tech companies in downtown Palo Alto only have a 33% driving rate because they subsidize biking and transit just as they subsidize parking permits, and their workers are happy to take alternatives to cars if they aren't more expensive. Other companies with offices downtown (e.g. law firms) only pay for parking permits, and they have a driving rate about twice as high. These carrots and sticks matter a lot!

Facebook is a great example of a company that is trying to build housing near its offices. But note that the city would need to change zoning in order for companies in Stanford Research Park to do the same thing! I don't think any employees or employers are asking Palo Alto to *build for them*. I hear employees asking Palo Alto to *permit* more housing - which is a different thing altogether.

THe only prices become more affordable is if Palo Alto becomes less desirable. Adding density, crime, traffic, and pollution is one way to achieve that.

At no point in his many blogs, do i remember Levy ever pointing the finger at the major culprits. Beside the undeniable realities that Palo Alto is a permanently expensive and small place with millions of people around the world who would figuratively kill to live here.

1.Companies who insist on locating to Palo Alto, hiring many workers without housing in the bay area.
2. Stanford Industrial Park companies. Stanford doesn't provide housing for their workers and they want to live in Palo Alto.
3. Foreign money is pouring into Palo Alto and keeps inflating property values and rent. There is so much foreign demand for all kind of Palo Alto property, that even densifying, the absolute worst thing we could do, will just mean more opportunities for foreign buyers to inflate existing housing prices. How could we guarantee that new housing would go to those who need it? Developers are going to sell to the highest bidders.

The talk of new residents giving up their cars if they only get an opportunity to live here is silly. Unless they plan to only hang out downtown and on Cal Ave, how would they get to the beach, Santa Cruz, Napa, Sonoma, the hiking trails? Or to jobs where public transportation doesn't service? When they have kids, how would they get to the doctor, dentist, after school activities, etc. Just more insincere promises, wishful thinking and pure fantasy, so we allow more density that will create many more problems and solve none.

At work, I know a few twentysomethings who live downtown and don't have a car. When they want to go to the beach or to Tahoe, they just use carshare, rent a car for a day, or go with a friend. After all, if you don't need to drive your car to work or to go shopping, it's cheaper and less hassle to rent a car when you need it rather than to pay for it every day.

For married couples with kids, the relevant choice isn't whether to go car-free, but whether to have one car for the family rather than two. If you can bike to work or take the train and walk to Whole Foods, you don't really need two cars. You basically only need a car to move the kids around. (In my neighborhood, there are lots of young families who take every opportunity to get out and bike with their kids for lunch, shopping, whatever.) If own a home nearby, but if I didn't and had the option to cut my commute substantially or save money on rent just by giving up one of our cars, I would do it in a heartbeat.

This isn't a fantasy or wishful thinking, this is something people do every day, right now.

An OK blog Steve, but it isn't anything new that hasn't been talked about and debated before. It's always good to see the numbers in front of us tho just for the shock value.

As long as this has been a problem and discussed so often, and with all the brilliant minds we have in PA, I'm a little astonished/surprised by why no great creative ideas for expanding housing choices haven't been offered already. Thanks again, Steve, for calling for action on this issue. We can't afford to continue to move at sloth speed on this.

How did housing costs get so out of control to reach this point? It has happened over many years, sometimes gradually, sometimes with big spikes interspersed by some flat periods. I'll let the real estate folks explain it. All I know is we were able to afford to buy our house in 1963 along with many other people in my neighborhood...middle class white collar workers and blue collar workers as well. We had two firemen and their families, plus teachers, small business owners, home builders, mechanics, and a Japanese-American gardener who lived around the corner on Nathan Way. We were diverse and still are.

I've written so many times about this on other blogs I could just copy and paste from them. And thanks, Steve, for steering us away from that poorly written blog, pitting seniors against millennials. That really stirred up the hornet's nest unnecessarily. 215 comments by last count. That might be a record of some kind. I even got lathered up about it. I made some uncharacteristically bad comments in it. I apologized later.

Maurichio made some very good points. I've written about it before also; the main causes of the recent bidding wars and homes selling for hundreds of thousands over asking price. Foreign money, maybe laundered, cash purchases. He tagged an ethnic group from a foreign country w/o identifying them specifically, but we all get the message and know who he's talking about. But there hasn't been, so far, any attempt made to identify that and make rules to prevent it. And there won't be. It is a political 'hot potato' and you will never hear any of our PACC talk about it or be willing to discuss it with you even if it is just over coffee at Philz. And of course the leverage the tech workers have that are lucky enough to have stock options worth millions. They can get loans very easily or if they already have the money after they exercised and cashed out on their options they can also pay cash.

I don't like living here as much anymore. I'm sad to say that. My town has already been despoiled. I remember loving all our trips to downtown PA when it had the feel of a small city downtown, you know, like Central Avenue in Great Falls, MT, where I grew up...not what it has turned into now. We bought a lot of stuff in those stores way back then. Now it's just a row of restaurants, coffee shops, a pharmacy or two, and high priced boutiques. Woo! Woo! I guess that's what gives it the vibrancy that so many of the young folks like and talk about. I can't imagine what the life of a downtown PA techie is like. Do they code all day, then party (eat and drink) in PA after work, grab a late train out of town to go wherever they sleep, and then repeat that the next day?

Thankfully there is still enough to keep me here. I can just stay in my bungalow in my little enclave in my village in SPA. I can buy my groceries, get a haircut, go to the library, shop at Costco, REI, OSH, and many others. Changes, yes, but not for the worse like what has happened to downtown University. But, as a tagged NIMBY, by many of the other posters, I support rezoning to allow much more housing near the downtown office centers. I don't go there anymore anyway. So let them build...build...build! Housing only...but no more offices!!!

I challenge you to observe two housing developments. One on High St near the University Ave train station, the other on Park Ave near the Cal Ave train station. In the mornings, when people leave for work, the garages and parking areas empty out of cars, and in the evenings they are full again. Try to observe foot traffic to the train stations from those housing developments, after all, the residents are supposed to use public transportations. Not so much.

I grew up in the South Bay and in the 80s and 90s, back then, Palo Alto's allure was the fact it attracted so many interesting, brilliant, creative people to this PLACE, to spawn so many new, exciting things, ideas and paradigms. It takes a certain kind of density to make a place exciting and desirable to be. So when we found an opportunity to move here ten years ago, I was thrilled to be a part of this dynamic.

Today, the creative collisions are still happening, and clearly many more people want to be a part of this exciting stone soup. But we're simply not making enough space for the to people who are here today and many others who could contribute our community.

The irony of those who want to prevent more housing because the housing is going only to foreign investors or the uber wealthy, is that if we don't make room for more people, we'll only ensure that the price of land will increase and that the pool of people who CAN live in Palo Alto continues to decrease into a smaller and smaller global circle of people with the highest means. Many of the people who moved here 30, 20, 10, even 5 years ago probably could not afford to move here now. That is a problem.

Without making room for more people to live in Palo Alto, we will lose the rich stone soup that has traditionally made Palo Alto such an amazing place to be. We'll begin diluting our community into a bland broth of aging folks and extremely wealthy folks, both of whom will have to be served by people travelling long distances to maintain the services PA is used to having. People between 18-34 are becoming an endangered species in PA. We'll lose our artists and writers and storytellers. We won't have a place for our librarians, teachers, fire fighters, police. We'll lose our food entrepreneurs and retailers and our professional services: accountants, lawyers, psychiatrists, veterinarians. And some people will argue we are already losing and maybe have lost them.

I'd like to keep our stone soup and maintain room for those who live here today and welcome others who may choose to live here tomorrow or in 10 or 15 years.

Talk is easy. Action is, um, well... let's see.

How much will all this below-market housing cost?

Who is going to subsidize it?

What area are they going to clearcut to build it?

Where will the displaced residents and businesses be relocated to?

Who pays for that?

Thanks to everyone for commenting. There is a lot to respond to.

With regard to commentator's question, I am asking about market rate housing not subsidized housing.

For all the posters raising objections and concerns, I want you to answer the question I posed--Do you want a Palo Alto where only the rich can move in to live. If you want to say yes that is your choice but please answer the question in future posts.

There are posters like Gale Johnson above, Greg Schmid, myself and many others including I bet many posters on this blog who were able to live and buy homes here when we were not rich. To keep that option alive we will have to have intention and be creative.

Gale Johnson is unhappy with some aspects of change here but he realizes the dilemma of the path we are on and we are in agreement that one part of the solution is more multi-family housing in areas like downtown.

I think Palo Alto will be a worse place if only older homeowners and new wealthy families can live here. That is the question I am asking,

No one is suggesting P.A. needs housing for every person that desires it. But when prices are so exorbitant that only the extraordinarily wealthy can rent or buy, we have a huge problem.

I love the suggestion above that families should move to EPA. Still laughing.

The typical 2 bedroom rents for $4000 a month. Income requirements: $160k at 30% of gross income.

The typical 3 bedroom rents for $6000 a month. Income requirements: $250k at 30% of gross income.

The average household income in Santa Clara county is $93k, and in PA is $120k.

Landlords and developers are exacerbating the already bad situation. There are plenty of takers, and they are all in the top 1-5%. That's the town you have with existing rules. Unless the council does something about it and nearby towns do something. Every town has to do their part.

Rents are roughly the same across the peninsula, and getting pretty high on the east bay too.

"With regard to commentator's question, I am asking about market rate housing not subsidized housing."

Apologies, Steve, but I need a clarification. I sense the problem is that the market rate for housing in Palo Alto is perceived as too high; only the "wealthy" can afford to pay it. But building market rate housing only adds more housing at the current deemed too-high prices. It therefore seems the only purpose for building the proposed housing is to build more housing that only the wealthy can afford. That's great for the builders' balance sheets, but it does not address the purported topic of this thread.

Talk with brokers. Prices are very high because there is no inventory, and one reason is the reluctance of older people to sell because they will incur avoidable taxes. If I keep my house until I die, my children will inherit a full $1 million more than if I sell to downsize.

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@ commentator

You are correct that recent market rate housing in Palo Alto and many nearby communities is out of reach of even well earning families.

If we do not want this to continue, zoning policies can be changed and less expensive units can be built.

