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The Housing Shortage In San Diego’s Future

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Housing Consultant Gary London says pent-up demand and restrictions on building will bring San Diego a housing shortage, especially for single-family homes.

— The San Diego housing market has been mired in a slump of low prices and low demand, due to a lack of financing. But the desire to buy homes hasn’t gone away. And that pent-up demand will eventually require the construction of more homes. But what will our future housing stock look like? And where will new homes be built? Morning Edition host Tom Fudge spoke with Gary London, president of the London Group Realty Advisers.

London: We haven’t built any housing for roughly five years. We’ve built a few, but nothing near the level we are at in a decent year, which is 18 to 20 thousand units. We’re in the one to five thousand housing-unit range for the past five to six years. And for the past couple of years most of those have been apartment units, not for-sale housing.

But while the demand hasn’t presented itself yet, in a very short period of time we will see a shortage.

Fudge: Our population in San Diego is growing and it’s going to grow significantly over the next 30 years. So you would assume we will need some more housing.

London: Well, we’re going to grow by a million people, over that period of time. And that represents a demand of over a quarter million units of housing or more. And we have to supply them as an industry. What’s going to change is what we supply and where we build.

In the latter part of the last century we have built single-family homes in new suburbs. In the future, we’ll be building inward, vertically. That means apartments and condos going forward. Very few single-family homes will be built, because we’ve run out of land.

Fudge: One of the reasons we have run out of land is because San Diego County has created a new general plan that makes large parts of the backcountry off-limits for new homes. How is that going to affect the housing market and the way San Diego looks?

London: Well it affects it both dramatically and traumatically. What it means is that our incorporated cities will have to accommodate the demand that’s going to occur, by allowing more density and more in-fill development to occur.

Fudge: And the anti-sprawl folks think that’s a good thing.

London: Well look… I think it’s a good thing too, in a sense. It makes for a much more efficient urban system. What the anti-sprawl folks forget is that this is a multi-segmented society, and there are still people who need single-family homes.

Most of the people entering the housing market will be young people, who are going to form families. And the question becomes: Are they going to want to have families in condominiums and apartments, or are they going to want to raise families in homes? And the answer for many is going to be: We want homes!

Fudge: As our population in San Diego grows, the San Diego Association of Governments (SANDAG) has predicted that in-fill development in existing municipalities can accommodate the demand. What do you think of that prediction?

London: It’s accurate in theory. The problem is they don’t factor in the “push back.” If, for instance, a developer proposes a mostly-residential, mixed-use development at the site of an old shopping center in Clairemont, the zoning allows for it today. The problem is the community might not allow for it.

They may say “Hey! We don’t want this density because we don’t want the cars on the road or we don’t have the schools or the police or other services.” What are you going to do about that? Inevitably it means these development projects, that were meant to be pretty big, are going to be smaller. When you multiply that out, these cities are not going to be able to accommodate the growth that their own zoning projects they can.

So, inevitably, housing prices are going to go up, and it will make San Diego a much more expensive place to live than it even has been historically.

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