Moderate-Income Housing Strategy
Status Report
Erik L. Soliván
Housing Director
Community and Economic Development Committee
May 19, 2025
Item d(2)
2 Housing Continuum
Unhoused
Outreach
Encampment
Resolution
Lived in
Cars & RV
PSH Units
Rent Subsidized
& Restricted
Rent Stabilized
Market Rate
Units
Subsidized
Homeownership
Home
Ownership
Board & Care Beds
[County]
Safe Sleeping & Parking
[City]
Congregate
Shelter Beds [County]
Interim Housing
Tiny Homes
Unit
Preservation
Preservation
Hoteling & Congregate
[City]
Interim Housing
Hotels
Prevention
3 City of San José’s 2023-2031 Housing Element
• Housing Element plans ways to meet critical need for housing across all income levels, including moderate- or middle-income residents • Strategy is per Housing Element program P-15
• Complete study and implement City Council-approved strategy to further rental and homeownership opportunities for moderate-income residents • Regional Housing Needs Assessment projects a need for an additional 10,711 moderate-income workforce housing units by 2031
• Housing Element Chapter 1, Table 1-1
• Moderate- or middle-income households of 4 people earning 81%-120% of Area Median Income ($146,101 - $221,150 per year)
• Example: Average income of City of San José employee is $115,701 Staff salaries (non-management) in Housing Department go up to $155,000 Moderate-income City jobs - police officers, firefighters, librarians, legal analysts Income Levels
2024 Income Limits 1-person household 2-person household 3-person household 4-person household
Lower Income Households
(0-80% of Area Median Income) $0 - $102,300 $0 - $116,900 $0 - $131,500 $0 - $146,100 Moderate-Income Households
(81-120% of Area Median Income) $102,301 - $154,800 $116,901 - $176,900 $131,501 - $199,050 $146,101 - $221,150 Above Moderate-Income Households
(121+% of Area Median Income) $154,801 and up $176,901 and up $199,051 and up $221,150 and up 4 5
Demographics & Affordability
• 55% of San José’s moderate-income households own their homes • Homeownership is out of reach for today’s moderate- or middle-income households in San José
• San José’s ratio of home price-to-income is now 11.0 – second highest in U.S. behind L.A.
Low-Income Moderate-Income Above ModerateIncome All Households Total % of Total Total % of Total Total % of Total Total % of Total RenterOccupied 89,418 59% 26,387 45% 29,891 26% 145,696 44% OwnerOccupied 62,289 41% 32,621 55% 87,136 74% 182,045 56% Total 151,707 100% 59,008 100% 117,026 100% 327,741 100% 6 Housing Cost Burden
Approximately 20% of moderateor middle-income households are housing cost-burdened
7 Demographics
AVERAGE HOUSEHOLD SIZE BY INCOME LEVEL, SAN JOSÉ, 2022.
Moderate- or middle-income households slightly larger and more diverse
POPULATION BY RACE AND ETHNICITY AND HOUSEHOLD INCOME LEVEL, SAN JOSÉ 2022
1) Zero Market Rate multifamily housing starts in 2024
2) High development cost per unit, increasing subsidies per unit 3) Rental market buy-downs and limited throughput on the housing continuum 4) High mortgage rates, low unit turnover, low unit production – Limited homeownership opportunities means moderate-income households are consuming rental supply, renting longer than at other points in history, thereby driving up overall housing prices
5) Inventory and production limits that may hinder diversity of financeable product types 6) Limited public subsidies at all levels
Housing Challenges
8 9
Examples of Missing Middle Housing
Proposed Strategies
Proposed Policy Strategy Category
Update Inclusionary Housing Regulations to Maximize Housing Production • Simplify regulations
• Establish Surplus Unit Credit Market
• Expand AMI scale to 60% to 120% per adopted FY 2025-2026 March Budget Message
Process Improvements
Expand Affordable ADU Ownership Program
• 2024 – City Council passed ordinance allowing owners to sell ADUs separately from primary residence
• Explore incentives to encourage ADU production and purchase assistance programs for prospective income-qualified homebuyers
Production Incentives
Consider a Moderate-Income Housing Density Bonus Program • Explore ADU Density Bonus Program best practices, which allow an additional market-rate ADU for every deed-restricted affordable ADU on a property Production Incentives
10 Proposed Strategies – Cont’d
Proposed Policy Strategy Category
Support Construction Defect Liability Reform for Condominiums • California's current construction defect liability law holds builders liable for defects for 10 years, discouraging developers from building for-sale condominiums
• Continue work to advance support reforms to state law Regulatory Reforms
Missing Middle Housing for the Workforce
• Pursue more mid-density housing and explore additional building typologies to meet the needs of our population
• Missing middle housing includes condos, townhomes, fourplexes and bungalow courts
Regulatory Reforms
11 Moderate-Income Housing Strategy
Status Report
Erik L. Soliván
Housing Director
Community and Economic Development Committee
May 19, 2025
Item d(2)