COMMENTARY | COLUMNISTS | ALAN NEVIN

# A crisis in the making: SD housing supply

The San Diego Association of Governments routinely projects that the county needs 12,000 new housing units each year to achieve a supply/demand balance. That projection relates to an average of 1.24 jobs per household; thus, a projection of 13,300 new jobs each year.

That appears to be a rational number, but what if it is woefully shy of reality?

Let’s look at the years from 2010 to 2014. During that time, the county added 112,000 jobs, or an average of 28,000 jobs per year. If you apply the 1.24 jobs per household, you can calculate a demand for 22,000 new housing units each year. During the 2010 to 2014 period, our average housing production was 6,000 units annually. Thus, we built up a deficit of 16,000 housing units each year.

Mathematics aside, we have to ask how this shortage manifests itself. First, we look at the rental housing market. We have in this county about 300,000 apartment units. In ordinary times, we have an occupancy rate of 93 to 94 percent. Currently, the occupancy rate is in the 96 to 97 percent range — basically full occupancy.

In terms of sale housing, the resale market has from three to four months of inventory, which is substantially below the norm of six months. Pointedly, there are not a lot of vacant housing units sitting around. They are all full.

And new for-sale housing is sparse, except in the \$700,000-plus range, most of it north of state Route 56.

What happens to the rest of the folks who need housing? There are several options for them.

• Singles can double up, pushing up the number of people per household.

• Existing homes can become multigenerational housing.

• They can commute from Riverside County.

• They can commute from Tijuana.

None of those four typically fulfills the needs of the housing market in a satisfactory manner.

We also know that we have a housing shortage because homes priced less than \$500,000 are rising significantly higher in value than the rate of inflation. At the peak of the hot market (2005-06), our average resale home price peaked at \$600,000, then declined to \$350,000, and at the end of 2014, had crept back to the \$500,000-plus level.

As home prices creep upward, so do rents. We have watched apartment rents increase significantly in the past two years, particularly in popular areas like downtown, Hillcrest, UTC and Carmel Valley. Similarly, rents of single-family homes have moved up significantly.

The question arises: What has caused this shortage of housing? I can assure you that it is not the homebuilders or apartment builders withholding their efforts. If provided with shovel-ready land and rational zoning, they will build more than enough housing for everyone and in all price ranges. Builders just love to build; just give them land and loans.

The real answer lies in the general and specific plans of the county and the cities and communities within it. Uniformly, the current densities, parking ratios and height limits relate to the 1950s.

Virtually all the community planning groups embrace a “Leave it to Beaver” mentality and the elected officials inevitably bow to the wishes of the community planning groups — in order to keep their jobs and pensions) We saw that rather recently in Clairemont at the Trolley Stop, where neighbors violently objected to a 60-foot high skyscraper, and almost killed One Paseo in Carmel Valley.

I recently completed a study in suburban Valley Center, a five-minute drive north from Escondido. The community has several major casinos/hotels to the north of it with thousands of moderate-income workers; yet there are no plans in Valley Center that would permit apartments or, for that matter, moderate-priced sale housing.

The mere thought of having lots smaller than one acre creates chills in the backbones of Valley Center Community Planning Group. They could care less about where the working folks live or how far they have to travel to get to work. Smart growth is a concept that hasn’t yet reached Valley Center.

It is the obligation of every city and community to provide housing for its residents, yet that obligation is routinely ignored. Maybe litigation is required to enforce cities to fulfill that obligation.

There must be rational minds out there that recognize that sooner or later, new jobs will not be coming to town because there is insufficient and over-priced rental and sale housing.

Fortunately, there are a multitude of metropolitan areas that are delighted to produce appropriate amounts of housing — in Arizona, Nevada, Utah, Colorado, Texas and Florida — just to name a few. And at prices and with rents that relate to the household incomes of the workforce.

It’s time small minds woke up and faced reality.

Nevin is a team leader in market research and forensic services at Xpera Group, the West Coast’s largest source of experts in construction and real estate. He can be reached at anevin@xperagroup.com

User Response
William Combs 12:00am September 19, 2015

When I'm done with electrical engineering at ucsd, i'm getting out of dodge.

Davedale 12:00am September 15, 2015

There is a shortage of land, increase in cost of materials, and a huge shortage of skilled tradesmen to build high quality housing. The lack of tradesmen causes inflation in what they provide-Econ 101. , In my neighborhood, the older houses are far more expensive than most of the cardboard and plastic junk thrown up in the 70s thru the 2000s. The few new houses that are of quality are extremely expensive. During the past 50 years, we have devalued blue collar workers and work, and shop classes in high schools and trade schools have disappeared almost completely. . If we want to solve the housing problem, we need to build. To do that , we need to some how get workers willing to do the work. We need to re think our attitude toward funding education in high schools and in prisons to train skilled construction workers. Our educational system has been feminized over the past 30 years, and we need to bring back training for the skilled trades because they do real work.