People at the last council meeting talked of studio units and smaller apartments or condo/townhouse. Some communities are experimenting with micro units and there seems to be high demand.

All cities have some power to shape what developers will and can build.

I am not advocating a particular solution except to ask council to make expanding housing choices a high priority.

And many people at the council meeting talked about expanding choices for seniors who live here already but whose housing needs change as they age.

If you are going to post again, please answer the question "Do you want a Palo Alto where only the rich can move here to live".

@cynic

Older residents are not a monolithic group. Some will stay in their homes as you state. Others will want to or need to move for mobility or health reasons.

One can always rent your home to avoid the capital gains tax.

In any event this is not an answer to the subject of this blog.

If you are going to post again, please answer the question "Do you want a Palo Alto where only the rich can move here to live"."

it is fine to say NO and then add but I think it is really hard to reach that goal.

Then we can discuss strategies not reasons why prices of existing units are high.

I personally have no problem with Palo Alto turning into another Atherton, Portola Valley or Woodside. Many people bought into Palo Alto for good schools and suburban lifestyle. Increasing density and lower property value will destroy the very reasons large portion of Palo Alto residents moved here for.

As some have pointed out it is not just Palo Alto that is impacted, it is the entire mid-peninsula. Lots of things have brought us here. 1), no more land to build on, 2) strong economy that creates demand, 3) low density zoning, 4) overwhelmed transportation infrastructure 5) tax policy that favors the long time resident and discourages turnover of property. We are simply the victims of too much demand and not enough supply. Factor in the fact that many people are strictly of a no growth mindset and it is difficult to see a solution.

As a long time resident who has seen her house in Belle Haven appreciate from $74,000 to more than 10 times that since 1979 I can say that I may consider moving to be close to childeren and grand childeren. Once my husband passed my home was appraised and I will not pay income tax if I sell. My leaving will make no difference in the overall scheme of things but many seniors might consider it as it could make their financial situation much more comfortable. Those homes could be snapped up by younger families who wish to live here.

Mauricio, if you want to continue posting here answer the question posed in the blog. You have now posted four times without ever saying as Suburbanite did above that it is okay with you if only rich families can live here in the future. Were you rich when you moved here and when was that?

Crescent Park Dad, answer the question and I will repost your cart before the horse post. Please stop telling people what voters will or won't do and tell us whether you are okay if only wealthy people can move here in the future.

Were you wealthy when you bought a home here and when was that?

I don't want Palo Alto to be only for the super-wealthy. The large number of rentals will prevent this from being the case, though. If Stanford grad students and post-docs can afford to rent here (with roommates) I don't think that tech workers will have difficulty doing so as well. Admittedly Palo Alto is not a place where young families with single earners can purchase starter homes. I don't see this as a huge problem, though.

I'll answer your repeated question: No I don't want Palo Alto only for the rich.
Now it is your turn to answer, how to deal with the two major causes of the shortage:

1- the dumping of foreign, mostly Asian, millions into our real estate, and
2- billion-dollar corporations that hire huge numbers of people and do not supply housing for them.
Some corporations do build housing, like Facebook, Apple, Google, etc. Other local billion dollar companies want Palo Alto to <zone>build for them.

Until these two causes of overdemand are addressed, the rest is a waste of energy.

No, I don't want Palo Alto to be a town only for the wealthy, but nor do I want the massive development that would be required to bring down housing costs.

"If you are going to post again, please answer the question "Do you want a Palo Alto where only the rich can move here to live". "

To answer the ostensible question: No. To answer the question in its rhetorical guise: Yes, I have stopped beating my wife.

It matters not what I Want. As the smarter Entitleds (referring to the mindset, not the person) at last Monday's City Council meeting will eventually learn, what I Want is often not quite what I'm gonna Get.

During the decades I've lived in Palo Alto, it has evolved from a middle class with a sprinkling of upper class community to a middle class with a drenching of upper middle class town. Such tends to be the fate of locales with intelligent, educated, success-oriented inhabitants.

With notable temporary individual exceptions, the rich tend to prefer living in yjr true enclaves for the rich: Tiburon, Pacific Heights, Hillsborough, Woodside, Atherton, Los Altos Hills, Monte Sereno, Pebble Beach, ... . Palo Alto will never be in that league.

What we have going in Palo Alto is a working example of what Alan Greenspan aptly named "Irrational Exuberance." It will not last. Rational people should not react irrationally to an irrational stimulus. Especially a temporary one.

Booms always run their course, leaving their debris behind. This one too shall pass. Let's hope its legacy isn't too terribly onerous.

It should be a placed to live for those who have worked hard, made good life choices, taken advantage of their educational opportunities, and have earned the privilege to do so.

To answer the question posed ... I am ok with anyone who can afford to live here living here. I would have liked to move to Saratoga or Atherton a decade ago but those suburban towns were too pricy then and still remain significantly pricier than Palo Alto today. If the price goes out of control in a small pocket of the bay area like Palo Alto, there are other places to live nearby , San Jose, East Palo Alto, Sunnyvale, Santa Clara... Of course everywhere is getting expensive and traffic in the whole region is getting very onerous in this latest boom cycle. Overall it doesn't seem sustainable, and not just in Palo Alto. That doesn't strike me as a good reason to emulate San Francisco , build more of these monolithic "communities" right up against the sidewalk on ECR, or block the sunlight with taller buildings. To really make Palo Alto "affordable", would require destroying most of the reasons why I moved here ... lower density residential neighborhoods with trees and parks where its safe for kids to play on the street and high performing schools due to an educated citizenry that prioritizes education. By all means, add some higher density housing in areas like downtown as long as the infrastructure is there to support it, but build a lot of high density apartments/condos and then there will be at least one additional SFH available when I move out. Maybe some developer can knock it down and build a triplex on the small 6k lot.

To answer your question. I don't mind if you have to be wealthy to live here - it was no different when we bought our first PA house in 1994. I'm a 5th generation Californian. I was born in SF but I grew up here. My family moved back down here when I was 4yo. My Grandfather went to Paly.

Out of college I lived at home during the summer and then (because of rent prices in this area were too high for my income), I shared an apartment in Fremont and carpooled (it was bad back then too --- had to leave at 6:30 to get in by 7:00...otherwise it would take 60-75 minutes) to Cupertino. I had no problems with that. (And my room mate took BART to SF...he had no problem with that either).

My first home was a 3-way partnership with friends. Bought a townhouse in San Jose. Sold my share because I was getting married.

At first we rented in SF and had a room mate as well. We wanted to live in PA and we looked at a house along the creek - too much $$. So we bought a condo in Redwood Shores. Then bought our first house in Mountain View and had child #1. With child #2 and a double-income that put us into 6 figures (early 90's) we bought our first PA house - which was a major fixer-upper (roof leaking, bad plumbing, 1930's furnace, termites, water damaged ceilings and walls, dry rot, rodents in the attic, failing Edison-fuse electrical panel, etc.). This was 13 years out of college. Lived with all of the problems and employed sweat equity for a few years. Then later remodeled to make it a great home.

So yes, we were making good money in order to buy our first PA home, a rundown/falling down home. We also had to save in order to come up with a down payment. And we never saw a problem with that. And we didn't have a problem of having to work our way up the ladder to make it happen nor did we mind sacrificing comfort, monster commutes, stay-cations, etc. for the long-term goal of owning a home in PA.

No need to repost my other response. I'll summarize here. We cannot substantially add housing without first planning, funding and building all of the infrastructure and services required. This has been proven out by the debacle that is downtown Palo Alto: overbuilt office space without the means to support traffic, people, etc. Let alone convince the good citizens of this town to agree with throwing out the height limit (aka, "Manhattan-izing") and taxing themselves to come up with all of the things to keep this town sane with a double-digit increase in population.

This is a general rant, not directed at Steve L.: Wishing for it, sermonizing for it, moralizing for it, politic-ing for it, income-gap shaming for it ... while conveniently ignoring the huge burden of funding (Billion$) and building (schools, reconfigure roads, expand transit, water storage/distribution, consumer services (a modern-sized grocery store or two), electrical grid, etc.) that must happen before any expansion is started is totally irresponsible.

Palo Alto can no longer afford to keep expanding (office space or housing) without first addressing and solving the major gaps in services and infrastructure that exist today, let alone what should be in place before any further expansion is considered. And until someone comes up with the funding (which will no doubt require a huge city-wide property tax increase/vote) all of the guilt trips should just stop.

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BTW I don't have any problem with the cost of housing in Palo Alto.

move here? how about us non-tech folks who GREW UP here who can barely afford to stay? there are now two generations of us!

@undrgndgirl

good point, you are right. My apology for overlooking you.

@marc

Could you tell us when you moved here, do you own and were you wealthy when you moved to Palo Alto.

@ Crescent Park Dad

Thanks for the details. My family has only been in CA for 130 years so you have me beat there. I understand that you (and I and many of today's young people work(ed) hard. My evidence is that today's young families in the region work as hard as most of us older timers.

So could you answer the last couple of questions above (do you own and were you wealthy when you moved here?)

I go back to my story that started the blog. Greg Schmid and I had good jobs but were not close to wealthy and could buy a home here 30 years or more ago.

Now that is not possible. I do not want to lose families like ours were because we refuse to try new approaches to the next round of housing, which will not be single family homes here or up and down the peninsula.



Thanks

Great post, Steve!

It's a bit tiring to try to have an honest, thoughtful conversation about values and vision yet constantly be met with straw-man arguments, non-answers, or claims of entitlement, disingenuousness, and ignorance.

I absolutely do not want a Palo Alto where only the rich can afford to live. What's more, I don't want a Palo Alto with housing solutions that only make sense for one age group or lifestyle. I want a Palo Alto that welcomes the young and old when they look for smaller units that make more sense for them. And I want a Palo Alto that offers great opportunities to walk to work, bike around town, and take Caltrain to all sorts of other places!

The situation is tough and complicated, as has been said. It's easy to put blame elsewhere - on nearby towns, on foreign investors, on developers, or on a tech boom, and some of those may deserve that blame. But we have much less control over those things. We do have some control over what our town builds, and how it builds that. If we do it right, it can cause less traffic, less pollution, less noise, and fewer parked cars.

