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Housing costs will impact region's future work force

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San Diego-area residents are all too aware of the region's high cost of housing. But did you know that high housing costs impact our ability to attract and retain the work force necessary for a competitive economy? In an ongoing effort to create solutions and shape policy, the San Diego Regional Economic Development Corp. studied and reported on the problem of housing affordability and availability in the region. Titled "Housing San Diego -- Toward a Plentiful and Attainable Workforce Housing Supply," the study examines housing and employment trends in the region's 18 cities between 1990-2005 and 2005-2030. It advocates smart-growth solutions to the housing problem, so that the county can remain attractive to the highly skilled work force needed for the region's key industries. The report will help inform EDC's initiatives at a critical time when lower-cost cities like Seattle, Austin and Raleigh are potentially viable alternatives for high-tech industries and qualified workers. The annual median price for all homes within San Diego County peaked at $490,000 in 2005. Late that year, the percentage of local households able to afford a median-priced home dipped below 5%, according to the National Association of Home Builders. Consequently, the County's rate of home ownership is among the lowest of all U.S. metro markets, ranking 344th out of 369 metropolitan areas, according to 2005 figures from the U.S. Census Bureau's American Community Survey. Between 1990-2005, the growth of home prices outstripped income growth, and that historical trend suggests incomes will never rise fast enough to solve the San Diego region's housing affordability problem. Housing is one of the infrastructure challenges of our future. Our regional prosperity has grown in recent years because of industry diversification -- much of which relies on individuals recruited from outside our region, state and country with science, technology, engineering and math (STEM) degrees. While we continue to focus on improving STEM education in our region, continued prosperity depends on our ability to attract and house young talent. 2007 was the fourth year in a row that saw a net outflow of people to other parts of the United States, with housing costs cited as a contributing factor. Housing has not kept pace with population growth since before 1990. And the gap is expected to continue. In order to maintain the region's current ratio of average number of persons per housing unit, the county would have to build 65,267 more homes by 2030, in addition to the 278,813 that the San Diego Association of Governments (SANDAG) forecasts will be built. While the region's overall job-to-housing unit ratio is near the ideal of 1.5 jobs for every home, the ratio varies wildly among cities. This imbalance means many workers live far from the county's employment centers and spend hours on the road each day traveling to and from their jobs. That, in turn, leads to congested roadways, increased pollution and lower productivity -- all challenges that could be mitigated with regional smart-growth planning and development. EDC calls for greater integrated regional planning and support of SANDAG's Smart Growth Opportunity Areas, where in 2006 only 14 percent of new housing units were built. EDC calls for educating residents on selective implementation and long-term benefits of density. The housing shortfall could be made up in the 42,300 acres comprising the Smart Growth Opportunity Areas if density were increased by an average of only one home for every 1.5 acres. EDC's board of directors affirmed its commitment to proactively address housing availability and affordability with proposals in the following areas: ¥ Support for smart-growth "urban village" land-use planning to complement extensive single-family home inventory already in the region;

¥ Innovative savings plans for individuals trying to amass enough cash for a down payment;

¥ An assessment of infrastructure needs, including potential financing options, to ensure timely and adequate investment in infrastructure, particularly in Smart Growth Opportunity Areas;

¥ Regulatory reform, with the goal of reducing the cost of project development and housing construction.

Visit www.sandiegobusiness.org to access the report under "Policy & Initiatives."

Schuerman is director of research for the San Diego Regional Economic Development Corp.

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