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San Diego Housing Crisis Drives Some To Relocate, Others To Invest

Reported by Katie Schoolov

San Diego Housing Crisis Drives Some To Relocate, Others To Invest


Stephen Russell, executive director, San Diego Housing Federation


Jennifer Van Winkle, 31, has lived in San Diego her whole life. It appears she and her husband, James, are living the millennial dream: They have good paying jobs and own their home. Yet, they’re packing up and moving to Austin, Texas.

“We both realize that we want to start a family,” Jennifer Van Winkle said. “And that’s not possible when we rent two of our three bedrooms to tenants to help with the $2,600 mortgage that we’re paying.”

“We could’ve made this work,” James Van Winkle added. “We could’ve survived in San Diego, but out in Texas we can thrive.”

Jennifer Van Winkle is a legal assistant who holds a master’s degree. James Van Winkle is a Navy veteran and diesel mechanic. The Van Winkles bought their 1,200 square foot home near the College Area two and a half years ago for about $400,000. Jennifer Van Winkle recalled they were ecstatic — at first.

“We thought we could deal with the mortgage. We could find a way. And we did — we have roommates,” she said. “But then we saw things aren’t getting any easier.”

Something had to change, Jennifer Van Winkle said.

So they sold their home, and they’re using some of the $60,000 profit to start a new life in Austin. There, houses average around half the cost of a San Diego home.

“To stay here would be scrambling at nothing. We’d be clawing and scraping our way to attain nothing,” Jennifer Van Winkle said.

The Van Winkles are not alone in their search for greener pastures. Skyrocketing housing costs in San Diego County are among the highest in the nation. Nearly a quarter of people are spending more than half their income to put a roof over their head, leaving little room to save for retirement or pay the bills.

The average price of single family home has climbed to $545,000, a 6 percent increase over last year. The average cost to rent in San Diego County is $1,743 — an 8 percent increase since March, and 33 percent rise since 2010. Prices are expected to continue escalating.

Behind the numbers is a major housing supply problem.

“Some of the estimates are approximately 35,000 units short in San Diego County,” said Mark Goldman, a real estate instructor at San Diego State University.

“Our population is expanding, our housing supply is already too small and the growth in our housing supply is not fast enough,” Goldman said. “We’re getting further behind every year.”

Low-income and middle-class families are being hit hardest, and impacts of the housing deficit could become increasingly visible as more people are forced to double up, Goldman said.

“More people are seeking fewer units, so the obvious solution is there’s going to be more people per room,” Goldman said. “There’s just not that many places for people to live and have a home."

Goldman said people in the upper-income bracket are the ones buying homes and sustaining the competitive market, for now.

"People who are buying those homes have incomes that are keeping pace with the rate of increase, more or less,” Goldman said. “So that’s a good thing because that reduces the possibility of another housing crash."

Some are finding opportunities in once-struggling urban neighborhoods. The up-and-coming communities are increasingly attracting buyers because of their relative affordability and proximity to job centers.

Michael Fernandez first realized the opportunity three years ago in a designated historic neighborhood in Golden Hill near downtown. It wasn't just the 800-square-foot house, riddled with termite damage and in dire need of electrical, plumbing and overall renovation that caught his eye.

“I fell in love with the view from the park, the proximity to downtown, the proximity to Coronado and the price,” said Fernandez, who works in digital cinema technology.

Photo by Katie Schoolov

Michael Fernandez sits on steps in front of a home he purchased in Golden Hill near downtown San Diego, October 2016.

He bought the two-bedroom, two-bathroom home with intentions of living there with his family. But halfway through the remodel, they found out their second child was on the way and they would need a bigger home. Fernandez completed the renovation and started renting it out.

Fernandez didn’t want to reveal what he paid for the home, but records show houses in the neighborhood at that time averaged approximately $300,000. He’s now renting the home for $2,000 a month. No real profit yet, he said.

"I wanted to go kind of on the higher side of that rent but in doing so I had to justify it. Hence the home benefited from new appliances, new bathroom, new kitchen, new floors," he said.

“If I was to calculate what I invested into the home and what I’m charging rent, it might take 20 years before I get that money back,” Fernandez said.

Fernandez purchased a second home earlier this year in Barrio Logan. After a full renovation, he's renting the one-bedroom, one-bathroom home for $1,900 a month.

He’s seeing others in the neighborhood doing the same.

“There’s essentially two ways to look at this,” Fernandez said. “You can either leave them in the current position, which is poor, or somebody can come in and bring them back to life.”

Fernandez plans to hold onto both homes as long-term investments. "I'm not a flipper," Fernandez said. "I think the real potential is 20 to 30 years from now."

He’s optimistic about the future of both communities.

“I think what you’re going to see is a lot more improvements, rehabbing of these older homes,” Fernandez said. “It’s going to be eclectic, it’s going to be vibrant... It’s going to improve."

What isn’t likely to improve anytime soon is San Diego’s housing inventory. That’s because developing a new housing complex from conception to completion takes an average of seven to 10 years.

The Van Winkles said they don’t have time to wait.

“Do I feel let down by San Diego because of having to relocate? No," Jennifer Van Winkle said. "The bitterness comes from just not having a way to make this work and now having to leave family.”


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