Will building more housing make Palo Alto affordable to everyone? Maybe not, but we have to start somewhere, and it will probably lower prices a bit. And if we build more variety of housing, it will bring in more variety of people as well.

And, just to head off some of the common responses: Yes, I actually live in Palo Alto. No, I'm not a shill for a developer, company, or organization. And no, I'm not asking for anyone to pay for my housing or anyone else's; I'm asking for the town to change the rules a bit to direct the free market to build out the best town it can.

Twenty-six years ago we moved from a small place in Massachusetts to Palo Alto. In Massachusetts we owned a two-bedroom condominium which we had bought for $32,900. Yes, $32,900. Imagine, the shock we went through purchasing our tiny little two-bedroom hobbit home in Professorville for $499,000. A little home that needed a lot of work. We agonized for many a night being fearful we could not afford it, as our salaries were good but not that good.

We bought it 21 years ago, and put our heart and soul into refurbishing this little place, and we absolutely love it.

What constitutes "being wealthy," and why does everyone want to live in Palo Alto?

I personally agree with several previous posts that an outstanding and affordable public transportation system could help relieve many of the issues related to housing density, expense, traffic, air quality and people's unhappy feelings that Palo Alto is only for the wealthy.

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I don't want only rich people to be able to live here, nor do I consider myself rich even now, although I could sell my house today in the 5-6 million dollar range with intense overbidding. In my case, I was not remotely rich when I bought my house 30 years ago. I was just wiling to make the sacrifices that millennials and others don't seem to want to make.

The problem I have with the pro density people is that they, deliberately, don't confront, but rather ignore those who are responsible more than others for the ridiculously high price of housing in Palo Alto and don't demand of themto rectify the problems they have caused.

1. Companies at the Stanford Industrial Park who keep hiring young workers with no Bay area housing and then demand that Palo Alto take care of their housing problem. Start ups like Palantir moving to arguebly the hottest housing market in world, and pressuring Palo Alto to solve their employees housing problems.

2.Enormous amounts of foreign money dumped on Palo Alto real estate, some of it undoubtedly illegitimate money needing laundering. It has caused an unprecedented bidding wars that rapidly pushed housing prices to dizzying heights that can be afforded only by the very wealthy. The real estate agents with offices in China who encourage and solicit these kind of transactions should shoulder some of the blame, so are home owners who are wiling to except outrageous offers for their homes without even meeting knowing who the buyer is.

Most of us live in Palo Alto because we chose this way of live:low density, tree lined streets, manageable traffic vollume, low building that allow us to see the foothills from almost everywhere and don't block the sun. We moved to Palo Alto exactly because we didn't want to live in the kind of place and environment Steve Levy has in mind for us, and we intend to protect our way of life by rejecting his vision.

Thanks Anneke.

This blog is not about everyone wanting to live in Palo Alto.

It is about making it possible for families like yours and mine to move or remain here now.

I suspect you could not buy the house you are in if you had to buy now, It is not a matter just of working hard,

I think it is a bum rap to talk of young professionals and their families now as if they are not working hard (I know you did not say this).

To buy a $2 million home now cost $115,000 a year with a $400,000 down payment. I could not do that now. Could you?

That is the point, unless we change we will lose the type of family that was the foundation of our city.

I agree about transportation but not as a reason to exclude two earner families who are not able to afford $2 million for a house/condo or %5-8K a month in rent, which is what condos in our building go for.

Thanks, Steve and others for propelling housing issues into debate. Most of the issues seem to be on the table very early.

I already feel the joy and pain that leaders will encounter as policy evolves at CAC, Planning Commission, a probable new Housing Study Committee and Council.

Two things are very clear to me. The most determinative factors are November 8, 2016 and November 6, 2018

As I see it, wealthy communities want exclusive restaurants, high end shops, unique entertainment, yet they don't seem to think about who works at those places. Service workers for all your exclusive needs typically don't pay much beyond minimum wage. I'm including nanny and elder care services, landscaping, etc. Where would you like us to live? Do you think we should commute in from Tracy or Concord? I've watched Portola Valley and Atherton become islands, disconnected from the rest of the real world. When I started elder care in the 50's service workers lived on the large estates, and were available at all times for the wealthy families. Reminiscent of Downton Abbey, in many ways, but there we were, not paid well, but with a place to live and food to eat, and a trust unheard of in this day. With the exodus of service workers fleeing to more affordable places, I sense an economic collapse coming. We can fix this with affordable housing for all.

Mauricio,

Before you accuse companies of creating the housing problem, supply this information:

How many people work in Stanford Research Park today vs. 2000?

How many people work in Palo Alto today vs. 2000?

How big was Palantir when it moved to Palo Alto? It did not transfer thousands of people to Palo Alto. Facebook, Google, and Survey Monkey moved out of Palo Alto as they grew. Are you suggesting that Palatir move out of town or cap its employment in Palo Alto?

What if somebody suggested that you move out of town? How would you react?

As a 4th generation Menlo Parkian, I appreciate this subject. My family has been in the service industry all this time, even with the last two generations having college degrees. I feel the anguish of Violet, who worked in elder care. It has taken all of my family's hard work to keep this old house that Grandpa bought in 1940 for $12,000. Yes, it's officially too small, but it has a rich history, and we won't be run out of town. We are sort of a Charlie and the Chocolate Factory bunch, by necessity. Please consider all the blue collar workers when planning our future community. We are the backbone of it all.

Thank you, Steve.

I somehow wanted to bring across that not everyone in Palo Alto is "wealthy." Most likely, house-rich, but not wealthy in the sense of the billionaires we so often read about.

In 1988, a good friend of my husband in San Francisco sent us a wonderful news report from one of the Bay area news papers that rated a number of Bay area cities based on many different components, i.e., schools, crime, jobs, parks, etc. (about 75 different components.) Even though Palo Alto did not show up as number 1 in all categories, the overall sum did make Palo Alto the best place to live.

Before we moved here from Massachusetts, we had no real "feeling" about the different cities. All of Palo Alto's surrounding cities sounded lovely to us, and we looked at many places.

We ultimately chose Palo Alto based on the information published in the news paper, and limited our search. Yes, we were very blessed finding our little home in Professorville, and we love it dearly, not only for the home, but especially for our great neighbors, the birds in our backyard, the fact we can walk everywhere, and the relationships we have developed with our service people, i.e., the mailman, and the UPS deliverer.

l am also deeply concerned about all the people who are critically important for our infrastructure, but I do not believe making the housing more denser at cheaper prices is a reality in the free market. However, I do believe that having an excellent train, BART and metro system, could help alleviate a lot of the issues. It would bring all of us together in a more balanced manner.

Steve - sorry if you didn't see my answers in all the details. My bad.

When we bought our first PA home (13 years after college graduation), married for 9 years, we had a combined income that put us in the low 6 figures. Our down payment came from our savings and a second loan on the house. We did not have any gift money, trust funds, etc. We did it on our own. I would say that we created our own wealth in available income through working two jobs. I would also say that we didn't start out wealthy and had to work our way up - just like many other PA residents.

So - yes, I have no problems that you have to be wealthy to buy in PA. And I have no problems that you have to be ultra-wealthy to buy in Atherton or Woodside. Further, no problems with that you don't have to be wealthy to buy in Sunnyvale, Milpitas, San Jose or Mountain View. I have a regional outlook on this.

The City of Los Angeles (I know, big example) has very wealthy enclaves to low-income areas. LA has a larger geography than most of the SF Bay Area combined. Bel Air, Silver Lake and Crenshaw are all part of the same city. That is the equivalent of Atherton, Palo Alto, Sunnyvale and Milpitas in our greater area. And it seems to be working out just fine.

So when I give my real estate timeline, I'm not trying to talk about our work ethic. What I'm describing is how we worked our way up the housing ladder in the SF Bay Area. It doesn't all have to be in Palo Alto. It's OK that Milpitas is far more affordable than PA and that's where you buy your first home or rent your first apartment.

You don't have to be wealthy to buy in Mountain View?

Excuse me, but you haven't actually LOOKED at listings in Mountain View recently, have you?

This sort of out-of-date, blinkered thinking is what is at the root of the problems that this area faces. Somehow, there is this notion in play in this area that "things aren't as bad as they seem," or "Don't worry, the market will fix itself."

Newsflash: It IS as bad as it seems. And the market has most definitely NOT fixed itself -- ever.

Getting out of this area is becoming a better option for a lot of people.

@chris, it was Palantir who coordinated a mass appearance by Palantir employees and other techies who want to live in palo Alto. Companies demanding housing for their employees when they insist on being in a very expensive real estate market with very limited space and tight inventory are indeed a major cause of the problem. If companies are concerned about their employees housing, moving to todays Palo Alto in particular, and the Bay area in general is an astonishingly bad idea. Asking Palo Alto residents to take care of their employees inability to find housing is nothing short of chutzpah. Imagine a start-up moving to Pebble Beach, Woodside or Bel Air and demanding the residents facilitate their employees housing while giving up their way of life, because this what density/urbanization,/sardine can approach advocate like Levy are demanding.

In response to your remark, no one can ask me to leave Palo Alto, because I bought a house here without asking Palo Alto for any help and because I didn't ask Palo Alto change so I can move here. A very different situation from those who demand help to live here. I never asked anyone else to leave, but I keep posting out that corporate responsibility doesn't obligate us residents to bail them out. They need to find housing for workers who can't afford housing here, not us residents. It was corporate irresponsibility and foreign money that caused this problem, let them fix it.

There are 100s of new apartments and family homes being built in east Palo Alto starting in the high $600Ks. Crime rates are down. Interest rates are still at near historic lows and coordinated civic, corporate and market forces are working to revitalize that area.

I know many people that own homes in Palo Alto today (myself included) used a strategy of buying starter homes in satellite communities like Sunnyvale and Mountain View and then trading up as they were able to save and build equity over 5-10 years. Certainly housing prices are higher but arguably the job market, stock market and interest rates are more favorable.

If that path of save/invest/move up is still available in areas that are literally less than 5 miles away why do we need to look at strategies that would totally change the character of Palo Alto?

