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Left to its own devices, the building industry will always gravitate to the most profitable, high-end housing projects.
Kirk Effinger, a Realtor and writer from Escondido, gets very defensive in his letter to Voice of San Diego in response to a recent op-ed by Russell York. In Effinger’s letter, his aggressive tone would suggest that York hit a raw nerve by pointing out the fly in the ointment of the “build anywhere and everywhere” paradigm.
York’s point was that our housing crisis is a crisis of affordability, not just supply. Simply churning out above-moderate housing (meaning high-end housing) when we have routinely been over-stocked in that category actually exacerbates the problem. This is particularly true considering that we’ve only built 6.8 percent of our “moderate income“ housing goals, 13.5 percent of “low” and 7.9 percent of “very low” income housing.
The problem is that the status quo is encouraging the building of housing that people cannot afford; the median newly built home in San Diego County is $650,000, according to real estate tracker CoreLogic. This is happening throughout California, where the Department of Housing and Community Development recently noted we are overstocked on “above moderate” rentals by 300,000 units while we’re more than 3 million short on “moderate” and below units. Left to its own devices, the building industry will always gravitate to the most profitable, high-end housing projects. They would be foolish not to.
Ignoring the problem of affordability does not make it go away. The biggest problem with Effinger’s argument is that he attacks the messenger for something that the messenger didn’t even say. He claims that York is implying “that all it would take to change [the housing stock imbalance] would be for builders to decide to build lower-priced homes.” York never implied nor claimed that. He, like other quieter voices out there, pointed out that we need to look at the true nature of the problem and all possible solutions to encourage building housing that is more affordable. This is not “all on the developers,” but we are clearly not looking hard enough at the problem.
Effinger shrugs his shoulders, admitting, “Will the housing being proposed in the unincorporated areas of the county be largely available only to upper-middle and upper-income families? Perhaps.” This lack of certainty echoes the Building Industry Association’s position that we can’t guarantee affordable housing but maybe, just maybe, if we build enough high-end housing, it will somehow trickle down to the poor and the homeless. Unfortunately, the facts have not borne this out. When we produced 152 percent more “above moderate” units than needed between 2007 and 2014, it had no impact on housing costs overall. Prices continued to rise. In Vancouver, Canada, a city suffering from an affordability crisis similar to ours, housing stock has grown faster than the population, and yet it has had no impact on affordability.
This glut of high-end housing is not being purchased by people trading up, as Effinger argues. What is happening is the exodus of middle-class people while upper-income people move into the higher-end homes being produced. In the past 10 years in California, more than a million people have left the state and most are lower-income earners, families making less than $50,000 a year. Those moving here are mostly older, higher-income earners making $110,000 or greater. Building high-end housing will always be profitable because there will always be a ready market (mostly people moving in from out of state) who will happily pay the sunshine tax.
Clearly, we need to do something differently. The building industry’s only solution to the housing affordability crisis is to build anywhere and everywhere without any regard to smart planning principles. Possible solutions like inclusionary housing requirements and rent control that have proven successful in other regions are vehemently opposed by industry groups. I actually agree with the industry’s goal of reducing certain regulations and fees to help expedite building in the in-fill areas close to infrastructure and away from fire danger or projects that adhere to the general plan. I also support providing bigger incentives to builders who set aside affordable housing within their projects. Other programs that exist, such as the Department of Housing and Urban Development’s Good Neighbor Next Door program, which offers 50 percent discounts on the purchase price of a home to public-sector employees, are not available in San Diego.
We should look at all solutions to the housing problem, and we should support and help those builders who seek to build general plan-adhering projects because, as Effinger puts it, they are doing the good, hard work of providing housing and retail that we need, but it should be in the right places.
What we shouldn’t do is vilify residents who are rightly concerned that the building industry is using the housing crisis to do away with careful planning and smart growth principles to further their interests at taxpayers’ expense. We also shouldn’t vilify developers, builders or the association that advocates for them either. They are doing the best they can to make a living and have a right to promote their industry in the best way they can. But we also can’t let them be the only voices in the conversation. We should grow, but it should be in the San Diego way.
JP Theberge runs a public opinion and market research company and is the creator of Grow the San Diego Way, providing data and analysis on housing issues in San Diego County.