Experts Tell City Leaders Housing Is City's Biggest Economic Concern
The high cost of housing and financial inequality are the biggest concerns for San Diego's economy, a panel of economic experts said at a City Hall roundtable discussion today.
Studies show that more companies leave California because of high housing prices than a stiff regulatory burden, said Alan Gin, a professor at the University of San Diego.
"Despite the fact that prices are down significantly from their peaks, they're still high relative to the rest of the country," Gin said. "The high housing prices are affecting the direction our economic development is going to go."
He and the other panelists spoke at a special meeting of the San Diego City Council's Economic Development and Strategies Committee.
Kelly Cunningham, of the National University System Institute for Policy Research, said San Diegans spend a larger portion of their income on shelter than people in any other large metropolitan area.
He called housing prices "the biggest barrier" to attracting new companies to the region. "Anything to relieve that is critical to our economic health," Cunningham said.
Marney Cox, chief economist of the San Diego Association of Governments, said the city cannot justify raising taxes and fees when local residents have to shell out an extra 5-6 percent for rent or mortgages.
Now that housing prices have fallen with the recession, it is imperative that the city adopt policies to keep future appreciation roughly aligned with inflation, mainly by allowing a supply that keeps up with demand, Cox said.
He said city leaders should also recognize that consumers are beginning to favor apartments and condominiums over single-family houses -- partly because of lower costs -- so regulations need to be updated to reflect the new sentiment.
Cunningham suggested streamlining the permitting process to prevent a repeat of the experience of a housing developer whose Mission Valley project took a dozen years to complete, from planning to its recent opening.
Several of the panelists -- also taking part were Mark Cafferty, president and CEO of the San Diego Regional Economic Development Corp.; Lynn Reaser, chief economist of Point Loma Nazarene University; and San Diego State University professor Dan Seiver -- said they are concerned about present and future economic inequality among workers.
They said the problem is being made worse by a K-12 education system turning out students with a general education, when area employers need graduates who focus on science, technology and mathematics. According to Gin, the better-prepared students are coming from schools in more prosperous areas, which will make the equality problem worse in the future.
Cox said city leaders needed to examine the type of jobs being created, when compared to the cost of living. One of the region's main industries, tourism, has 75 percent of its workers making below the median income.
The committee was formed at the end of last year to help the city government streamline procedures for the area's businesses and find ways to create jobs.