"Do we want a palo alto where only the rich can move here to live"

Yes.

My home, the Abitare, is almost certainly the best living example of the type of high density dwelling Mr. Levy proposes for Palo Alto. It is my experience living in such an environment that makes me skeptical of the model's potential for addressing housing issues in our town.

Our building, constructed in 1984, located between Alma and High, consists of forty market rate units, four below market rate units, two store fronts (dry cleaner and skin salon), and a private garage. A public garage is attached to our building.

The structure is four stories, presumably exceeding the fifty foot height limit. The housing density is greater than allowed by standard zoning. Units range from studios to 2 bed / 2 bath, 785-1015 sq ft.

See Web Link

While some of the units have been beautifully remodeled, the Abitare is most definitely not a luxurious environment. The original interior design consists of tacky white particle board cabinets, cheap metal venetian blinds, etc. We have no amenities. No pool, no gym, no lawn, no air conditioning, etc.

We do, however, have all the advantages of living downtown. We also have all the disadvantages: noise, dirt, homeless people living in our elevator, etc.

The most recent sale was a 2 bed / 1 bath unit (780 sq. ft.) for $1,025,000. A 2 bed / 1 bath unit (955 sq. ft.) is currently listed for $1,149,000.

The following are my *observations*, clearly not based on any type of scientific research.

1. The community is composed of comfortable, professional people.

Most of our residents are working professionals, with several retired people and a few students. Appearances (cars, clothes, decor, etc.) suggest that residents are in solid financial shape, but are by no means "rich" according to the local standard.

It is doubtful any of our neighbors are blue collar or service workers. Rented units tend to run about $4000-$5500, necessitating a high salary.

2. The lifestyle does not appeal to many families with growing kids.

Most of the residents are singles or couples, with a few roommate situations. Currently, there are six units with small children. Once the kids start school, however, many of the families move to single family homes.

3. The vast majority of residents drive to work, shop, relax, etc.

We are located directly across the street from the Palo Alto Station. It could not be more convenient to use public transportation. Yes, you meet neighbors walking around downtown, and a neighbor here or there walks to work or bikes to Stanford or takes the train.

Still, the parking garage is full at night and nearly empty during the day.

4. Owners will only sell for a very high price, and will wait to get it.

Unlike other Palo Alto homes, our units do not sell in a few days with multiple offers. Even so, sellers will wait and wait and wait for the big bucks.

The unit currently for sale was listed on August 6, more than two months ago. The price has been decreased, from $1.275 to $1.149. The owner bought the place only two years ago for $798.5.

A similar unit in the building sold a few months ago. It also sat on the market for a long time. The realtor told me they would not sell for less than 10% above the list price. They waited and waited and got their price.

Call it unmitigated greed or smart business, but this is not a simple case of supply and demand.

5. The BMR units have a limited success in bringing economic diversity.

We have wonderful neighbors in BMR units who make substantial contributions to our community. But the BMR program, after the initial sale, does not appear to be well-managed.

Our building started out with nine BMR units, but five were converted to market rate because the owners were "unable" to find people with lower incomes to buy them. Additionally, we have cases where homes purchased at BMR prices are rented out at market prices, making a windfall for the owner.

There are many more observations that could be added, but the main point is that we should not expect that simply building more of this type of housing will have the desired effects, and they surely will bring negative consequences.

Excellent. Add my support.

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Most people I know in other parts of the country are appalled at the price of any housing on the Peninsula. In their opinion nothing here is affordable.

Whatever "affordable housing "you may cause to be built will either immediately get astronomically bid up (portion deleted). Once purchased the affordable homes will increase rapidly and dramatically in value which will lead to resales to take advantage of the sizable gains. And the overall effect will be more population, more strain on current resources like water, power, schools and roads. After a few years as homeowners the newest residents will have magically joined the ranks of the wealthy by virtue of their real estate. They will become what you don't want.

The need for diversity argument is false. Diversity is whatever you want to define it as. Right now the wealthy in this town in addition to Caucasian are also Chinese, Indian, Middle Eastern and many other races. They have backgrounds in medical devices, genetics, social media, semiconductors, application software and lots of other diverse areas. They come from poor backgrounds, middle class backgrounds and wealthy backgrounds. Ages range from late 20s and up. They pass every diversity test except there are not enough of them who are not doing as well financially as they would like.

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Stuck yesterday in both 101 and 280 traffic, and recalled 50+ years of Bayshore Highway to SF experience. Let's just face the fact Palo Alto is a jobs hub in the middle of a mass transit system which is crashing into griid lock. That's why people a willing to pay insane prices to live in our town!

Best comments I read here are to underground Caltrain. I'd do that from San Jose to San Francisco in all residential and downtown areas, add BART there, and use the ground above for more schools, parking lots, and high density housing close to the transit nodes. Such a taking of private land for public use is a good deal for all of us, including the railway land owner.

Years ago as a young lawyer, I had to go through boxes and boxes of railroad easements including all the above ground uses along the Caltrain line. Ye Olde Southern Pacific rail company makes more money on those easements than passengers. It certainly makes more money on its late night freight trains than running pasengers thanks to the wildly outdated labor contracts still in force. Until our local politicians wake up and realize that a surface train line on the Peninisul is a late 1800's artifact in the 21st Century we are all doomed to be stuck in worsening grid lock, soaring housing costs, and each time I drive along Alma I will look at that train right of way and roll my eyes.

A final thought, When Southern Pacific still had its spur from Calif Ave to Los Altos and Los Gatos, the head of SP based in San Francisco, Mr. Paul Shoup, lived walking distance from the Los Altos station. Every weekday he boarded an express which made only one stop to SF at Calif Ave where he was joined everyday by the head SP legal counsel who lived at Cowper and Santa Rita. To make mass transit work we'll need to get everyone willing and able to use such mass transit. I bet Mr. Shoup if alive would be trying to sell the Caltrain ground and air rights to the highest bidders starting with the San Antonio to Redwood City section.

Oldie,

The Caltrain right of way is no longer owned by UP/SP. It is now owned by Caltrain. UP has certain rights of usage.

Rather than get stuck in highway traffic, why didn't you ride Caltrain yourself?
Are you part of the problem or the solution?

Successful companies have implemented successful transit solutions for their employees.
Less successful companies will either come up with a better program or be left to wither.

@ abitarian and mauricio

I do not view where I live as a sardine can and find Mauricio's continuing reference to our 1,700 square foot condo or even smaller units that families happily live in as sardine cans a hint of why he is ashamed to tell us his real name.

to abitarian, my home is exactly what I do propose more of.

First to call where you and I live "high density" is almost as silly as Mauricio's sardine can reference.

We live in a four and five story building, mine bordered on both sides by even taller multi-family buildings.

SF, Oakland and San Jose have high density in the sense of very tall buildings. Four or five stories is not "high" density unless you think people should only live in single family homes or duplexes. Where you and I live is typical of what is being built now up and down the peninsula.

You write

1. The community is composed of comfortable, professional people.

I agree and add retired folks. I think the only way people with lower incomes can live here is with subsidies, which is not what I am talking about. I do worry that if we do not allow buildings such as where we live and some with smaller units, that many comfortable professional people will no longer be able to stay or move here and we will lose a part of our heritage and economic diversity.

2. The lifestyle does not appeal to many families with growing kids.

I strongly disagree. Just this week a family with a one month old is moving into our building from New York. We have many families with kids now some in middle school. They enjoy the convenience and amenities of living downtown.

My son and his wife live in a townhouse that is smaller than where we live in Costa Mesa and have space for our soon to be grandchild's bedroom. They could have bought a single family home far away but chose this lifestyle for their family.

3. The vast majority of residents drive to work, shop, relax, etc.

That is wrong for our building also. I think many do drive to work but some do not, some are retired, some take the train. But you are wrong about the non work trips. The families with kids walk or bike to school, shop downtown and walk and bike quite a lot.

And as far as the nostalgia other posters have mentioned for a friendlier Palo Alto, our experience and our son's is completely different. In our building, friends are there to get our mail or papers, do our condo chores when we are on vacation, watch the young children grow and take their first steps or bike ride, and do all and more of the neighborly things our friends did when we lived on Edgewood.

And for our son and daughter in law, living in a small townhouse complex brings continuing offers of help.

And of course the rising prices and rents in our building and downtown show that newcomers value our kind of living.

The point of this blog is to make sure that such living is available to "comfortable" but not rich families as we and the region continue to grow.

I'm 28 years old and I recently bought property in Palo Alto.

"Do we want a Palo Alto where only the rich can move here to live?"
Yes!

I work my butt off and took a ton of risks in life to earn enough money to buy property in Palo Alto. Still, a huge portion of my earnings go into my mortgage. I was not fortunate enough to have any money given to me by friends/family but I was lucky enough to get a quality education from my parents (1st gen) and the Cupertino school system.

It's supply and demand, and most of my millennial friends don't understand this concept. Heck if I had more money I'd want to live in Atherton - but that's not entitled to me. Maybe one day if I continue to work hard.

Who knows, maybe one day I'll lose my job and will no longer be able to afford my mortgage. That'll be on me, and I wouldn't expect to be able to stay in Palo Alto.

Plenty of other great, affordable places to live. I'd move to Austin if I had less money, save up for a few years, then try to buy in Palo Alto down the road.

If I believed non-rich people should be able to live in Palo Alto I could sell my property at 30% of it's value or rent out a portion of it below market value for charity. Probably not gonna happen!

P.S. I volunteer teaching underprivileged people in my free time so I am not totally heartless!

