Housing by the numbers

There's a pretty famous software engineering slide called "Latency Numbers Every Programmer Should Know." I thought I would write an equivalent for housing construction, since a lot of these statistics can be hard to estimate. The goal is to make it easy to do a ballpark estimate of the impacts of a particular proposal. For example, Emeryville has a $50 million affordable housing bond on the ballot, and California has a $4 billion housing bond. How many housing units would each allow to be built?

  • Housing units California must build every year to meet population/household growth: 180,000, according to the California Department of Housing and Community Development. California currently has 13 million homes; spread evenly, each city would need to grow their housing stock by about 1.4% per year.

  • Housing units California has built over the past decade: About 64,000 per year.

Chart of housing
production per year

  • Cost to build a single housing unit: This depends on a few things:

    • cost to buy the underlying land

    • how much you pay construction workers. Labor groups push for "prevailing wage," a living wage established by the state government. The prevailing wage in Los Angeles is around $43 per hour, while the median wage is around $25. If projects don't pay prevailing wage, unions will sometimes file lawsuits alleging that projects violate CEQA - an environmental quality law. The lawsuit will then be dropped if the project agrees to pay prevailing wage.

    • environmental regulations in new construction, anything from gray water / solar requirements to CEQA.

    • the amount of time it takes to get through the application process, and the amount of local opposition. In San Francisco it is not unusual for an application to take 10 years from end to end.

At the low end, you might be able to build an apartment building for $250,000 per unit. At the high end (San Francisco) it might be $600,000 or $700,000 per unit.

  • Square feet per unit: A studio might be as low as 300 square feet. A two or three bedroom apartment might be 1200 square feet. A single family home might be 2000 square feet. A mansion might be 5000 square feet.

  • Square feet per employee, for office space: Anywhere from 120 to 200 square feet per person. This disparity means you can build office space for more workers on the same lot than you can build space for people to live.

    For example, if you hear that Brisbane wants to add 2,200 housing units and 4 million square feet of office space, you can assume at the high end that 4 million square feet is 33,000 commuters, and at the low end that it's 20,000 commuters.

  • Construction cost per square foot: In the Bay Area, $400 per square foot. Modular housing may be able to reduce these costs, by building housing offsite in more friendly environments, then shipping fully constructed units to the site.

  • Cost for the State of California to build 180,000 units per year by itself: At $250,000 per unit, $45 billion; at $400,000 per unit, $72 billion. The state budget is $190 billion this year. AB 71 would have raised $300 million for housing by repealing the state mortgage interest deduction on second homes. This measure would have raised about 0.4% of the required yearly amount, but failed to get a vote in the Legislature last fall.

  • Parking required per housing unit: Anywhere from 0 to 2 spaces required per unit. In some parts of San Francisco you are not required to build parking spaces at all. Belmont, where I live, recently revised its parking requirement per unit down from 2 spaces per unit to 0.5 per studio, 1 per 1 bedroom, 1.5 per unit above that.

  • Cost to build a parking space: Above ground, about $22,000 to $27,000 per space.

  • Cost to build an underground parking space: About $60,000 per space.

  • Cost to get a mortgage: Anywhere from 20-30% of the purchase price for a down payment, and then a loan for the remaining amount with an interest rate between 4% and 7%, depending on your credit score.

  • Cost of the median home: $1.5 million in San Francisco, $1.3 million in San Mateo County. Starter homes/condos are at least $700k-800k.

  • Property taxes: About one percent of the purchase price of the home; if you pay $1 million for a home, you pay $10,000 per year in property taxes. Thanks to Prop 13, your property tax can increase by a maximum of 2% per year. (Home values have increased by much more than 2% per year.) This leads to absurd situations like side-by-side homes, one of which is paying $2000 per year in property taxes and one of which is paying $13,000 per year in taxes.

  • Rate of return for a multifamily apartment developer: Anywhere from 5% to 10% to be able to qualify for a loan from a bank to build the structure. Of course, in downturns like 2008, developers might lose all of their money. The historical rate of return for the Dow Jones Industrial Average is 7.75%.

Thanks to Scott Feeney for reviewing a draft of this post. What other statistics are you curious about? Send me an email: [email protected]

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