February 8, 2022

Palo Alto

Palo Alto’s Demographics

Population: 68,145
Households: 27,381
Housing Units: 29,298
Source: California Department of Finance, Table E-5

Employed Residents: 33,036
Source: ACS 2019 5 year estimates

In 2020, 54.9% of Palo Alto’s population was White while 1.8% was African American, 32.5% was Asian, and 5.6% was Latinx. People of color in Palo Alto comprise a proportion below the overall proportion in the Bay Area as a whole.
Source: 2020 Decennial Census

Rate of population growth, 2010 to 2020: 5.8%
Rate of housing unit addition, 2010 to 2020: 3.8%
Source: California Department of Finance, Table E-5

Over the same period, Palo Alto grew more slowly than Santa Clara County, which had a 9.2% population increase, or the nine-county Bay Area region, which had a 8.6% population increase.

The number of new homes built in Palo Alto and Santa Clara County has not kept pace with demand, resulting in longer commutes, increasing prices, and exacerbating issues of displacement and homelessness.

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 2020, 56.6% of homes in Palo Alto were single family detached (generally the most expensive type of home), 4.2% were single family attached, 6.6% were small multifamily (2-4 units), and 32.3% were medium or large multifamily (5+ units). 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, Table E-5

Jobs & Housing in Palo Alto

Jobs: 122,731
Employed Residents per Household: 1.21
Jobs per Employed Resident: 3.72
Jobs-Housing Balance Ratio: 4.19
Source: ACS 2019 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: 6.64 low wage jobs per low-cost rental unit
Source: Jobs from LEHD Origin-Destination Employment Statistics 2019; 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.

Renting in Palo Alto

Percent of population that rents: 45.4%
Source: ACS 2019 5 year estimates

Median Monthly Rent (1 bedroom apartment): $2,748
Rent Change Year over Year: +17%
Source: Zumper, February 2022

Cost Burden in Palo Alto

Cost-Burdened (30% – 50% income spent on housing)
Renter Households: 18.6% of renter households (2,204)
Homeowner Households: 24.2% of homeowner households (3,458)

Severely Cost-Burdened (more than 50% of income spent on housing)
Renter Households: 19.3% of renter households (2,292)
Homeowner Households: 10.5% of homeowner households (1,501)
Source: ACS 2019 5 year estimates

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: 11,884
Overcrowded Homes: 411
Severely Overcrowded Homes: 366
Percent of Rental Homes, Overcrowded: 2.7%
Source: ACS 2019 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.

2014-2022 Regional Housing Needs Allocation

Every eight years, the Regional Housing Needs Allocation (RHNA) process is used to assign each city and county in California their “fair share” of new housing units to build. These units of housing are intended to accommodate existing need and projected growth in the region. The RHNA process is critical because it requires all cities and counties to plan for the housing needs of their residents, regardless of income, in an effort to plan for future growth and ease the Bay Area’s acute housing crisis.

Many cities and counties regularly fall short of their RHNA targets, as the Bay Area’s housing crisis continues to grow. Each spring, jurisdictions are required to provide an Annual Progress Report to show how effective their efforts have been in achieving housing development targets by income level. The table below shows Palo Alto’s progress.

Affordability Level	RHNA Target	Permits Issued	Progress to Target
Very Low Income	691	101	14.6%
Low Income	432	60	13.9%
Moderate Income	278	43	15.5%
Above Moderate Income	587	763	130.0%
Total	1988	967	48.6%

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

2023-2031 RHNA Allocation

In January of 2023, about a year after local jurisdictions are given their final RHNA numbers, the local planning process will culminate in the Housing Element. This is a pivotal document that serves as a Constitution for land use planning and accounts for how and where the jurisdiction will accommodate allocated housing units. It must identify adequate sites for the full RHNA and all types of housing, including emergency shelters, rental housing, and ownership housing, and commit to policies and programs aimed at removing barriers to housing production, addressing racial and economic segregation and disparities in access to resources, providing for the unique housing needs of residents in protected categories, and protecting residents vulnerable to displacement.

Very Low Income	Low Income	Moderate Income	Above Moderate Income	Total Allocation
1,556	896	1,013	2,621	6,086

Source: ABAG Approved Final RHNA Plan: San Francisco Bay Area, 2023-2031 (Dec 2021)

Current Affordable Housing Stock

Extremely Low-Income	Very Low-Income	Low-Income	Moderate Income	Total Units	Affordable % of Total Housing Stock
146	1,029	614	843	2,632	9.0%

SOURCE: Units reported in the Housing Element Annual Performance Report that received building permits in 2019 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.

2017	2018	2019	2020	2021	2022	Total
12	36	62	43	89	120	362

Source: HCD 2022 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