My family moved to Palo Alto in 1958, when I was a few months old. My husband was born at Hoover Pavilion, and is a descendant of Gold Rush pioneers. So we've both been here a while and have seen a LOT of change, beginning with the cutting down of orchards to build Silicon Valley. And NO, I don't want to see a Palo Alto where only the wealthy can afford to live here. I'm afraid that this question is coming 10 or more years too late...
Certainly, this city has had its share of wealthy folks all along--just look at Hamilton Ave. or Old Palo Alto. But it had diversity that perhaps the more recently created Palo Altans don't know about. My family was decidedly middle class; I grew up in South Palo Alto in a McKay home that my father referred to jokingly as 'the poor man's Eichler'. It was a financial stretch for them, coming from a small town in Illinois. My husband and I bought our small bungalow in 1994, and it was a stretch for us, as well. We relied on my share of the proceeds from selling that house after both of my parents had passed away, as well as the Bank of (my husband's) Mom & Dad. And this was a bank foreclosure that needed a lot of work before it was even habitable (like, water not pouring in when it rained). Yet, these were stretches that were possible. I am a librarian and my husband has a small business--we do fine, but we are not rich. We have two daughters in college now, and unless they get lucky, I don't see how they will be able to live anywhere near us, in THEIR own hometown, even with the fabulously large inheritance they will get from selling our house when we're gone (at which point it will be moot, anyway). What a gift it was to my children that they had grandparents and a family home for get-togethers within walking distance. And what a boon it was to the grandparents that we were close by as they aged. Maybe it seems irrelevant in the days of Skype and trans-continental relationships, but humans have lived close to their kin for millennia, and not out of habit or inertia.
There are so many other problems with the insane cost of living in Palo Alto, including pushing out the educated professionals who have always formed the base for our progressive politics and activities. I saw a vanity plate on a Mercedes SUV a couple of years ago outside Addison School that read CR8EQTY. I first read it as, Create Equality--a good old PA value. Then I realized that it meant Create Equity--a different story altogether. Sigh.
I don't know if there is any viable solution to the issue of crazy housing costs--there's not much in life that is actually under our control. I do know that for the first time in my life, I have been seriously questioning the value of living in Palo Alto. And I'm certainly not the only old-timer who feels that way. Go to the Do you remember the old Palo Alto? Facebook page. I even have conversations with complete strangers who share my concerns. They're easy to recognize--they're over 45, don't wear hoodies and don't dress up to go downtown. ;)

"I don't know if there is any viable solution to the issue of crazy housing costs--there's not much in life that is actually under our control."

As noted, the best and probably the only feasible way to add to the existing housing stock is to take land currently used for non-residential purposes and convert it to residential uses. My preferred choice of sites is the Caltrain right of way as described above.

This is all good and I hope Mountain View and Redwood City will follow suit to make this the Worlds economic and techno hub. And this especially includes East Palo Alto and East Menlo Park, which would be better served by economic growth to force the modernization of those areas, ending its long history of blight and crime. Then this whole area on either side of 101 would be an upper middle class area with greatly reduced crime and no schools such as those in Mountain View that are a state wide disgrace to their sub-sub-sub-standards grades and academic performance. We do not need diversity for its own sake, and for people that cannot afford this area, well tuff, there are thousands of other places to live and maybe then we can go to our new modern libraries without fear from sitting on a chair and getting bed bugs.

Steve,

Surely, you do not intend to be disrespectful, but I find your response to my post indicated you did not read it carefully.

I did not call my home a "sardine can". I did say retired people live here. I did say families live here, though only with young children. I did say neighbors walk downtown. I could go on and on, but there is no point.

I do think this is a happy lifestyle, for many people, including me. I thought, perhaps incorrectly, that this was a place to discuss your ideas.

I questioned your assumption that this lifestyle would be attractive for large numbers of growing families because this does not seem to be the common case in my building.

Rather then simply saying you "disagree", as if I was just dead wrong, you might have noted that your building might be more attractive to families because the units are far more spacious.

Since I read your post, I know your unit is 1700 sq. feet. If you had read my post, you would have learned that the units in my building are much, much smaller, many just half the size.

Then, we might have discussed the role of unit size in appeal to families. Density is not just about height, it is about unit size, too.

I questioned your assumption that this lifestyle would be affordable to a broader group of people and provided recent sale and list prices for units in my building. I noted, with some data, that sellers seem very willing to wait and wait for a >$1 million offer. You did not respond to this issue at all.

It is not my intent to be disagreeable, but as the blogger and moderator, I would ask you to consider ways to better facilitate discussion, rather than shut it down. You had the opportunity to bring me to your side, but it feels like you chose to write me off.

Hi Abitarian

I apologize if I came across as disrespectful. It was not my intent to be dismissive.
Re the sardine can comment, it was directed at Mauricio who has made the comment several times and not at you as you never called our places sardine cans.

I certainly should have said my experience is different instead of I disagree.
Unit size is important and our buildings are different. You building may be at the top range of what two professionals can afford, my place is now a stretch. But neither is in the $2.5M+ range. Do you know what units in your building rent for? I accept that offers are in the $1M range but that could be affordable to some who are not rich by any definition.

My guess is that to build affordability, we are talking studios, one bedroom or micro units and possibly smaller two bedroom units. My experience is that there will be demand and such units will expand opportunity and preserve diversity.

I appreciate your comments and apologize if my tone indicated otherwise.
Steve

Steve,

You deserve a lot of credit for posting a very interesting question that has obviously spurred a lot of great discussion. However, since you posed it I feel like you have an obligation to share with us what is the correct mix of residents and who gets to decide.

Although sometimes harsh, the free market is demonstrably the most fair and efficient method for allocating scarce resources. There are certainly cases of luck or corruption but for the most part people need to work hard, earn income legally, save, invest and make good choices to accumulate resources.

When government intervenes it picks winners and losers. How many complaints have we seen regarding the inequity of building variances granted for particular projects? I wonder how objective the process would be if imminent domain is used or large chunks of the city are selectively re-zoned?

Maybe you could comment on which groups deserve to be subsidized so that they can live here (Teachers, Police, Fire department, local government, the elderly, the poor, first time buyers, plumbers, waiters, artists, cobblers, candlestick makers....)? How many would be enough and who would pay for it (Property owners, corporations, civic service consumers or foreign investors)?

Further, what meets your definition of "not rich"? Would you feel better if we followed an imaginary bell curve distribution based on economic class? Is the proper measure earned income or net worth? Should the privilege of living in Palo Alto only be granted by a committee after a means test?

Left to its own devices, the market will force corporations over time to raise salaries or redistribute facilities in order to lower costs. We have seen that process many times over the years as facilities are opened up and jobs are shifted to Austin, RTP or off shore. The same thing is already happening with the social media companies as they mature.

If the government uses its tools to reshape the community we should not be naive. The decisions will be made by a very small group of people, the costs will be very large and the benefits will be concentrated on a few select constituents.

I assume you think that would be more fair?

Vigilant Electorate raises some good points. Assuming that local government can influence pricing to keep certain job roles local (teachers, nurses, etc..), who would get those slots? If everyone can't have equal access to subsidized housing, then no one should get it...

Of course, that is what the argument is. Set up a "straw man", knock it and exclaim, "See! It won't work!"

Even if we enable just a few hundred with lower-paying, but important community jobs, what is wrong with that? Just because it won't cover EVERYBODY? Why does that have to be the goal?

This parallels an alarming shift in wealth in this country. Did I just read that 10% of the people hold 90% of the wealth? You can be a fan of the "free market", but doesn't this statistic worry you? How about if 1% holds 95% of the wealth? Do you agree then that is a problem? Or would it take 100% of the wealth being held by one person(not you), before you think there just MIGHT be a problem?

We can look at similar statistics in housing, be concerned and actually DO something about it. Come on!

Steve -- thank you for clearing the air.

Per my earlier post, several owners do rent out their units, typically in the $4000-$5500 range, beyond what a blue collar or service worker could probably afford.

Judging by the cars, clothes, decor, etc., my sense is that, few, if any, of my neighbors are truly "rich", at least by the local standard. People do seem comfortable.

Still, given that a 780 sq. ft. unit in our no frills building just sold for over a million, I do wonder just how "micro" units would need to be in order to get prices low enough to bring in more socio-economic diversity. And, how micro is simply too micro for a family?

For the record, I am from New York and understand very well the meaning of high-density living. Like many others, however, I chose Palo Alto for its college town atmosphere.

I do support adding *some* amount of additional housing that is higher-density than is currently available. I believe with planning and mitigation, Palo Alto could handle *some* increase in the type of dwellings where you and I make our homes.

Where we differ is the question of size and scale. My feeling is that the massive amount of development needed to enable affordability would destroy the very nature of what makes Palo Alto Palo Alto.

I love cities. But if I wanted to live in a city, I would move to one. San Francisco is a wonderful city. And reasonably comparable in terms of costs.

It's a good point. But let me know when one of those 70 year old sellers prices their home at a "below market rate" price...

Talkin' the talk is easier than walkin' the walk.

I would love to see an example where increased density resolved the problem in locations that are constrained by geography. Hong Kong, Vancouver, Rio, Manhattan and virtually every european city center have the same cost and class issues even after densifying. In addition, they created other ones like crime, pollution and loss of habitat.

If we build more density in Palo Alto then people will trade up from Sunnyvale and Mountain View. If there is any inventory left then people will move in from the east bay for cooler weather and shorter commutes. Next, people will migrate from slower growing parts of the country or world for jobs and lifestyle. Lastly, international investors will still seek the properties for a safe haven and long term appreciation. The cycle is endless but the resources are fixed.

If there is a benefit to having a diverse class of residents then it will need to be subsidized. So the question will be who to take from and who to give it to.

The ecosystem in the bay area is unique. There are only a few climates zones like it in the world and none with the same economic, cultural and intellectual vitality. Each generation up until now has ferociously protected our environment and special way of life. In the past, there were plans to fill in large parts of the San Francisco Bay. Whether we pave our way to density vertically rather than horizontally the effect will be the same.

Are we going to be the generation that gives in?

I believe it is vital for our children to grow up in a place with diversity of many types, including income diversity. Otherwise, they will be handicapped in their lives and careers by thinking their childhood experiences are normal.
There is an unmentioned part of zoning that cities could modify to help promote more diversity: modify the maximum allowable square feet. In Menlo Park, homes are being bulldozed right and left (without any requirement to recycle the materials) to be replaced by spec houses more than double the size that were in the past able to house happy (upper) middle class families with kids. Zoning allows full basements replete with home theaters and wine cellars without any of that space counting against the maximum size. And the entire home can be well more than double the size of the original homes. Who really needs >5000 square feet to raise a family?
More supply of housing should help provide diversity of our populations. Reining in the upper bounds of how large homes could be also should help the environment and prevent relatively modest neighborhoods (anywhere else) from turning into luxury enclaves that only the very, very rich can afford.

