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Housing Affordability a Challenge in San Diego Region

Posted on: May 01, 2018

The median home price in the San Diego region is $550,000. Let that sink in for a minute.

Because of those prices, many workers commute from Riverside County.

In metro Atlanta, median home prices are currently $199,000.

While home prices remain lower in metro Atlanta than in many other large metros, the addition of transportation costs, cost of living, and slower wage growth reveals a much higher financial burden to many residents. For example, Atlanta’s home prices are rising faster than the national average according to a report from S&P CoreLogic Case-Shiller Indices, but wage gains are considerably lower (less than 2%).

In San Diego, affordable housing solutions are being explored at the city, county, and state levels. A San Diego senator introduced a bill in the 2017 California legislative session that creates a permanent source of funding for affordable housing by imposing fees of up to $225 on certain real-estate transactions, such as mortgage refinancing (home and commercial real estate purchases would not be subject to the fee). It should generate $1.2 billion over the next five years, and would raise a total of $5.8 billion by adding federal, local, and private matching funds, according to committee estimates.

Also in 2017, San Diego County announced a $25 million plan focused on building, renovating, and acquiring affordable housing, and stemming the growing tide of homelessness in the region. Along with identifying county properties that could be redeveloped for affordable housing, the plan would establish an affordable housing investment pool and transfer $500,000 from the county’s Neighborhood Reinvestment account to its Health and Human Services Agency to underwrite pre-development and planning activities for potential sites. The $25 million investment pool in the plan comes from unallocated reserves, and will allow the county to work with developers to produce at least 1,000 affordable units over the next five years. The $500,000 converted from Neighborhood Reinvestment funds will help the county research and explore innovative designs to reduce the cost of new affordable units, a major barrier in constructing affordable housing. Recent affordable housing developments have cost between $400,000 and $600,000 per unit to construct, largely because land is so expensive. This makes the identification of county-owned land critical to the proposal.

The San Diego City Council is considering a $900 million bond measure to build affordable housing in the city. If approved by voters, the measure would raise property taxes an average of $72 per year to pay for approximately 7,500 subsidized apartments: 2,500 units for the chronically homeless; 2,500 for low-income families; and 2,500 for veterans, senior citizens, and the disabled. In addition, it would provide matching funds that would help the city leverage more state money available for affordable housing and homelessness projects. If the state housing bond passes later this year, San Diego will need additional local matching funds to access those dollars. The city bond measure was approved for further consideration at the February meeting of the Council Rules Committee, and is expected to be considered by the full council in July or August for placement on the November ballot.