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San Diego Builder Forecasts Moderation in California's Harsh Climate for Housing

As in the rest of the nation, recent times have been good for home builders in California, with production slowly increasing from the trough of the mid-1990s and expected to surpass the 200,000-unit mark this year, according to CBIA. But supply has lagged behind demand for 13 consecutive years, the association says, and that housing deficit continues to accumulate.

Citing findings by the California Department of Finance, NAHB President Bobby Rayburn told reporters at the annual conference that “builders in this state will need to construct about 230,000 homes and apartments per year over the next 10 years just to keep up with demand from newly forming households, immigrants and the loss of obsolete housing units.”

“In high-growth metropolitan areas across this country, we’re seeing time and again that local governments don’t have the political will to prioritize affordable workforce housing,” Rayburn said.

Rayburn recounted a newspaper account in March of a family earning $100,000 a year pulling up stakes from Los Angeles and moving to Las Vegas because they couldn’t afford to buy a home in that area. A median-priced home in Los Angeles costs about $400,000.

He also said that impact fees, a major cost-factor in California, have reached as high as $110,000 a unit in one community in the San Francisco Bay area.

The encouraging news, in Harmer’s view, is that the political climate in California — which has been anathema for the building industry — is starting to shift in response to mounting worries among corporate leaders that the state will soon experience a mass exodus of jobs unless it comes to grips with solving its housing woes.

“Every level of government — on a state, regional and county basis — has been coming to us and asking for help,” Harmer said. “They are asking, how are we going to be able to provide incentives to get you to build where we want housing?”

In the new emerging climate, “new housing will be just as important as water, just as important as highways and just as important as any other piece of the infrastructure,” Harmer said. “If you don’t have it, you can’t have jobs.”

At the top of the agenda, the state association president predicted that “the biggest change since Proposition 13 in how we tax housing” is headed for the ballot box. Current tax law encourages localities to favor commercial over residential development, he said, because they can keep only 13% of residential property tax and they have to send the rest to Sacramento.

“We have to reconnect jobs with rooftops,” said Harmer. “We can’t afford two hour commutes; the quality of life is horrible.”

Solutions include mandating a 20-year supply of land zoned for housing and redevelopment of built-out cities in coastal zones, he indicated.

Joining in the effort to provide housing for the state’s workforce, Harmer said that his company, Urban Housing Partners, is building at a density of 400 homes to the acre in a 19-story high-rise in downtown San Diego. First dibs on the properties will go to people who work downtown.

Mark Your Calendar for NAHB's Fall Construction Forecast Conference

Get the latest forecasts on housing starts, project budgets and other economic bellwethers of the housing industry at NAHB's Fall Construction Forecast Conference at the National Housing Center in Washington, D.C. on Oct. 27. Click here for more information.

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