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Since the beginning of the recovery from the Great Recession in 2012, interest rates have been maintained at low levels of 3.5 to 4.5 percent. Due to the COVID-19 pandemic, however, national 30 -year mortgage rates have dropped to historically low levels, declining to 2.7 percent in late 2020. When interest rates are low, capital investment and housing production generally increase, and more people are likely to take out a mortgage than when interest rates are higher. In addition, consumers are able to borrow more money for the same monthly payment. Extremely low interest rates are one of the factors that has led to overall increased home values in Pleasanton above what has been seen in the past several years. Coupled with the general desire during the pandemic to move from denser to more spacious neighborhoods, the housing market will likely continue to be competitive in the near future. Market Overview: Rental As shown in the Needs Assessment (Appendix A, Figure A-43), Pleasanton rents are higher than rents in Alameda County and the Bay Area as a whole. According to U.S. Census data, the median rent paid in Pleasanton in 2019 was $2,290, increasing 62.4 percent in the past 10 years, while rents in Alameda County have increased 56.2 percent. Meanwhile, median rent in the Bay Area region has increased just over 54.0 percent in the same time period. The rate of rent increase in Pleasanton has outpaced both the County and the Bay Area. Per the Needs Assessment (Appendix A, Figure A-44), renter households in Pleasanton experience a higher housing cost burden than homeowners. An estimated 22.6 percent of renters spend 30 to 50 percent of their income on housing compared to 13.7 percent of those that own. Additionally, 21.0 percent of renters spend 50 percent or more of their income on housing, while 9.9 percent of owners are severely cost -burdened. In total, almost 24 percent of homeowners are cost burdened, while almost 44 percent of renters are cost burdened. C.3.2 Development Costs Land Costs Due to the shortage of vacant property in the city, a residual land value analysis was used to estimate the price of land in Pleasanton. The analysis used comparables recently sold within the past four years (2018 through 2021). Individual lots ranged from $44 to $137 per square foot, or about $1,928,134 to $5,956,728 per acre. Lot sizes ranged from approximately 3,920 to 146,797 square feet. Residential multi -family land in the city is estimated to cost an average of $74 per square foot, or about $3,228,376 per acre. Though there was some raw land sale activity in Pleasanton, the city has little undeveloped land available. The shortage of available land in Pleasanton is considered a constraint to development, as housing production will most likely occur on more expensive opportunity sites for redevelopment. A developer will need to pay for the existing on-site improvement before demolishing it, resulting in a cost premium over vacant land. In addition, sites with existing uses will most likely incur more costs due to the removal of on-site structures. C-34 I City of Pleasanton Housing Constraints