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Preventing displacement in Berkeley: the social housing strategy (News Analysis)

Thomas Lord
Friday August 11, 2017 - 10:33:00 AM

Most of the people who live in Berkeley are at risk for displacement. The market prices of housing in Berkeley are affordable only to households with incomes over $100,000. The median household income in Berkeley is much less than that.

In 2015, that median income was only around $66,000. Anyone who must leave their current residence in Berkeley is statistically likely to have difficulty finding an affordable replacement in Berkeley

Each year -- year after year -- the number of Berkeley households making less than $100,000 falls by the hundreds. Each year the number making more than $100,000 grows even faster than that. (See the attached graph.)

Berkeley is Gentrification City

Between 2000 and 2015, Berkeley added over 7,000 households with incomes over $100,000.[1] Most of that increase happened just between 2005 - 2015. During that same period, Berkeley lost over 6,000 households where the people had incomes under $100,000.

Some of those changes in household income might be explained by households that had incomes below $100,000 in 2000, but who by 2015 had seen their incomes increase to over $100,000. Still, it is unlikely that explains very much of this overall change.

Each year, on average, many hundreds of very high income households move into Berkeley. And many households with lower incomes wind up leaving.

Berkeley is becoming gentrified at a very rapid pace. 

Berkeley's housing is priced for very high income households

Berkeley's market rate housing, these days, is affordable to households with over $100,000 income, but not to households much below that. For example, one is lucky to find a $2,500 apartment these days - a rent that becomes sustainably affordable only with around $100,000 income. 

The median income in Berkeley is well below $100,000 (at least for now). In 2015, the median household income was only around $66,000. 

This implies that more than half the people in town are at risk for displacement if they lose their current in-town housing. 

Students experience this pricing as unaffordable overcrowding

A segregated market of student housing has developed in two forms: 

  1. There is an informal (e.g. Craigslist) market for sub-leasing bedrooms or half-bedroom in shared apartments. This large market is not strictly exclusive to students but is student-dominated in Berkeley.
  2. Some units are removed from the general public market by the University of California, which leases them and acts as a master-tenant who in turn sub-leases bedrooms to Cal students.
It is typical for students in either system to pay much more than $1,000 for a bedroom space. 

Thus, this segregated student market remains priced for very high income households. Students are "simply" [sic] carrying a heavy housing cost burden. 

"Affordable Housing" programs can not help

Tens of thousands of Berkeley households face displacement pressure in the current market. If their current housing situation is jeopardized, a majority of the town would find today's market prices excessive. 

While the need is in the 10s of thousands, traditional approaches to "affordable housing", even if fully funded and optimally regulated, can produce at best a tiny fraction of what is needed -- hundreds of units per year. 

Berkeley is spending all of its 10s of millions of housing dollars on failed affordable housing strategies. 

"Streamlining" development of new market rate housing can not help

Berkeley's housing is priced for the top 30% of household incomes within the entire, commute-distance region. 

In regional terms, only a small minority can really afford to buy or lease in Berkeley -- but even that small minority is large in number compared to the size of Berkeley. 

Even if Berkeley gained newly built housing at record-breaking levels the, supply would be tiny compared to that top-earning 30% that are dominating housing prices in Berkeley. 

It follows from this that the affordability crisis can not be relieved by encouraging faster market rate development. 

Policy Direction: Social (de-marketized) housing can help

In the 1970s, Berkeley embarked on a program of price controls for rental housing. 

The idea at that time was, in the long run, to de-marketize the supply of housing and treat it as something closer to a publicly controlled utility. 

The state fought back strongly, ultimately taking away the right of California cities to control the price of privately owned apartments. (Particularly the Costa-Hawkins Act which took effect in 1996.) 

To restore price controls -- to solve the affordability crisis, in other words -- Berkeley must find another path towards public control, and public creation of housing. 

Here is a key observation for policy makers: 

If the City of Berkeley owns some unit of housing outright, then the City can lease it at any price public policy will support, and allocate the housing by any lawful means. 

The same is true (at least to some degree) if the City of Berkeley is the master tenant of unit of housing under favorable terms. If the City is getting a "good deal" on a unit, and can sublease it, then again the City has a large degree of price control over that unit. 

If the City outright owns some housing, or leases it on favorable terms, it can create a source of housing "outside" the customary housing market, and not subject to market prices. 

The City -- the public -- can allocate housing for practical needs supporting the local economy, local community, and the student population. 

Since neither market rate or traditional "affordable housing" policies can make a dent in the problems, social housing is more plausible than ever. 

Social housing has an additional, huge benefit: the capacity of the community to maintain and improve its own stock of housing using direct action and local labor rather than relying on markets dominated by the market. 

By the numbers

Income categories below $100,000 are shrinking: 



% households 2000  


% households 2015  




$0 - $9999  








$10,000 - $14,999  








$15,000 - $24,999  








$25,000 - $34,999  








$35,000 - $49,999  








$50,000 - $74,999  








$75,000 - $99,999  
















# of households  


of 45,007  


of 45,917  




Income categories above $100,000 are growing: 



$100,000 - $149,999  








$150,000 - $199,999  
























# of households  


of 45,007  


of 45,917  






[1] US Census Bureau surveys are used throughout.