Palo Alto

Palo Alto’s Demographics

Housing Types in Palo Alto

It is important to have a variety of housing types to meet the needs of a community today and in the future. In 2023, 56.3% of homes in Palo Alto were single family detached (generally the most expensive type of home), 4.5% were single family attached, 6.5% were small multifamily (2-4 units), 32.%3 were medium or large multifamily (5+ units), and 0.32% were mobilehomes. Between 2010 and 2020, the number of multi-family units increased more than single-family units. In Palo Alto, the share of the housing stock that is detached single family homes is higher than the average of other jurisdictions in the region.
Source: California Department of Finance, 2023 Table E-5

Jobs & Housing in Palo Alto

Jobs: 90,465
Employed Residents per Household:  1.23
Jobs per Employed Resident: 2.60
Jobs-Housing Balance Ratio: 3.20
Source: ACS 2022 5 year estimates

Note: Jobs-Housing Balance is a measurement used by planners that assumes that a balanced community is one where people can both live and work. This ratio compares the number of jobs in a community to the number of housing units.

Jobs-Housing Fit: 8.6 low wage jobs per low-cost rental unit
Source: Jobs from LEHD Origin-Destination Employment Statistics 2021; households from U.S. Census, American Community Survey B25056, B25061

Note: Jobs-Housing Fit measures the mismatch between wages and housing affordability as the ratio of low-wage jobs (less than $3,333/month) to the number of low-cost rental units (less than $1,500/month). In Palo Alto, there are more than 6 low-wage workers competing for each affordable home.

Note: Current standards measure housing cost in relation to gross household income: households spending more than 30 percent of their income, including utilities, are generally considered to be overpaying or “cost burdened.” Severe cost burden occurs when households pay 50 percent or more of their gross income for housing. The impact of high housing costs falls disproportionately on extremely low-, very low-, and low-income households, especially renters. While some higher-income households may choose to spend greater portions of their income for housing, the cost burden for lower-income households reflects choices limited by a lack of a sufficient supply of housing affordable to these households.

Homelessness in Palo Alto

2022 Unhoused people: 274 people, including 263 unsheltered and 11 sheltered (-12% from 2019)

2019 Unhoused people: 313 persons, including 299 unsheltered and 14 sheltered (+13% from 2017)
Source: 2019 and 2022 Homeless Point In Time Count

Overcrowding in Palo Alto

Total Rental Homes: 13,269
Overcrowded Rental Homes: 450
Severely Overcrowded Rental Homes: 355
Percent of Rental Homes, Overcrowded: 3.1%
Source: ACS 2022 5 year estimates

• The U.S. Census defines an overcrowded unit as one occupied by 1.01 persons or more per room (excluding bathrooms and kitchens). Units with more than 1.5 persons per room are considered severely overcrowded.

Note: Overcrowding increases health and safety concerns and stresses the condition of the housing stock and infrastructure. Overcrowding is strongly related to household size (particularly for large and very-large households) and the availability of suitably sized housing. Overcrowding impacts both owners and renters; however, renters are generally more significantly impacted. 

2022-2031 Regional Housing Needs Allocation (RHNA) 

Every eight years, the Regional Housing Needs Allocation (RHNA) process is used to assign each city and county in California their “fair share” of the region’s housing need, by income level. These homes are intended to address the housing shortage, meeting the needs of existing residents and accommodating projected growth in the region. 

The RHNA process is critical because state law requires each city and county to make a specific, actionable, and measurable plan, called a Housing Element, that complies with state law and addresses housing needs. It must identify enough sites to hold the RHNA, by income level, and create programs that remove barriers to housing production and protect residents vulnerable to displacement. Local jurisdictions must also take significant steps to affirmatively further fair housing (AFFH), addressing racial and economic segregation and disparities in access to resources, and meeting the unique housing needs of residents in protected groups. The California Department of Housing and Community Development (HCD) is responsible for certifying Housing Element compliance with state law.

In the past, many cities and counties have fallen far short of their RHNA targets, as the Bay Area’s housing crisis continues to grow. In this planning cycle, new laws give HCD additional tools to provide technical assistance and hold jurisdictions accountable to their plans. Each spring, jurisdictions are required to complete an Annual Progress Report on the Housing Element, including the number of homes permitted by income level, program actions taken, and outcomes achieved. The table below shows Palo Alto’s target in the sixth cycle and progress to date in permitting new homes.

