There is absolutely no doubt that the housing crisis in California, specifically in San Diego, is a controversial topic that seems to be at the center of many political conversations. However, with the recent popularity of the topic, where did the issue exactly originate from?
The issue derives from the fact that the rate at which the economy and population have been growing is out of sync with the number of houses necessary to handle the growth. Yet, this inconsistency between the numbers started at the end of the Great Recession. Ever since the recession, the inconsistency has only grown.
In 2010, data revealed that San Diego was short 59,000 housing units. Furthermore, if one were to include the past 20 years, the data would reveal that San Diego is actually 140,000 housing units short.
San Diego has tried to recover from the 1990 recession that involved Southern California, but three decades later, San Diego has failed to approve the permits needed. The refusal to grant building permits, in turn, is producing the very slow homebuilding pace seen in San Diego. This impediment is ruining the housing market by artificially restricting the supply—which increases the cost of existing housing.
In addition, when houses are actually built, they are at a cost level deemed above moderate income. For example, from 2003 to 2010, California set to build 107,000 new homes in each category: very low, low, moderate, and above moderate incomes. However, a majority of the 107,000 houses built were in the above moderate-income category. The high costs equate to higher taxes, which further damage the housing market.
Lastly, the lack of house construction will not only affect today’s market, but the future housing market as well. Analyzing similar situations from the 1980s, an influx of new housing will not necessarily be able to mitigate the current situation as it would be occupied so quickly due to the overwhelming demand.
As the housing crisis persists, it begs the question of whether San Diego will ever escape the crisis. With factors such as overregulation, high taxes, and refusal to grant permits, it is hard to foresee the local housing market recovering anytime in the near future.