Palo Alto’s Housing Situation
Jobs-Housing Imbalance
What is the “Jobs to Employed Resident” ratio?
Jobs-housing balance is measured in a variety of ways and, in Palo Alto, sometimes refers to the city limits alone and sometimes to the city plus it’s sphere of influence (SOI), counting both the city and Stanford University, which lies outside the city limits. While the ratios of jobs/household or jobs/housing unit have been used in the past, the City currently favors a jobs/employed resident ratio (J/ER).
Although past use of different measures can make it difficult to convey trends, the J/ER ratio avoids the complication of counting housing units that may be vacant or occupied by multiple workers, instead simply tying one local job to one local worker. By correlating jobs with local workers, planners can get a sense of the potential for individuals to both live and work within the City. Benefits typically attributed to an even balance include reduced car travel, expanded housing choice and enhanced economic and social vitality.
According to the latest data (2014), the City of Palo Alto currently has a very high J/ER ratio of 3.06 jobs per employed resident. Counting the jobs and population in Palo Alto’s Sphere of Influence (SOI) (outside of the city limits, including Stanford University) the overall J/ER is 2.80. (City’s 2016 Comprehensive Plan Update Draft Environmental Impact Report (DEIR), p. 4.11-29)
By comparison, Santa Clara County’s ratio is 1.14 and the Bay Area as a whole hosts 1.03 jobs for every employed resident.
J/ER imbalance worsened despite significant increase in housing production
Palo Alto’s jobs-housing imbalance has long skewed heavily to the jobs side of the ratio. The J/ER ratio (city + SOI) for 2000 was tagged at 2.4 jobs to every employed resident (1999 City Housing Element, p. 12). By 2005, the J/ER ratio (city +SOI) had jumped to 3.11 (Stanford University Medical Center DEIR, p. 3.13-7) before settling at its current 2.80.
This despite an 80 percent increase in the annual rate of housing production during the period from 2000 to 2012 as compared to the decade before. (2015 City Housing Element, p.45)
During the period from 2000 to 2012, new housing was produced in Palo Alto at a faster rate than anytime since the housing boom of the 1970’s. At the same time, however, concern about the economic impacts of the dot.com bust and the subsequent financial crisis led to City policies to encourage jobs creation through increased office space development.
As a result, annual growth in non-residential square footage in Palo Alto jumped from an average of 90,489 per year between 1989 and 2007 to an average of 102,352 per year between 2008 and 2015. Jobs in Palo Alto (city only) grew from 86,960 in 2000 to 89,690 in 2010 and 95,460 in 2014. (1999 City Housing Element, Comprehensive Plan Update Existing Conditions Report, 2016 Comprehensive Plan Update DEIR)
What does Palo Alto’s housing look like?
Housing Types
Single family homes historically have comprised more than half of the city’s housing inventory, but Palo Alto has proportionately more attached, multi-family residences than either Santa Clara County or the Bay Area. (2016 Comprehensive Plan Update DEIR, p. 4.11-8)
About seven percent of citywide units are Below Market Rate (BMR), with about one percent of all units characterized as for-sale BMR units and six percent characterized as rental BMR units. (Fiscal Analysis of the City of Palo Alto 2030 Comprehensive Plan Draft Report 2/17/17, p. 17)
Household types
Renters
The current ratio of homeowner to renter households is 57.6 percent to 43.4 percent. That proportion has been fairly stable since 2000 and is in close alignment with Santa Clara County trends. (2016 Comprehensive Plan Update DEIR, p. 4.11-9)
Rentals for large families can be particularly difficult to find, however, because only 23 percent of rental housing contains three or more bedrooms. 70 of rental housing contains one or two bedrooms and seven percent are studio units. (2015 City Housing Element, p.35)
Families
Families (made up of relatives by birth, marriage or adoption) have historically comprised more than half of Palo Alto’s households with that proportion steadily increasing since 1990 to a 2012 level of 64 percent. As of 2012, approximately 80 percent of the city’s population lived in family households.
Family households with children increased by 28 percent between 2000 and 2012, rising to 52 percent of all family households, including a 15 percent increase in the number of female-headed households with children.
Seniors
Palo Alto’s senior population (65 years or older) grew by 24 percent between 2000 and 2010. During the same period, the percentage of seniors living in owner-occupied housing units decreased from 70 percent to 66 percent.
Vacancy rates
In 2012, Palo Alto’s overall housing vacancy rate was 6.07 percent. However, of the 1,708 vacant units, only 40 percent (686) were for sale or rent. Of the rest, 366 (21 percent) were used for seasonal, recreational or occasional use and 340 were sold or rented, but unoccupied, thus reducing the effective vacancy rate to a low 2.43 percent. (2015 City Housing Element, p.46)
Vacation rentals
Airbnb listings are on the rise in Palo Alto and East Palo Alto, with 333 of listings (46.2 percent) encompassing entire homes as of August 2017.
For updated, interactive Airbnb analytics, visit:
https://www.airdna.co/market-data/app/us/california/palo-alto/palo-alto/overview