Permitting progress as of December 2023. Source: HCD 2023 Housing Element Implementation and APR Data Dashboard.

2014-2022 Regional Housing Needs Allocation

The table below shows Palo Alto’s final progress toward meeting the 2014-2022 RHNA.

Permitting progress as of December 2022. Source: HCD 5th Cycle Housing Element Implementation and APR Data Dashboard.

Current Affordable Housing Stock

SOURCE: Units reported in the Housing Element Annual Performance Report that received building permits through 2023 were added to the unit counts in the previously reported 2018 Base Year table.  This methodology necessarily means that any ELI units, if any, are included in the VLI category since that is how HCD has required production data to be reported.  The RHNA data on new units relies on self-reporting by jurisdiction and can include units for which building permits were issued that never got built.  The percentage of the total housing stock in the community is based the California Department of Finance’s Table E-5.

See more information on our affordable housing assets page.

Accessory Dwelling Units (ADUs)

All California cities and counties are mandated to permit ADUs and JADUs according to state law. The Legislature further updated ADU and JADU law effective January 1, 2021 to clarify and improve various provisions in order to promote the development of ADUs and junior accessory dwelling units (JADUs). These include allowing ADUs and JADUs to be built concurrently with a single-family dwelling, opening areas where ADUs can be created to include all zoning districts that allow single-family and multifamily uses, modifying fees from utilities such as special districts and water corporations, limited exemptions or reductions in impact fees, and reduced parking requirements. Please see the Accessory Dwelling Unit Handbook (PDF) for more information for local government bodies and homeowners interested in adding an ADU or JADU to their property. Our partner, the Housing Trust of Silicon Valley has kicked-off a major initiative, Small Homes, Big Impact to support ADU development throughout Santa Clara County, including outreach and education, and potential new financing mechanisms.

Source: HCD 2023 Housing Element Implementation and APR Data Dashboard.

Affordable Housing Policies

Housing Element Policies

The Housing Element of Palo Alto’s Comprehensive Plan has several policies encouraging affordable housing, including:

• An active Below Market Rate (BMR) (inclusionary) program for for-sale housing that provides affordable units (or payment of an in-lieu fee, as an alternative).
• Extremely low-income (ELI) units are given a strong preference in the expenditure of City funds.
• Zoning Code amendments to provide additional incentives to developers to include ELI units in their project, including reduced fees and landscaping requirements, and reduced parking requirements for smaller units.
• For proposed affordable housing developments, City departments are required to expedite processing times and waive or reduce development fees.
• Permanently affordable units are exempt from infrastructure impact fees.
• A density bonus program to allow affordable housing developments to exceed standard limits.
• A commercial impact (linkage) fee to generate funding for affordable housing finance.

Inclusionary Housing

The City of Palo Alto has an inclusionary housing policy that requires for-sale residential developments with three or more units to designate a percentage of total units for very low, low and moderate income households.  The percentage requirement differs based on the acreage of a project’s site:

• Less than 5 acres: 15% percent of total units (with two-thirds of the affordable units set aside for households earning 80-100% AMI, and one-third for households earning 100-120% AMI)
• 5 or more acres: 20% of total units (with four-fifths of the affordable units set aside for households earning 80-100% AMI, and one-fifth for households earning 100-120% AMI)

Affordable Housing Impact Fees

In April 2017, the City of Palo Alto adopted an affordable housing impact fee policy that requires new rental housing developments to pay an impact fee, which is used to fund the creation of affordable housing. As of Fiscal Year 2021, the fee is set at $21.99 per square foot.

As part of the 2021 Fee Schedule, the City also set the following fee levels for non-residential development:

• Office, R&D/Medical: $38.48
• Hotel, Retail, Other Non-residential: $22.40

Additional Resources

• City of Palo Alto 2015-2023 Housing Element
• City of Palo Alto Affordable Housing Impact Fee Ordinance
• City of Palo Alto Mobile Home Park Ordinance
• City of Palo Alto Housing Programs
• City of Palo Alto Planning and Community Environment Department
• City of Palo Alto ADU Resources
• City of Palo Alto Housing Work Plan