Towards more safe, affordable homes (Pt II of III): Making the market work for all
This week, my campaign released our Housing4All plan to help make our region more affordable for San Diegans by taking on our housing crisis. I wrote about part of our solution – the community-based approach for subsidized homes – here. This post focuses on some of the key changes we need to make to our regional housing approach that influence the market realities and can make homes more affordable.
First, a quick story to make a point.
If a grocery store has 10 chocolate chip cookies to sell and only 1 person who wants a cookie, the store has to keep the price low if it wants to make a sale. However, if the store has 1 chocolate chip cookie to sell and 10 people who each want that 1 cookie, then the store can charge more money for that cookie.
Supply and demand.
San Diego County does not have enough homes for the people who are already here – most of whom are homegrown despite how it may feel. In fact, our region has over 160,000 homes less than what it needs to keep pace with job growth. We have a rental vacancy rate below 5% - which is not great for renters whose incomes have only gone up by 4% since 2000 while rental rates have gone up a whopping 36% in the same time period! View a sharable 30-second clip on our rent imbalance here.
We have a supply problem, so why don’t we build more homes?
This is where things get complicated and what our Housing4All plan seeks to address. Most homes are built with money that comes in part from investors (e.g. shareholders, family friends, investment trusts, etc.). These investors want their money to grow so they can put their own kids through college, fund their retirements, grow businesses, and so forth. As a result, they typically want reliable investments that will give them a return on their money with as little risk as possible. Building homes is risky for a whole host of reasons such as swings in interest rates, the cost of building materials, not having enough qualified workers, and so on. But one risk – that a project you invest in never gets built or takes a really long time – is more significant than the rest. This uncertainty makes the return on investment your rich uncle would want higher than if he just put the money in a savings account.
In the context of San Diego County, there is massive uncertainty in the amount of time to build homes, in where those homes can be built, and in what will be required to actually build the homes. As a result, far fewer homes get built than are needed. The problem is made worse because we don’t have flexibility about the size and location of the homes and the rules vary when combining multiple pieces of land to build on.
What does all this have to do with our plan?
Our Housing4All plan takes on the biggest barriers to building homes while protecting our environment for the future. Specifically, the plan calls for:
- Overhauling rules. Overhauling the housing rules (called "zoning") to preserve community quality of life by focusing on the character of homes within each community, not some rote formula based on square footage.
- Simplifying approvals. The community, builders and environmental advocates have been very involved in our region’s planning. By selectively creating “by right” development that allows certain types of homes to be built without lengthy supplemental reviews, our plan minimizes the expensive uncertainty.
- Embracing creativity and innovation. Not everyone wants or needs a huge home, and not everyone wants or needs lots of land around them. By allowing builders and communities to be more creative in what they build, our plan better tailors what gets built to what people want.
The truth about housing in a place as desirable as San Diego is that people are always going to want to live here and we are likely to be more expensive than other parts of the country. This truth is a reason to moderate expectations but it is not a reason to sit on our hands while hundreds of thousands of seniors fall into poverty and homelessness and 20% of our children grow up in poverty. Together, we can balance the needs of our fellow San Diegans with our collective need to protect the environment and enhance community character.
Our Housing4All plan has four principles. Enhance quality of life, improve reliability in rules, decrease overall cost, and protection of our natural beauty. To view or share a 30-second video about these pillars, click below.
This focus will put us on a path to help all San Diegans live in communities that are safe, thriving, and affordable.