This Bay Area exurb is full of McMansions – and may be the ‘next frontier' of the housing crisis

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Vacaville was supposed to be where Guadalupe “Lupe” Lupercio realized his American Dream. After living paycheck to paycheck in Los Angeles and San Bruno, the Mexican immigrant retreated to this working-class exurb 55 miles northeast of San Francisco in the mid-1990s for cheaper rent, friendly neighbors and the hope of buying a house someday.

Yet today, Lupercio, 68, is struggling to afford the modest two-bedroom apartment he rents with his wife in southeast Vacaville. With few other low-income housing options in this steadily growing outpost of roughly 103,000 residents, the retired truck driver fears that soaring expenses could force him out of the Bay Area – or worse.

“It’s stressful,” he said. “There’s times I think I’m going to have to move out of here and go live under a bridge or something.”

Stories like Lupercio’s are increasingly common in the Bay Area’s outer suburbs like Vacaville, where average monthly rent for a two-bedroom apartment has more than doubled since 2010, from around $1,200 to about $2,500. For decades, San Franciscans escaped skyrocketing costs by moving farther out. But with the housing crisis now stretching into remote pockets once considered bastions of affordability, priced-out renters wonder: Is anywhere in the Bay Area within their budgets anymore?

Perhaps nowhere presents a more striking case study for the region’s ever-expanding rental crunch than Solano County. Perched along the periphery of the Bay Area, with vast expanses of farmland, wide highways and sweltering summers, this 900-square-mile patch of exurbia long felt more like California’s Central Valley than Silicon Valley. Now that’s beginning to change.

A recent Chronicle analysis of U.S. Census Bureau data found that Solano County has the two cities, Vacaville and Vallejo, with the Bay Area’s highest share of renters considered “cost-burdened,” meaning at least 30% of their pre-tax income goes toward housing costs. More than 70% of renters in both Vacaville and Vallejo exceed that cost-burdened threshold, far higher than the regional average of 56% or the roughly 50% of cost-burdened households nationwide.

“These outlying cities really are the next frontier of displacement,” said Cristal Gallegos, director of the Vallejo Housing Justice Coalition, a community-led nonprofit that advocates for tenants’ rights. “Once the old adage of ‘drive until you qualify (for a mortgage)’ stops applying to the Bay Area, you know you have a serious problem.”

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The big question is what, if anything, can be done to make the exurbs more attainable for anyone willing to slog through long work commutes. Vacaville offers critical insight into the issue’s complexities.

Forged in the late 19th century as a major production and packaging center for the area’s booming fruit industry, it evolved into an important commuter hub. Tucked between the rolling hills roughly halfway between San Francisco and Sacramento, Vacaville provided residents the cheaper housing and easygoing charm of the Sacramento Valley, all within driving distance of Silicon Valley’s corporate campuses.

As costs in the Bay Area’s core cities ballooned over the past two decades, thousands of people traded big-city living for bigger homes with bigger yards in Vacaville. The pandemic and remote work only exacerbated that trend.

Unlike Vallejo, which has yet to fully recover from its 2008 bankruptcy filing, Vacaville has signs of a suburb on the rise: a burgeoning biotech presence, a median household income in the low six figures, several new higher-end subdivisions. But the more people flock to this bedroom community for cheaper housing, the more its rental prices veer toward San Francisco levels. Over the past half-decade, Vacaville’s share of cost-burdened renters has swelled more than any other Bay Area community.

“If you’re a renter in Vacaville, there’s so many different market forces working against you,” said Robert Eyler, an economics professor at Sonoma State University. “Until you’re actively looking for a rental there, it’s hard to understand just how bad it is.”

Some priced-out renters have been surprised to learn that Vacaville has no problem greenlighting construction. It’s the type of projects that’s the issue.

According to Vacaville’s official housing reports, it completed around 2,900 residential units between 2015 and the end of 2021, more than double what it had targeted. That was enough to put Vacaville among the top-10 Bay Area cities in overall housing production.

But the bulk of the building has been for large single-family homes. Along Vacaville’s southern edge, construction crews are working on a 2,400-acre development called Lagoon Valley, which will include more than 1,000 houses spanning 14 distinct neighborhoods, retail and office space, a golf course and a community event center.

Meanwhile, Vacaville has long ranked toward the bottom of Bay Area communities in producing multifamily homes. Housing projects such as townhomes, duplexes and triplexes, often called the “missing middle,” make up less than a 10th of the city’s housing stock.

With few new rentals, the city’s vacancy rate has seldom risen above 3% in recent years. Experts consider anything below 5% “unhealthy” for the market.

“When you have all these people moving here from better-known Bay Area communities to pay cash for McMansions, it changes the entire housing landscape,” said Michael Hulsey, a longtime realtor based in Vacaville. “There’s a trickle-down effect, and renters end up paying the price.”

Lupercio is one of them.

During the three decades since he moved to Vacaville from San Bruno for the promise of a better life, he has withstood the kind of hardships he said “could break some people.” In 2015, eight years after undergoing open-heart surgery, he was in a serious trucking accident that left him with chronic back and shoulder pain.

