San Diego's Housing Crisis Is Squeezing Out Top Talents
As San Diego grapples with a growing housing crisis, a disconnect exists between where jobs are expected to be and where housing can be built. And, employer satisfaction regarding the housing supply has sunk to a new low.
These are the key findings of a study released Tuesday by the San Diego Regional Chamber of Commerce, which updates a 2016 study authored by London Moeder Advisors. The study projects specific housing-type shortages in North County, where there is a substantial imbalance of housing and jobs, and includes a survey of employers’ views on how the lack of reasonably priced housing is affecting talent attraction efforts.
“Employers, in greater and greater numbers, are losing talented employees to places like Seattle, Austin, and Denver, where housing is more affordable and there are more options for employees and their families,” said Sean Karafin, Vice President of Policy and Economic Research at the San Diego Regional Chamber. “This means that employers will look to grow in our competitor regions instead of right here in San Diego.”
In Seattle for example, a years-long construction boom has led to an overwhelming supply of apartments, further easing the transition of newcomers to the city.
The increase in supply yields somewhat better news for tenants on the rents they pay. Seattle was among the top six metro areas in the country for rent growth every year from 2015 to 2017, according to ApartmentList.
This year it’s fallen to 22nd of out 25, and rents here have actually dropped slightly compared with the record highs reached last summer.
Of course, this doesn’t mean Seattle is suddenly cheap — the typical two-bedroom apartment is still above $2,000 a month. And the slowdown in the rental market follows seven years of rent hikes that totaled nearly 60 percent, among the biggest increases in the country. It’s just that things are no longer getting any worse, which, at this point, is what constitutes a victory for renters.
Meanwhile, the housing crisis here in San Diego has already caused decreased housing affordability, created longer commutes and greater congestion, and increased employee and employer dissatisfaction. The study update finds that the “anticipated additional demand for single-family homes, including small lot, clustered, rowhomes and townhomes, will be considerably higher than the potential for new single-family homes (of all types) identified in local plans.”
“Younger millennials, and millennials who have yet to start families, may be continuing to prefer urban apartments and condominium living. But we shouldn’t assume the same is true for those starting families,” said the study’s author, Gary London, Senior Principal, London Moeder Advisors.
“We need to focus on providing housing options for this growing population looking for that single-family feel by producing cluster-detached, rowhomes, and townhomes among other options.”
The study argues that the consequences of not providing options to better accommodate families will become irreversible as time passes. This “inability to reconcile housing supply and demand is likely to fuel an unprecedented economic challenge for the region, as employers are weighed down by the plight of their employees unable to find or afford their preferred housing type.”
Without substantial action to correct the region’s housing crisis, the shortage will worsen well into the foreseeable future. The result will be ever increasing housing costs, whether it is for homes that are for-sale, or for rent, whether single-family homes or multifamily homes.
A lack of action will lead to demand perpetually outpacing supply and a less resilient overall economy. The San Diego Regional Chamber of Commerce is a sponsor of the study and releasing the report to facilitate the community discussion around housing development, a key policy priority for the Chamber.
The study’s author is a local expert with four decades of real estate development experience as an analyst and strategic advisor. The full study can be downloaded from the Chamber website here.