May 8, 2024 - News

San Diego's big year of affordable housing construction may not last

The column chart shows a fluctuating trend in the number of permits issued for income-restricted units in San Diego from 2019 to 2023, with a significant spike in 2023.
Data: City of San Diego; Note: Permits reserved for moderate, low and very-low income households; Chart: Axios Visuals

San Diego last year quadrupled the number of permits it issued for homes reserved for lower-income residents, but city planners don't expect that to become a trend.

Why it matters: From 2021 to 2029, the city needs 108,036 new homes — with 64,199 of those reserved for income-restricted households — to meet demand, per its state-mandated housing plan.

  • But even last year's spike in low-income housing didn't reach the level the city needs to average over those eight years to reach its housing target.

By the numbers: City planners approved permits for 9,692 homes in San Diego last year, nearly twice as many as in 2022 and the most they've issued in decades.

  • Of those, 2,362 were reserved for residents with low or very-low incomes, and another 214 were set aside for households with moderate incomes — nearly four times the 675 permits for homes reserved for moderate or lower income residents in 2022.

Yes, but: The market needed to produce 13,504 homes — 8,024 with income restrictions — every year from 2021 to 2029 to satisfy housing demand.

The big picture: Through three years, the city is way behind that pace.

  • Overall, developers received permits for 20,038 homes since the start of 2021, compared to 40,512 to meet its housing needs target.
  • And the 3,721 income-restricted permits issued are just 23% of the 16,048 needed to satisfy the city's need.

What they're saying: Heidi Vonblum, San Diego's planning director, said  the effect of multiple city housing reforms from recent years are starting to show up as projects that take years to put together are beginning to come through.

  • "That's 800 new units that probably wouldn't have even been allowed as recently as 2019," she said.

Friction point: Vonblum, though, does not expect low-income housing to continue representing 26% of total homes permitted, as they did in 2023.

  • "I think that's an anomaly," she said. "We don't expect to stay on that trajectory."
  • Vonblum said it was likely the result of a few projects with lots of low-income units receiving permits last year, skewing the data.
  • A low-income housing project in Rancho Bernardo is expected to cost about $900,000 per unit to build, and another in City Heights is projected to cost over $800,000 per unit.
  • Income-restricted homes represented 12% and 10% of permitted homes in 2022 and 2021, respectively.

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