This article adds the numbers. We need to build at least three times as many homes as we’ve been building to keep up with the growth – and no telling what that would do to prices, if anything:
SAN DIEGO (CNS) – As the homeless population grows and rents balloon in San Diego, city officials Thursday announced a series of proposals to help alleviate the housing shortage over the next 10 years.
Numerous changes to city codes and procedures are required to meet the housing demand, according to a report presented to the City Council’s Smart Growth and Land Use Committee.
Some of those changes include rezoning areas around transit hubs to increase density, converting unused industrial zones into residential areas and encouraging smaller unit sizes. Making use of vacant lots and easing some onerous parking requirements are also among the ideas identified in the report.
“This is an exciting step because it gives the city goals for the future, and it gives the city goals to be measured by,” San Diego Housing Commission President Richard Gentry said.
To meet the housing need in San Diego, as many as 220,000 new housing units will need to be built by 2028, the report said. The top annual production rate within the last 5 years has been of 6,400 units. Even with the solutions identified in the report, San Diego would have to bolster its production rate.
“To meet the projected needs for the city for the next 10 years, we will need to produce between 17,000 and 24,000 housing units per year — a dawning task but a worthy goal to be set,” Gentry said.
After the presentation, City Councilwoman Georgette Gomez worried that more units may not necessarily fix the housing crisis facing the region.
“I would love to work with the housing commission to look at the affordability of housing,” Gomez said. “I’m not a firm believer that just creating units is going to get to the actual issues that are in front of us.”
According to a staff report, the annual rate of housing construction has been well under half that of population growth over the past decade, creating a warped supply-and-demand situation that has prompted costs to skyrocket. The result is that half of San Diegans can’t find rental units they can afford and 60 percent can’t afford to purchase a home, according to the report.
“What we are doing is driving our kids and grandkids right out of town,” Councilman Scott Sherman said.
The report identified the communities of Skyline-Paradise Hills, Linda Vista, Otay Mesa, Clairemont Mesa and Navajo as the areas with the largest housing growth potential. As many as 74,000 units could be built all together in those five communities.
If all the suggestions in the report are carried out, that 10-year housing goal could be met or exceeded. Then hope later one is to keep that same production rate through 2028 to keep up with the expected population growth.
Let’s get cracking on solving the affordable housing problem, and power through the next recession! Pala, Valley Center, Ramona, etc. – here we go! Hat tip to Larry who had this on his FB account:
And it is simple: Yes, you can build your way to affordable housing. Aside from economic decline and depopulation, it is the only strategy that actually works.
You can do it through a state monopoly as in Singapore, an array of public and limited-profit associations as in Vienna, or private developers as in Chicago, Germany, Houston, or Montreal.
But to have affordable housing, you have to build homes in great abundance, and without that, other affordability strategies such as rent control and inclusionary zoning can be fruitless or counterproductive, as in San Francisco. Building plenty of housing is not just one way to affordability, it is the only way—the foundation on which other affordability solutions, measures against displacement, and programs for inclusion rest.
Let’s examine Rich’s other charts to see how divergent our San Diego market has been lately, comparing to the last three years. In spite of much-higher pricing, the raw number of homes for sale has crossed under the paltry few we had during the Frenzy of 2013, and into uncharted territory:
Yet, the volume of sales has been strong – and see June :
The rest of the year looks OK too, though this is for the whole county:
There will be sellers – especially on the higher-end – who didn’t know how motivated they were until now. Will they lower their price, or wait and take their chances next year? The market couldn’t be much better than now!
The new pendings had a nice bounce back this week, but just making up some ground lost over the last couple of weeks. Last September, we averaged 90 new listings, and 66 new pendings per week:
Week
New Listings
New Pendings
Aug 7
99
71
Aug 14
76
65
Aug 21
83
62
Aug 28
96
60
Sept 4
74
71
Sept 11
81
42
Sept 18
77
47
Sept 25
67
59
We don’t mind if the new listings drop off – all we want are motivated sellers, because it is so unlikely that buyers will wildly overpay now. With all the outside distractions, it will be a little too easy for casual sellers to wait until next year.
It looks like potential sellers are already thinking about next year:
A couple of other old videos to commemorate today’s anniversary. This was a compilation video I published on this day in 2011 (9/24/11):
This is a video filmed in March, 2013 as the frenzy really got rolling. I think Bill featured it first on Calculated Risk, and then got picked up by the national media which then generated almost 15,000 views.
The first house featured here was a regular sale of a long-time owner’s house that listed for $699,000. It closed for $775,000. The second house was a short-sale which listed for $659,000 after the sellers had paid $800,000 – and financed 93% – in 2005. It closed for $752,000:
September 24, 2017 is the 12th anniversary of this blog! For a little perspective on where we’ve been, here is my most-watched YouTube.
This house originally sold for $927,500 when new in 2005.
I sold it for $485,000 in April, 2009 which was the low point of the San Diego market, as judged by our Case-Shiller Index. This year there have been sales on the street in the mid-$800,000s!
It feels like change is in the air – just ask any agent who is paying attention. But most want to shrug it off, and pray they make enough money before the SHTF.
I applaud Notorious Rob for furthering the discussion – my comments are towards the end of his post:
The gist of it is this – some day a game changer will come along that has the potential to commoditize the industry where we won’t need 1.2 million realtors to conduct the business. The business will be dumbed down to just order-taking, and no realtors will be left to provide the expertise to make sure you don’t make a mistake.
It’s not that big of a deal in the travel industry. If you make a mistake with your vacation, you learn a lesson and do better next time. In the real estate business, one mistake can cost you big money, and/or stick you with the wrong house – or cost you the right one.
These days, I feel more like Captain Willard than Hunter S. Thompson:
Addressing a real estate conference in flood-ravaged Houston this month, longtime investor Ray Sasser detailed his strategy: buy up to 50 flooded homes at deep discounts, then fix and flip them for a hefty profit.
Sasser first followed that game plan after Tropical Storm Allison flooded the city in 2001. He bought homes for 30 to 40 percent of their pre-storm value, spent another 15 percent on repairs, and sold many a year later – at full value.
The quick recovery surprised him, he said.
“This can’t be true,” he recalled thinking at the time.
The bet that home prices in hard-hit Houston neighborhoods will fully recover after Hurricane Harvey could be riskier, Sasser and local economists said. But a rush of investors eager to snap up flooded homes reflects broader confidence in the resilience of Houston’s unique metropolitan economy.
While the region’s unchecked development has come under fire for exacerbating flooding, it also reflects its core strength: A rare combination of rich job opportunities and low cost of living, driving explosive population growth in America’s energy capital.
The surging demand has sustained home prices through four major floods since 2001 and a historic oil price crash starting in 2014. Though Harvey caused far more damage than previous storms, investors such as Sasser see plenty of opportunity in the region’s estimated 268,000 flooded homes.
Tara Waggoner, the Houston market manager for brokerage and online listings firm Redfin, said the firm’s local agents were getting about four times the number of calls they usually get from investors. They ranged from individuals looking to buy one flooded house to groups of ten or more pooling their money for a home-buying spree, she said.
“You have people with millions of dollars to work with,” she said in an interview days after the storm. “They want to go in, pay cash, get the discount and fix it up to sell.”
The sales-price-to-list-price ratio has been dipping in the off-season lately, and we can probably expect that streak to continue this year!
Buyers expect to have more negotiating power, and the fixers are the ones that get punished. Sellers will be smart to do more improvements to their home before hitting the open market!