So, Levy, my comment was not pertinent to this subject? You censored my replies from The Voice and PAO. A balanced viewpoint where YOU censor the conversation? NOT!

@ punisher

Yes, your comment was not responsive to the question posed in the blog and was filled with a lot of off point invective.

So it like a very few (3) other off point comments were deleted.

Mr. Levy,
My comment was one of the few deleted as "off point". On the contrary the
points made were right on target in a number of respects and reinforced
many of the counter-points made in this discussion to your too narrow
perspective.

Chris, I ride Caltrain whenever I can. I take it regularly to SFO, SJC, and downtown SF whenever I go to a Giants game. I use it a lot for carpool meetups, too, to avoid 101 traffic. When in LA , I ride their trains and subway whenever I have to get to downtown LA from LAX or Burbank airport I was stuck with 280 and 101 the other day having to pick up a disabled airline passenger with serious mobility issues.

Caltrain, SP, UP... whoever owns the ground and air rights must be part of the solutions.

I also just updated my bicycle this year.

Until our local mass transit options are more frequent, cheaper, and easier to use than private cars only those people with no private car option can be holier than thee and me for who-causes-highhway-gridlock.

>> . The only way to buy a home in Palo Alto is to first sell another home in the Bay Area

Hmmm, thinking about that, and estimating that most Palo Altans are in
a fairly high tax bracket aready ...

... having a house already would certainly help but the taxes would eat
you alive just to sell and buy another house.

I really doubt that someone who sold a house in Palo Alto could buy
another house in Palo Alto unless they could already afford a house
in Palo Alto. The down payment that your original house would
give you would make the payments lower, but you'd still have to
take a loan or cash in lots of options.

There is hardly any point in doing it. The only value in this high-
priced market now is the tax-break you get by owning a home for
a very long time.

OK, we all say we don't want this particular outcome,
but whatever happens the housing market will because
as crazy as the rental market, where people are willing
to pay in some cases $2000 a month for a space that is
not even fit to call a rental unit.

Build a bunch of low cost units and you will up the City
with people, force buildings to go more vertical, increase
traffic, congestion, pollution.

I think the best solution would be something along the
lines of Elon Musk's Hyper-whatever-its-called.

We have think ecologically and long-term.

Create branches out into the country that take 20 minutes
to get to at 200mph and build nice units out there.
Connect with what is already there and allow development
along the rail as we allow development around El
Camino. Otherwise you are just taking value from
everyone else who already lives here and has more
than paid their dues.

And while they are at it, build a decent intercontinental
airport or two that anyone can get to from the SF Bay area,
maybe one North or SF and and one south, and get
rid of the constant airplane noise. Put them set back
from the coast enough that development will not occur
in the noise corridors.

We have to start a new version of civil engineering
because what we have will not work and doing what
we have always done ... building the new over the
old is not going to work.

No more do we develop where the human being and
nature has to adapt to the needs of the one time
developer.

@Vigilant Electorate and @Regulation:

I am a fervent believer in the free market. For example, I think rent control does more harm than good.

But let's dispense the notion that we have a free market in housing here. If we did, the people who want to introduce new supply into the market would be allowed to do so, by building more housing, including more dense housing.

What we have is a market where the supply is strongly regulated (by zoning laws enacted by elected representatives who, understandably, tend to favor current homeowner interests), and only price is unregulated.

Our region's jobs-housing deficit is not some force of nature like rising sea levels. It is a human construction. We the people of Palo Alto and Mountain View and neighboring towns could zone less land for commercial and office and more land for residential.

No one from Palo Alto can reasonably claim that other cities are causing the problem. Your jobs housing ratio (3.13) is considerably higher than any other significant city in the whole region.

In a very real sense, Palo Alto residents have decided, through zoning, that only very rich people deserve to live in their city.

(But you still vote Democratic to remind yourselves that you care about the low income people you just drove out of town.)

"If there is a benefit to having a diverse class of residents then it will need to be subsidized. So the question will be who to take from and who to give it to."

I agree with this point made by Vigilant Electorate, though I suspect we disagree on what should be done. I believe Palo Alto will be a better place to live if it continues to have significant economic diversity among its residents. Support for sustaining and adding to affordable housing stock through public policy decisions is essential. Without that, I don't see a way for Palo Alto to continue being a place where the non-rich can live. Which would make it a much less desirable place to live, even for the wealthy.

To the many posters who have raised questions about whether the goal I favor is realistic, requires subsidies and government intervention.

First as many recent posters have noted and the Legislative Analyst's report on housing supports

It is government regulations (and in some cases lawsuits filed against housing under CEQA) that are the primary cause of the substantial under building of housing relative to population growth.

I am not in this blog talking about subsidized housing although that is a good topic to discuss.

I am talking about market rate housing and arguing that to avoid being a place only for the wealthy in the future, governments should loosen zoning to allow builders the option of developing smaller units and in buildings like the one I live in.

I am confident that there is a strong market for such units but do not wish to compel anyone to build them or buy them.

But I do want the option for developers and people to live in such units here and up and down the peninsula.

I do not think this will open Palo Alto or similar cities to residents at all income levels but it will broaden choice in a positive way.

The council has pledged to reexamine our current housing element with a view to locating more new development near services, shopping and transit and will need also to consider somewhat higher density to achieve any measure of diversity.

Virtually all new development here and on the peninsula will not be detached single family homes and most new development will not be in the middle of existing SF neighborhoods.

What I am saying is consistent with a free market If zoning is loosened a bit to allow smaller units with perhaps less parking (a very costly item), then the market can decide if builders want to build and residents current and future wan to buy or rent.

Let's attack the under supply of housing in creative ways.

I am no longer a resident of Palo Alto, but was born/raised and lived in PA up to my early college years. i am of chinese decent, and have nothing but
fond idealic memories of Palo Alto has a small town with friendly people.

Since I am asian I can say this....snotty Chinese folks coming from overseas paying cash for homes...they know nothing about the history of this city. hence the small town feeling is slowy and just about gone. My elderly parents still live in Palo Alto.

I really feel like, anyone buying a home in Palo Alto needs to know its history and what this city is all about

To the posters who want corporations to step up.

Certainly companies like Facebook and Google to name two are really serious about expanding housing near their work sites.

They are not the barrier now, it is local governments.

Mountain View is in discussion to change their zoning in north Bayshore that prohibited housing to allow housing.

Menlo Park is assessing how to respond to Facebook's desire to have housing near its campus.

We are not company towns where the companies build and own the housing.

But we are a region where companies want more housing and are currently constrained by local zoning restrictions.

If zoning is changed then we can have a discussion about company contributions to amenities and infrastructure.

So if you want companies to help, tell local officials to approve zoning that allows lots of homes and apartments to be built near jobs with services and shopping also nearby.

Let's not forget that Stanford provides more housing for its staff and "customers" i.e. students than does any other Peninsula employer/company/institution.

Hurrah for better understanding! Compliments to both Steve and Aribitarian for working things out amicably. That doesn't always happen on blog posts. Arbitarian set the stage by giving a very detailed and objective report on his experience living where he does. Kudos for that. Steve countered with some differences of opinion, but more than that, it was based on his observations and experience living where he does. You both might only be separated by a few blocks but your living experiences seem to be a lot different and I can understand that. Bigger and maybe more luxurious units in Steve's place probably makes for the biggest, but not only, difference.

It took me a little while but it finally soaked in that Steve was talking about market rate housing and not subsidized BMR units. I am in favor of building more housing if it will actually accomplish the job of allowing downtown workers of all kinds...techies, office workers, service workers, et al...to live in PA, thus avoiding the traffic/parking problems associated with long commutes by car.

How many and what kind of housing do we need? What size units? I can't imagine living in a micro unit. I get claustrophobic just thinking about it. Will it make it possible for teachers, firemen, policemen...single, married, married with children (1-3), to live here? From the numbers tossed out about rental and ownership costs it doesn't sound very promising, along with the associated numbers offered of what income levels it takes.

Let's try it. This will be a grand experiment. What I don't like is people speaking up now...too early...like they are experts, authorities on this issue, and have the perfect solution to the problem. Beware of them!

Let's get started, but go slowly. Do a little bit and then sample the results. Good? Keep going. Bad? Rethink! Many lab experiments have blown up in test tubes in the faces of technicians/scientists. Put your lab coats and protective eye wear on and get ready for this experiment.

This is in response to Mauricio that Palo Alto was never a blue collar town. Well I've got news for you Mauricio, it was when I grew up there. I was born at Hoover hospital in 1959. My father was an electrical engineer for PG&E. My parents were able to raise 5 of us on my fathers income. We owned a house and my mother stayed home. Many of my friends back then were raised the same as me. I will never be able to return and live in my hometown because of the ridiculous housing prices. Enjoy Palo Alto Mauricio with the rest of your close minded cohorts. People like you remind me of why I would never move back even if I could. Palo Alto was a great place to grow up with mostly middle class families. My memories will last forever of how great it was there as a kid. I go there now and it isn't the same because of people like you.

Significantly allowing zoning for increased density will only accomplish increased density...there will still be a huge demand for housing in PA by the millennials. (portion on BMR housing deleted since it is not being discussed here)

I think Steve Levy needs to rethink his argument, unless he is saying that Palo Alto should be greatly densified.

Water, water, water. There's not enough of it for more households with more showers, faucets, dishwashers, and washing machines.

Transportation is not the only infrastructure challenge. Our schools are crowded (as LASD is finding, it is next to impossible to acquire land to build a new school, and yes - a small apartment can house multiple children); our parks/open space/field space is limited; and we are water-challenged. These constraints are a product of too many people given the area's limited natural resources. Thus the competition for housing, land, water and everything else.

Gale --

Thanks for the acknowledgment. This is an important topic, and we should all strive to bring our best data and manners to the conversation!

I agree that more research is needed. It would be interesting to see a formal study around existing higher density Palo Alto dwellings like Steve's and mine and put that data into models for the future.

BTW, I am a "she".

Mr. Johnson, please don't take these remarks personally, but your suggestion of "let's try it and do a little bit...", is exactly what we cannot do!

