Hat tip to Kwaping for sending this along from the U-T:
But that’s what area builders of for-sale and for-rent homes are talking about.
The concern is that supply will lag behind demand and lead to low vacancies and spikes in prices and rents.
Alan Nevin, vice president at MarketPointe Realty Advisors, a consulting company to the industry, says a shortage already exists in apartments, as evidenced by a 4.1 percent vacancy rate recently reported, and a looming shortage in for-sale homes in three to five years once renters with good credit want to buy.
“If we continue to grow 15,000 to 20,000 jobs a year in the private sector, I think we will definitely result in a shortage,” Nevin said. “There will be an imbalance between supply and demand, and that will gradually drag up prices, and most of that increase will come at the bottom end of the market, starter homes.”
The area has been losing jobs in recent years, but SANDAG projects a growing job market over the next few years.
The solution to shortages in the past has been to:
Speed up development in master-planned communities;
Sprawl out to southern Riverside County, Imperial County and even into Mexico;
Liberalize building regulations and lighten up on developer fees to stimulate production.
But Nevin said the conditions have changed and some of these actions aren’t feasible. The result, he fears, is a reduction in homeownership — going from the present about 55 percent to 45 percent. The national rate has tended to be two-thirds owners, one-third renters.
“To me, that’s sad,” he said, but he doesn’t think Generations X or Y will lose the American dream of ownership once they start families and pine for a home of their own.
On the other side of the debate are the demographers at the San Diego Association of Governments. Chief economist Marney Cox said a shortage of for-sale homes is not likely “because prices will be too high to afford.”
He agrees with Nevin that San Diego is headed toward a renter society and points to large urban areas like New York, where less than a third of residents are owners. He figures even fewer than 45 percent of households will be homeowners.
But to handle that shift, he said, more land will have to be zoned for apartments.
“That’s where the change has to occur,” he said.
No one knows what will emerge from the economic storms. SANDAG simply tries to look at the long term and ignore monthly gyrations.
But already, their projections are off-kilter. Their current draft of 2050 population projections indicate that 7,822 dwelling units will be approved by local jurisdictions this year. But for the first six months of the year, only 2,977 have been authorized, according to the Construction Industry Real Estate Board. Even if that pace continues in the second half of the year, which history shows usually doesn’t happen, the 5,954 total would be 23.9 percent below expectations. Next year’s projection of 10,298 homes could only result if there is a sudden burst of job growth and economic recovery.
“When we forecast average growth that’s going to occur,” says SANDAG’s Edward Schaefer, “there’s no way we can hit the cycles. That means sometimes we can be a little low and a little high.”
And, he acknowledges, current economic projections point to job growth that is “pretty slow.”
“I think the housing industry will have plenty of time to react,” he said.
Click on link to read what builders have to say at bottom of article: LINK