San Diego is not issuing enough housing permits to keep up with demand
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The San Diego metro area is on track to permit fewer housing units this year than in 2023 — in line with a nationwide trend, U.S. Census Bureau data show.
Why it matters: That's a problem for people facing steep housing prices, and it's not a good sign for the city either, as it struggles to meet demand and state-mandated housing goals.
Zoom in: The metro area, which includes the entire county, is projected to permit 10,624 new units this year, compared to nearly 11,500 in 2023.
- That means a projected 32.5 new units permitted per 10,000 residents — down from 35.1 in 2023, or 7% fewer total new units permitted per capita.
- Yes, but: While the region as a whole is trending below last year's mark, the number of projected permits is still higher than the previous five years.
Between the lines: Last year, the city issued more housing permits than it has in decades — and about one-fourth were for cost-controlled units, although Heidi Vonblum, the city's planning director, said she doesn't see that ratio as sustainable.
- "I think that's an anomaly," she previously told Axios.
What they're saying: Even last year's best-in-decades performance was not enough to satisfy demand, according to the city's state-mandated regional housing needs assessment.
- "It was a good year," Vonblum said. "It was not a good enough year to hit our RHNA target."
Zoom out: A slew of new state housing laws effective this year could help expedite construction of new housing, with a focus on affordable units.
The big picture: Higher interest rates are slowing home and apartment construction, according to the National Association of Home Builders.
- Labor and lot shortages are also weighing on builders, per the national group's latest survey. Experts estimate America is short more than 3 million units of housing, either to rent or buy.
Yes, but: Home building has proved resilient, partly because of low inventory of existing houses for sale.
- 1.3 million units were permitted nationwide in 2023 — most of which (60%) were single-family homes, data show.
What we're watching: A cascade of new apartments, financed when interest rates were lower, helped recently to slow rent growth across the nation.
- With the peak of the construction wave behind us, per an analysis from real estate services firm Cushman & Wakefield, landlords could raise rents.