That approach is better know as "nickel and dime-ing" the solution. And before you know it, you've spent a ton of nickels and dimes.

I don't even want to get into affordable and/or more housing debates. The issue is that our city is already behind in providing appropriate infrastructure and services to our current residents (and businesses). And as many have said above - our schools are still over-crowded despite the recent building campaign and the water supply is nowhere near what we need today.

We cannot add any significant housing until groundwork and foundation for all these things are done first. (And find the funding to do so). We can't throw up housing (pun intended) and just hope for the best.

Maybe your schools wouldn't be so over crowded if you hadn't sold a number of elementary schools to developers in the 1980,s. Always trying to make things better when you actually have made them worse. Explain to me how you are to keep quality teachers with such a high cost of living.

The solution is near. The Bubble will pop. All will be put asunder before a slow return to sanity. One sign is this article: Web Link

No, we do not want Palo Alto to be a place where only the rich can live.

Since somebody asked, I actually do greatly value a diverse socioeconomic community and I could support targeted government policies to encourage it. However, I just don't think densifying works.

It hasn't worked in the bay area, San Francisco or Seattle. It hasn't worked in any of the high demand asian gateway cities like Vancouver, Hong Kong or Singapore. It didn't work in the old economy cities like New York and Chicago. It hasn't even worked in places where there is seemingly an endless supply of cheap land like Houston or Las Vegas.

Everywhere one looks, the desirable communities in high demand areas are out of reach for many economic groups in the cities. Real estate is not a commodity like soy beans or pork bellies. Where there is growth, demand always exceed supply for the best locations. That is especially true for places like Palo Alto that is the focus of international investment.

I also get very concerned when no one can even define what is rich, what the appropriate mix of economic classes should be and how many new homes it would take to maintain those objectives.

Is the goal to ensure that anybody with the Palo Alto median income of ~117K only spends 30% of their budget on housing? That might be upper middle class so maybe we should use the California median income of ~$60K instead. Common sense tells us that we could never build enough and have no way of paying for the requisite infrastructure to support it.

The expansionistas are eager for us to destroy one of the most unique places on earth yet have difficulty answering the most basic questions with any credibility. Even if we could magically waive a social engineering utopian wand and rezone everything from the bay lands to the Santa Cruz mountains I fear we would return right back to square one again faster than anybody expected. For those of you who have lived here and witnessed the cadence of the boom and bust cycles tell me you don't have that same nagging trepidation in the back of your mind.

Densification won't work and it will destroy the great gift we have been given by previous generations.

deleted

SL; Off topic. Palo Altp has committed to planning for and allowing 2,000 more housing units in the next eight years as required by law.

This discussion is about the best way to plan for these units.

Thanks for the gender correction, Arbitarian. And I'm a he.

Change "Palo Alto" to "Atherton". Read again. It is not sensible to make each town a full microcosm of the larger world, with all income strata represented. Palo Alto is what it is. (portion deleted)

The above comment citing Singapore is an example of where there is not densification has not worked is simply wrong.

Singapore is the third most densely populated nation in the world - 19,935 people per sq mile.

"About 85% of Singaporeans today live in public housing estates and 90% of citizens are homeowners. The public housing estates, managed by the government, have an enforced ethnic quota. Maximum proportions are set for the residents from various ethnic groups in these blocks of apartments. This helps “prevent the formation of racial enclaves and promote ethnic integration," according to the government's website. Sales of a new or resale apartment are not approved to a buyer from a particular ethnic group if it would lead to that group's limit being exceeded."

In my neighborhood the new trend is tourists buy homes with cash and the homes stay vacant.
The market price goes up because they have no problem paying above the asking price.
The homes stay vacant and there are less homes for rent - that increases the rent rates.
As bad as it sound, I think that homes should not be sold to tourists.

Steve,

Thank you for publishing this article. I am pleasantly surprised by the positive tone of most of the comments. You have done a great job, addressing an important subject, and ensuring that people stick and progress with the subject in a thoughtful manner. Chapeau!

It is so interesting that so many people have so many different opinions, not better or worse, just different. It shows how all of us come from different cultures with different norms, and different expectations. It is what makes the world go around. A small example is when you hear "in England people drive on the wrong side of the road." No, they drive on the other side of the road, and when you know the history as to why, it makes total sense. Look it up!

I am also proud of the many people who have provided their valuable comments that show a lot of thought. It is so good to see this kind of atmosphere in our still beautiful small city. It is perfectly fine "to agree to disagree," as long as it is done in a polite and thoughtful manner.

"However, I just don't think densifying works.

It hasn't worked in the bay area, San Francisco or Seattle. It hasn't worked in any of the high demand asian gateway cities like Vancouver, Hong Kong or Singapore."

Actually, that list of cities is a pretty good example of why density does work. Seattle got denser. San Francisco did not. Over the last 20 years, their housing starts have been approximately double ours. As a result, Seattle has a reasonable median home price (515K) and San Francisco does not (1.2M).

Try
research.stlouisfed.org/fred2/series/SANF806BP1FH
or research.stlouisfed.org/fred2/series/SEAT653BP1FHSA

Vancouver was known for years for a focus on a dense walkable waterfront, focused on residential buildings. Recently their home prices have shot up. Sure enough, they are in the middle of an office space boom without corresponding residential construction.

try www.vancitybuzz.com/2015/03/top-12-buildings-construction-vancouver/

Singapore has had quite a boom in housing prices. If you look, this was preceded by a long and steady decline in housing starts.

try ipinglobal.com/ipin-live/406685/will-more-house-building-really-ease-house-prices

That leaves Hong Kong. 7.2 million residents, growing approximately 0.8% per year. 57,000 net new residents per year, needing 19,000 net new homes. New housing starts have averaged around 13,000 per year. They have high housing prices, and they also create fewer new homes than their population growth requires.

So, yes, those cities are a great example of how cities can use zoning to drive up home prices, at the cost of driving poor people our of town, deeper into poverty, or both.

Here's some food for thought:

Web Link

Shanghai is the business center of the universe in China, where the entrepreneurial spirit has traditionally flourished in concentration. This video is eye opening. I'm not suggesting Palo Alto will start hosting 100 foot towers or anything... but the word "more" is so open ended.

All the poor people one of my parent's grew up with were completely decimated by that transformation as in that article, by the way.

I think this focus on Palo Alto is misplaced. This is a region, and even many communities in our region would be happier for the development dollars and the extra building. When does "more" become "too much" here? The Shanghai video is a cautionary tale in that sense, that we have no real sense of retaining the natural environment, the views of the hills, traffic circulation (as required by state law), quality of life, etc. At some point, those who benefited from compromise feel no compunction about pushing out those who moved over to share.

I have lived in the Bay Area for several decades and have never spent less than 50% of my income on housing. I feel like that's my choice (and partly due to some bad luck and a natural disaster). I would not choose to move into a small high density apartment in Palo Alto -- I would move away first.

I appreciate that Steve's whole raison d'etre seems to be to get us to build more. I appreciate the civility, too, but I would much rather feel like I was getting Steve to appreciate my perspective just once.

We want the poor to clean our streets and our houses, teach and care for our children. But we don't want the same people to live here. That's shameful and disgusting. Northern California NIMBY at its absolute worst. What keeps cropping up again is that we demand that the poor commute here on a train and after an arduous day working for us, return to their crime infested Ghetto they came from. Out of sight, out of mind! This is inexplicable.

@neighbor

We have a disagreement but your perspective is yours and valid for you.

I know plenty of people who would live in a relatively small home in Palo Alto and want them to have the chance, partly for them, but for me also as I value having people who are well off but not rich continue to have opportunities to live here.

Palo Alto is not Shanghai or Hong Kong or New York but it is not Atherton, Portola Valley or Hillsborough either.

You and others keep calling the place where I live (5 stories) and where Abitarian lives (4 stories I think she said( "high density" instead of the medium density that they are and lower density than much of what is being built today on the peninsula.

I certainly do appreciate your continuing civility.

To Crescent Park Dad first: Believe me I don't take any online comments or criticisms personally anymore. If I did I would have given it up long ago. All of us regulars or quasi regulars have to have developed thick skins by now.

Your focus is always on the infrastructure concern. I agree it should be a concern, but isn't that concern part of the review process that happens before projects are approved? If it isn't then god help us all. Hope to hear responses from those involved in the review process. Please enlighten us!

And now to 'Palo Alto is my home town': Your post struck a chord with me. Your dad's reference to McKay homes is so funny. You lived in my part of town. We used to spend our weekends, before we bought here, driving south to Sunnyvale, Cupertino, Hi-Way 9 area in San Jose, to look at model homes that were going up by the hundreds and selling in the $16K-$18K price range. Beautiful homes, and we really liked those at Cherry Chase in Sunnyvale. But we had rented a duplex apartment on Alma, 3153 Alma, for a couple years, enough time for us to get to know and love PA. And of course everybody knew about the reputation of the school system here. That helped us make our decision to just rent a couple years, save money for a down payment, and buy here. Best decision of our lives.

We bought our Brown and Kaufman bungalow in 1963 for $23,500. It was built in 1956. Even then there was tract home snobbery in our middle class neighborhoods in our end of town, SPA. Now that is really funny. Snobbery was supposed to be relegated to those really rich folks in Old Palo Alto, right? Of course the Eichler folks had their noses highest in the air, knowing they were first and thinking they were best. And then I think we were next...often disputing their claim and saying we were actually better than them...but then came the McKay owners. They always came in last in our minds. Isn't that silly? There's were beautiful homes and they loved them and raised their families in them just like we did.

More history about my experience in PA. Our daughter graduated from Cubberley the last year it was open, in 1979. Our twin boys did their freshman year there and then transferred to Paly. They all graduated from PA high schools and went on to college and graduated from UC schools. Tuitions were so much lower then. But the main point I want to make is that they knew when they graduated in the mid-80s that they would never be able to come back and live in PA. So this is not a recent problem. It has existed for 30+ years.

Very sad but very real!

Steve,

I agree that Palo Alto needs to allow for more and denser market rate housing to be built on or near transportation corridors, without violating the status of R-1 residential zoning. There are lots of ways this could be done without subsidy as you state.