The $2,075 a month Lupercio earns from disability is around the same price as Vacaville’s market-rate rent for a one-bedroom apartment. With his wife, a retired cannery worker named Ana, also on a meager fixed income, Lupercio has had to become a master at securing spots in one of the city’s handful of low-income housing complexes.

“The trick is calling the rental office every single day,” he said. “Eventually, you might get lucky, and call right after the next person in line for an apartment didn’t answer their call. They’ll give you the place right away because they need it filled.”

Still, with no financial cushion, Lupercio knows he is just a minor rent increase away from having to make difficult decisions. Some of his old neighbors have already escaped for more affordable states like Texas and Arizona. Others can be found in one of the many homeless encampments that dot Solano County.

Vacaville community development director Erin Morris said it’s not hard to pinpoint the crux of the problem. When California dissolved its redevelopment agencies in 2012, Vacaville and many other exurbs lost their largest dedicated affordable housing fund. With no single source to replace it, they must rely on a mix of Low-Income Housing Tax Credits, state grants and county affordable-housing funds to get rentals built.

The Trump administration’s efforts to scale back federal housing programs only made things trickier. With the funding models for multifamily complexes now often expected to take at least several years to line up, many developers favor the faster, more predictable returns of single-family projects.

“Over the last three years, we’ve really seen no meaningful starts to apartment complexes in Vacaville,” Morris said. “We know why: It’s funding, funding, funding, the interest rates and funding. Until something changes, we’re kind of at a stop right now for multifamily housing.”

Many experts believe that the Bay Area’s rental crisis won’t ease without government intervention. But compared to major urban centers like San Francisco, exurbs like Vacaville tend to be less receptive to such progressive housing policies as local rent control and below-market-rate mandates.

City officials must get creative. In October, the Vacaville City Council voted unanimously to apply for a prohousing designation, which could boost the city’s chances of securing new funding sources.

But at that city council meeting, some residents couldn’t ignore what they viewed as the city’s blatant hypocrisy. “This is the least pro-housing this community has ever been,” retired engineer Tom Phillippi said during the public-comment period.

Over the past 46 years, Phillippi raised five children in Vacaville, only to watch each of them settle elsewhere as adults due to high costs.

“The crazy thing is, they’re all successful in their own right,” Phillippi said. “Four of my kids are homeowners in different states. Despite its ‘affordable’ reputation, Vacaville is expensive by almost any measure.”

Twice in recent months, Vacaville’s City Council brought in a housing consultant to discuss the merits of inclusionary-housing plans, a popular strategy that features lower-income households within market-rate projects. After sitting through heated debates on the topic from residents and local developers, the city council ultimately opted not to make a decision on inclusionary-housing.

Phillippi was hardly shocked. After moving from Pleasant Hill to Vacaville to buy his first home in 1980, he came to appreciate the city’s tight-knit community, workmanlike ethos and low crime. But the atmosphere has changed over the years, Phillippi told the Chronicle, and “it’s a direct result of town leaders’ insistence on Vacaville being one of the nicest suburbs in the county.”

Mark Welch, a Vacaville-based real estate broker, calls it the “the Tiburon effect.” He figures that the longer city officials fail to build multifamily or below-market-rate housing, the less vibrant the community will become. And that could hurt Vacaville’s bottom line.

“They’re trying to make us like that one swanky Marin County town on the (Tiburon) Peninsula, and it’s backfiring,” Welch said. “Just watch: This will end up killing us economically.”

To balance its last fiscal-year budget, Vacaville needed one-time reserves and hiring freezes. Its five-year financial forecast currently projects an annual deficit of roughly $9 million.

If Don Burris – Vacaville’s director of economic development – has things his way, this midsize city along Interstate 80 will attract more biotech companies, bolster its tax revenue, and stave off the deep cuts to city services that plague other Solano County communities. But that plan at least partly depends on Vacaville building more low-income and middle-income rentals.

Whenever Burris meets with CEOs about bringing their companies to town, they ask about Vacaville’s affordable housing stock. Often, while detailing the city’s rental challenges, he can sense himself losing the pitch.

“These executives aren’t concerned about whether we have single-family housing for their wives and children,” Burris said. “They’re actually more worried about the younger employees who don’t make enough money to afford a single-family home.”

Such concerns might seem minor compared to the Lupercios’.

On a late-December afternoon at their apartment, beside a plastic Christmas tree in the kitchen, Ana Lupercio prepared a lunch of brick-red mole and fresh corn for her husband. Afterward, Lupe Lupercio monitored his blood sugar on an app.

If he does get priced out of his apartment, he worries that his health would deteriorate. In addition to having a surgically repaired heart and nagging back and shoulder pain, he has diabetes.

The mere possibility of being homeless is too scary for him to consider much. Asked to name the likeliest place he’d move if forced out of his apartment, Lupercio instead rattled off what he sees as his two viable options.

“Stay here until we die,” he said, “or die trying.”

This article originally published at This Bay Area exurb is full of McMansions – and may be the ‘next frontier’ of the housing crisis.