Homeowners in San Diego County may not feel it, but a housing crisis is underway in the region, and the middle class is especially hard squeezed.
Longtime Escondido resident Guy Chandler faced a situation that may be all too familiar to many San Diego families. He described what happened at a recent San Diego County Board of Supervisors' meeting.
“Probably the worst day of my life was in June 2015,” Chandler said. “My daughter, Jenelle, 37 years old, came to me and told me, 'Dad, sit down. There's something you’re not going to like. We have to move out of San Diego County.'”
Chandler’s daughter told him she was planning to take her family and move to another state because she couldn’t find a house in San Diego where she could afford to raise her kids.
“The next two days a lot of hand-wringing and crying went on," Chandler said.
He now communicates with his grandchildren on the web via FaceTime.
“What’s my point?” he asked the board. "My point is, droves of young families are leaving the state of California because they can’t afford to live here.”
The housing situation in San Diego is being called a crisis, for both buyers and renters.
Stephen Russell heads the San Diego Housing Federation, which works to produce more low-income housing for renters with the help of government subsidies.
“Since the year 2000, we’ve seen rents increase by about 32 percent, while wages have decreased 2 percent during that same time frame," he said.
More than half of San Diego renters pay more than one-third of their income in rent, Russell said. The San Diego Housing Commission estimates more than 70 percent of San Diegans are now priced out of the market for an average priced home.
Forecasts: We have enough housing capacity
And yet Charles Stoll, director of land use and transportation planning for the San Diego Association of Governments said the region has the space and the capacity to build enough housing to meet the area’s needs.
“Our current forecast shows the planned housing that is contained in all the general plans for all the local jurisdictions — the cities and the unincorporated county — provides enough housing to accommodate the projected need of about 325,000 units between now and the year 2050," Stoll said. "So the current general plans show sufficient capacity to meet that."
But in practice, the gap is widening between what is needed and what is actually built.
Actual construction versus planned construction
Matt Adams, vice president of San Diego’s Building Industry Association, quoted SANDAG when he said the region needs to build 11,000 to 12,000 housing units annually just to keep pace with population growth.
That hasn’t happened since 2005, when 15,000 permits were issued, Adams said. Since then, the numbers have dropped to as low as 3,000 housing units in 2009. Last year, the building industry did get permits for more than 10,000 units countywide.
“I thought it would have gotten more attention," Adams said of the increase in building. “But sadly, it didn’t."
Adams acknowledges there’s a catch in these improving numbers. Even though more of the permits are for multi-family homes rather than single-family units, the homes still are not affordable.
"Of the 10,000 that were produced last year, you had only 229 single-family homes that could be sold at $500,000 or less," Adams said. “And then you had only 471 multi-family homes produced that could be sold for $500,000 or less. The market that is not being met is the market of working middle-class families."
Less middle-income housing built
Adams called the housing market an "hourglass" market, with more houses being built for people at the top and the bottom of the economic ladder than for people in the middle.
The reality is that in the first eight years of building out SANDAG’s fourth housing element cycle — between 2003 and 2010 — the construction industry built 152 percent of the housing needed for above-average earners. Low earners got 26 percent of the housing they needed. Middle-income earners did worst of all — just 18 percent of their construction needs were met.
Because of government subsidies, Russell said, more affordable housing is being built for low-income families than for middle-income families. He said a graph of the housing market looks more like a goblet, with a big bowl for upper-income earners, a tiny base for low-income earners, and a thin stem: the squeezed supply for the middle class.
“You think of the goblet spilling over with supply, and for the top third there is a plethora of choice,” Russell said. “For folks below the top third, there really are not choices.”
In the face of this evidence, the profit-motivated building industry chooses to build for the top end of the market at the expense of the rest, Adams said, citing a 2015 report. It says city regulations are so costly that they drive up the price of construction to the point where building middle- and low-income housing is no longer profitable.
The median income for a family of four in the San Diego region in 2016 is $73,495 a year. So a family of four earning less than $68,000 a year (80 percent of the median) is considered eligible for low-income housing.
Few incentives, no penalties
Russell said part of the problem is that though the state requires cities to submit plans for where housing can be built, few incentives exist to actually build those houses.
“It would be helpful if municipalities actually built according to their community plans and actually met the expectations that they put out in their own local housing elements," Russell said. "If they were to do that, then we could, in fact, meet the local demand for housing.”
Adams of the Building Industry Association said there are no penalties and few incentives motivating cities to follow through on their state-mandated housing plans.
“It’s a paperwork exercise right now,” he said.
In the decade between 2003 and 2013, Carlsbad, for example, issued permits for 231 out of the 3,400 very low-income units that were its share of the Regional Housing Needs Assessment.
That assessment allocated 2,645 moderate-income homes as Carlsbad's share of growth, but the city issued only 522 permits.
On the other hand, Carlsbad was allocated 4,800 above moderate-income homes under the regional assessment, and the city actually issued 5,575 permits.
Stoll said SANDAG awards $5 million to $8 million every few years to cities that do a good job of building sustainable, affordable houses near transit lines such as the North Santa Fe Apartments in Vista. But, he said, the regional planning agency has no authority to enforce local land-use plans that call for higher density.
“Each jurisdiction is responsible for pulling their own weight,” Stoll said. “That’s the way it has always been.”
What’s more, Stoll said, the law recently changed to update the housing needs assessment every eight years instead of every five, so the next review of how local jurisdictions are meeting housing needs won’t happen until 2019.
Russell said SANDAG should step up and take more of a leadership role.
“We have had some constructive conversations, but I don’t think that the magnitude of the housing crisis we’re in has really permeated to the minds of all of those board members,” he said. “We have a lot of work ahead of us to get the level of focus and attention and commitment from SANDAG that the issue really deserves.”
Russell and Adams said the challenge is to stop the region from falling farther behind in its plans to meet the needs of future residents. As the economy improves, market forces are doing a good job of providing housing for upper-income residents. Government strategies to encourage affordable housing are struggling to adjust since redevelopment money disappeared in 2012. But housing for middle-income renters and buyers is being squeezed out by shrinking of the land available to build on and a resistance to higher density.
As Escondido's Guy Chandler knows, future house-hunters are not all moving here from other places: They are mostly the children of current residents, and they don’t want to leave San Diego to find a place they can afford to live.