Those of us who have been here for decades have benefited from the way Palo Alto was, but we shouldn't be able to block the city from adapting to new realities of job creation, housing and transportation needs going forward. Our good fortune in choosing and being able to live in Palo Alto during the huge run-up in Silicon Valley doesn't give us the right to keep the city from changing so that newcomers have a chance to live here and fully benefit from and contribute to community life.

Whether this would mean that people who aren't "fairly rich" could live here depends on your perspective. In Montana , where I'm from, someone who could come up with $400K to buy or $2500 a month to rent would fit the description. Would that person be able to live here if Palo Alto made the changes you advocate?

Land and home values HAVE declined multiple times over the last 40 years. The steep increase over the past 3 years though has been unprecedented. That's due to the bubble. Home prices can still be higher than they were in 2005, and yet fall quite a bit from where they are now. Home ownership is for the long term. Rents follow home values as they stem from the same factors. Rental increases have been especially sharp in the past year.
Average home price Mountain View, July 2012 $850K
Average home price Mountain View, July 2015 $1.3 M
Average home price Mountain View, Oct 2005 $800K

Palo Alto, July 2015 $2.4 M
Palo Alto, July 2012 $1.4 M
Palo Alto, Oct 2005 $1.2 M

7 years FLAT (with small ups and downs) and then in 3 years an increase of over 50% in MV and over 70% in PA.

Effects of the bubble, pure and simple. Slingshot loaded by the recession of 2007-2008

@ sharp changes

Certainly the hot job market has some impact on prices and rents but all expert advice suggests that the main culprit is the vast under building of new units to keep pace with recent population growth.

And your characterization of this period as a bubble is off base in terms of job growth and future expansion although it may be true for the stock market as I am not an expert there. Even if job growth slows as I expect we are still not producing enough housing.

So the bottom line is you can start a family in Palo Alto, but once the kids leave home they most likely will never be back, unless your can afford a 2-3 million dollar shack. That\\\\\\\\\\\\\\\'s just classic.

Sharp Changes wrote:
> Palo Alto, July 2015 $2.4 M
...
> Palo Alto, Oct 2005 $1.2 M

$1,400,000.00 * 5.54% compounded over 10 years = $2,400,484.65


> Effects of the bubble, pure and simple.

An average increase in value per year of 5.54% is a "bubble"? I don't agree.

A Bay Area home increasing in value by 5.54% is a very typical growth rate for the area, long before the recent increases.


> Slingshot loaded by the recession of 2007-2008

I agree it's a big part of the reason for the recent large increases in real estate prices. The Great Recession created unusually low real state prices, and in the last 3 years the market has corrected that pricing anomaly.

Whups, small correction: Sharp Changes was using an initial value of 1.2, not 1.4. That requires a rate of 7.18% . The historical rate of growth for the Bay Area is in the 6-7% range, so *if* his growth rate of 1.2m to 2.4m over 10 years is accurate, that's a little higher than average. But not by much.

But my broader point remains valid, which is that over the long haul, even factoring in price dips and spikes, home prices in the bay area do not increase as egregiously as some people believe.

BTW: My " non de plume " is spelled with two Ns. That keeps the MPAA and their lawyers happy. I have to thank our media hosts for keeping the comments on your blog identical between " The Voice " and " PAO ".

When my family and I moved here years ago we were not as wealthy as some so. I guess we contributed to some income diversity. Nevertheless, we could still afford a nice home on one income. Ideally, it would be nice if that diversity of income could remain. Now that I am single, I could not afford to buy in Palo Alto today. Quite apart from the cost of property, there is also the considerable property taxes and fees to be taken into consideration. My children, although successful, are unlikely to be able to live in Palo Alto. When they relocate, I will probably move to be near them. As another comment pointed out, I will not sell my home but will rent it out. Thanks to California's high capital gains tax I would have to pay so much tax that, with Federal taxes, it makes no sense to sell. My kids will inherit my home and sell it then. I can't see people of average or modest income ever being able to afford a house at current prices and the property taxes that go with that so , sadly, desirable though it would be to have a mixed range of incomes living in Palo Alto, I don't see that happening even with 'affordable' housing. (Incidentally, what $$$ is considered affordable?)

I would love more economic diversity. But, what are our realistic options? How many more homes would we need to build to lower housing costs? Is that even possible? More important is how much will it cost us to support the additional people with: schools, police, fire, other services, traffic and parking, parks, and everything else that comes with living here. An analogy would be to double the housing at Stanford to make it easier for qualified students to attend. We all know that makes no sense since students need more than housing. They also need classrooms, labs, professors, research funding, ... and you would still have thousands of qualified students who couldn't attend. It would still be an elite school with limited access. Let's study our realistic options with costs and benefits to optimize our choices.

None of you think this discussion is a little late in the game..... Like 15-20 years late?

@ HUTCH

No I do not think it is too late to address the challenge. That is why I started the blog.

It may well be past the time where existing single family homes will be affordable to families that are not fairly wealthy.

But nearly all new housing on the peninsula will be apartments, condos and townhouses.

The Palo Alto Housing Element pledges to make zoning and policies to support development of at least 2,000 housing units in the next eight years.

The choices of locations, zoning and other policies can make the new units less expensive than single family homes and attractive to a wide variety of households that can preserve a measure of economic diversity although all will have good incomes.

It is the new housing that will be built that I am focused on

When California centralized school district funding and then doled out funding per head school districts were allowed to opt in or keep the status quo. That is, continue to fund their school district from their own property taxes and not received a set amount from the state for each enrolled student.

The Palo Alto Unified School District opted to continue their funding from our own property taxes. That means with each additional student enrolled the pie gets a little smaller per head. As far as I know Palo Alto still funds it's schools with property taxes.

Yes, property taxes are very high if you buy a house in Palo Alto, but I'm not sure if the increase keeps pass with the cost of eduction. Before anyone grips about Prop 13, if you buy a home in Palo Alto property taxes are astronomical. But if you intend to make Palo Alto your home long term and are not just passing through eventually your property tax will be manageable, and when you retire and living on a fixed income, perhaps you won't be forced out of your home.

Just because over some period the changes match history doesn't obviate the affect on this point in time. It has been a very sharp change. Some retrenchment might be expected. Things are set up though for a disaster when the bubble bursts, and there is a bubble. The situation is a repeat of the most recent 2 previous bubbles. The only thing that varies is the sectors and geographies that bear the brunt of the impact. The 0% interest rates from the Fed have fueled speculative investment, mostly in tech companies and real estate in perceived safe havens. There are many cross variables, and some of them worsen things in our area. The perverse situation of personal investments from Chinese citizens trying to shelter wealth the best they can has had a strong impact on Palo Alto real estate prices. The era of the "all cash" buyer is not just due to stock options cashed in by buyers. Either way, the fueling of the shortage of housing has been increased by the "buy at any cost" mentality. The true economy doesn't support the real estate appreciation we have seen. It's a very dangerous unstable situation.

On top of that, we have a true housing shortage. But this is not as big of a factor in the long term environment. It's made worse by the speculators focusing on high-end apartment creation to maximize the cost of each unit. More unwise workings of the capitalistic situation gone wild, the Casino Capitalism chasers at work here too.

Palo Alto has historically relied on residences outside the city. What's different now is that there are no longer residences available in the usual places. Unfortunately, undoing the historical practice is impossible because the imbalance is so great. It would indeed upend the political situation for this end of the county to suddenly shoulder its weight in residents compared to the typical day time populations. Make more housing, but it will end up costing way more to live here than other places no matter what you do, short of eliminating jobs in the city, which is really not such a bad idea.

The situation is pathologic is other ways too. The discrepancy in property taxes paid is extreme. The example you cite of $120,000 for a 20% down payment on a $2 Million home includes $20,000 in annual property taxes. How many people can afford THAT? That's with a 4.8% interest rate, fairly low historically. Why haven't interest rates on homes been lower with 0% Fed Rates? Well, sometimes they have been.

But the big question is, what happens to affordability if interest rates go up to 6%? What happens to prices of all-cash buyers are no longer in the mix? What happens to property tax receipts if a great deal more new housing stock is created and more and more people buy even $1.2 MIllion homes? The appreciation of the total assessed value in Mountain View this year was 12% over the previous year. In parts of Sunnyvale and Cupertino the overall total valuations grew by 50% year over year That's another "Sharp" change. It will have unexpected consequences.

We are new to this area and have the privilege to be part of a great institution such as Stanford. The most striking and immediate observation is the tremendous intellectual and cultural diversity of this specific area brought on by the attraction of the best and brightest regardless of where they come from. Very competitive no doubt and very rewarding intellectually. However, practically speaking, this is a very difficult area to live in and be able to afford life, unless you have been here for a long time, or you make a lot of money ( and I will add that most Stanford physicians don't make enough money by any stretch). I think ultimately something is got to give if new comers are going to be able to live here for the long term, otherwise turnover is high. I will also say that there is a concern, not a trivial one, that the type of diversity here is not representative of the rest of the planet by any means, and it is always a struggle to think if your kids grow up here, will they have a realistic understanding of diversity in the rest of the country. These are challenging questions, no easy fix.

To answer your question "Do I want Palo Alto to can move here to live?", of course not. Is it already that place? Absolutely. Is more housing the answer? No. Anything we build, high or low density, will be purchased at a premium price, Palo Alto is simply too desirable of a place to live. As is Mountain View, Menlo Park, etc. The only solution to our housing issue is a coordinated, true public transit system like New York, Chicago, Boston, etc. We need ONE well-funded bay area transportation system, not a piecemeal county by county, city by city approach.

Hello all, you should take a look at this video "Million Dollar Shack" Very well done and you should pay attention to comments by Ken De Leon at 20:05 where he says that the buyers have IQ's that are 20-30 points higher than the sellers. That's because the sellers are all blue collar workers or teachers and by definition they are all a lot dumber than Kens buyers.

Also see what Ken thinks about the right of less accomplished people to even harbor the aspiration of owning a home here. That nugget can be found at 21:43. Ken votes no. You people without Phd's who don't work hard enough to deserve to live here should take note of Ken's life advice, simply work harder you lazy undeserving numbskulls!

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