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San Diego's Housing Crisis Squeezing The Middle Class

In first eight years of SANDAG's Fourth Housing Element Cycle, many more permits for homes for  high income earners were issued than for low or middle income earners.
San Diego Houisng Commission Report, Nov. 2015
In first eight years of SANDAG's Fourth Housing Element Cycle, many more permits for homes for high income earners were issued than for low or middle income earners.
San Diego's Housing Crisis Squeezing The Middle Class
San Diego’s Housing Crisis Squeezing The Middle Class
San Diego's Housing Crisis Squeezing The Middle Class GUEST:Alison St John, North County reporter, KPBS News

People who already own a home in San Diego may not realize it but a housing crisis is underway in the region. Allison St John says the new construction is leaving middle income buyers and renters even more underserved than low income families. Longtime Escondido resident Guy Chandler faced a situation that many families may be all-too-familiar with. He described it in a meeting.'s the worst air my life was to 16th 2015 when my daughter came to me and said sit down. She said we have to move out of Sandeno County. 's daughter said she was plenty digger family and move to another state because she cannot find a house she could afford to raise her kids in San Diego. The next two days a lot of crying went on.'s bike now communicates with his grandchildren the of these time. My point is droves of young families are leaving the state of California because they can't afford to live your. The housing situation is being called a crisis. Stephen Russell heads the Federation which works to produce more locum -- locum housing for renters with the help of government subsidies. Cemex in figure 2000 we've seen Brett increase by 32%. More than 70% of Sunday can are priced out of the home ownership market for an average price house. San Diego regional planning agency dissociation of governmental sent access we have a capacity to build our needs. Here is a director Charles. Our current forecast shows that the planned housing that is contained on the plans for all of our local jurisdiction in all the cities in all the counties provide enough housing to accommodate the projected means of 25,000 units. The current plans show the capacity to meet that. The gap between what we need and what is being built is getting wider. We need anywhere between 11 to 12,000 units annually just to keep pace with population growth. Matt Adams says that has not happened since 2005. Last year he said the building industry finally take it permits for over 10,000 units but admits there is attached to these numbers. More of the permits are for multi family and not single family homes. He said there's still not affordable. October 10,000 that were produced last year, you had only 229 single-family homes that were produced that could be sold that $500,000 or less. Been you had only for hundred 70 one multi family homes produced that could be sold at $500,000 or less. The market that is not being met is the market of working middle-class families. A recent tally showed over hundred 50% were being built. Low income family needs were only about 20% met. New construction for middle income families met only 18% of the need. Russell said the state requires cities to submit plans for where housing that could be built there are few incentives to build them. If municipalities built to committee plans and met the expectations, if they were to do that then we could meet the local demand for housing. Charles says the regional planning agency has no authority to push cities that don't want higher density. Peach District is responsible for pulling their own weight. PC -- he says they should take more of a leading role. I don't think the magnitude is permeated to the minds of all of those board member so we have a lot of work ahead of us to get the level focus and attention and commitment from SANDBAG Market forces are creating more than enough new housing for upper-income residents . That story from North County Bureau chief Allison St John who joins us now. Then morning. Hasn't this been a constant in San Diego for the longest time that a large portion of the population can't afford to buy a house here? Yes, indeed. I know that Stephen Russell said that 56 years ago when he and Tony we are talking about attempting to tackle the lack of affordable housing. It was called the housing crisis for the longest time. I think sort of one of the things is that it becoming fairly clear that the people who are already in the housing market perhaps are less aware of the difficulty for people trying to come from outside or people like the children of the people who live here now to be able to stay. So it is becoming more and more of a problem for the region and the more the land that we have available for building housing gets used up, the bigger problem it will be. It is very important to develop policies that help address this problem. You say that there already plans that the cities have that in theory to build the housing we need. That is what is so interesting because when you go to the planning agencies, you find that according to them there is enough land that each jurisdiction in the unincorporated County have set aside for enough housing to meet our needs into the future. In theory, it looks as though we should be fine. In practice market forces interact with public sector planning and market forces do not appear to be unfolding in a way that meets our needs. Why is it more lucrative for developers to build high-end housing as opposed to high density lower-priced units? Most of them to build low income housing at all unless they are getting subsidies from the government. There are two construction sectors. One is the sector that uses a lot of government subsidies to make a payout and then the other sector, which is the more market-driven construction industry, which appears to be very much providing to the needs of the upper market. In fact, more than 100% of houses needed are being constructed, whereas the middle income and of the market is the one that is thing the least amount of housing being built. Part of the reason is that it is so expensive to build because of all the regulation that 40% of the cost of new construction is due to local government regulation. Obviously, the other side of the coin is there hoping to meet larger profits from the more expensive properties and the middle income properties they say don't pencil out. So we don't know what the prophets are it is really hard to double check on that. Allison, in your feature we heard the story of a family thing separated because the kids have to move away to buy a house or rent something that is affordable. To have a sense of how common that situation is? Anybody looking at the situation all the knowledge that the idea that we are not providing housing for people coming from the outside is really much less of a problem than the fact that we can provide housing for our own children. Demographically, because this is a wonderful place to live many people would like to have their children remain in the area and be close to them. That is becoming difficulty -- difficult for them. Those who say we don't want more people coming to San Diego from the outside, the fact is that the largest sector that is looking for housing now is our own children. If families are moving away because they can afford to buy or rent, when it to the benefit of the city to actually promote the building a middle-class housing to preserve their tax base? Well, yes. The problem is that there are many problems. One of the things is that local communities are set with increasing traffic. Anytime we see a new development, traffic is a big issue because we do not have a infrastructure and a public transit system. Nobody wants to be spending their lives in traffic jams so they don't want more density or go density has become aware that is very flashpoint and some people simply are a distant. Other people that opinion cities that are well-designed and seen how dense housing can be a wonderful way to live and you are closed to all your shops and places of work and parks become so much closer community that are very spread out development here in San Diego. That's what are the reason that many jurisdictions are resisting higher density is because they don't want to see the traffic. I've been speaking with Allison St John. Thank you very much. Thank you.

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.”

Stephen Russell, executive director of the San Diego Housing Federation, July 14, 2016.
Nicholas McVicker
Stephen Russell, executive director of the San Diego Housing Federation, July 14, 2016.

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.

This graph compares the rising median rent in San Diego County and the decreasing median income.
California Housing Partnership Corporation
This graph compares the rising median rent in San Diego County and the decreasing median income.

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.

This graph shows the number of permits issued in San Diego County each year.
BIA
This graph shows the number of permits issued in San Diego County each year.

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.

Percentage of San Diego housing needs met by new construction between 2003 and 2010.
Jorge Contreras
Percentage of San Diego housing needs met by new construction between 2003 and 2010.

“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.

The North Santa Fe Apartments complex on the Sprinter line in Vista is shown in this 2016 photo.
Alison St John
The North Santa Fe Apartments complex on the Sprinter line in Vista is shown in this 2016 photo.

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.