San Diego Regional Housing Market: Are We Headed For A Crisis? Gary - - PowerPoint PPT Presentation

San Diego Regional Housing Market: Are We Headed For A Crisis?

The London Group Realty Advisors Gary London

(619) 269-4010 glondon@londongroup.com

• There is a basic deficiency and maldistribution in the amount of

housing units demanded and the number being supplied.

• A maldistribution of the types of housing we are supplying –

mostly multifamily and not single family.

• A pricing and availability problem.
• And ultimately an economic problem which will challenge, and

perhaps even damage, our economy.

Housing Crisis = Economic Crisis

There is a basic deficiency and maldistribution in the amount of housing units demanded and the number being supplied.

100,000 200,000 300,000 400,000 500,000 600,000 700,000 1996 2000 2005 2010 2012 2020 2025 2030 2035 2040 2045 2050

Job Growth Housing Growth

Regional Jobs & Housing

Cumulative Growth Since 1996

Forecasted Historical

20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 1996 2000 2005 2010 2012 2020 2025 2030 2035 2040 2045 2050

Job Growth Housing Growth

50,000 22,000

Maldistribution of Jobs and Housing

North County – Adding More Jobs than Housing

Forecasted Historical

10,000 20,000 30,000 40,000 50,000 60,000 70,000 2012 2020 2025 2030 2035 2040 2045 2050

Housing Demand (1.38 Jobs Per DU) Forecasted Supply

22,287

Looming North County Housing Shortage

Demand Based on Job Growth vs. SANDAG Forecast

Forecasted Historical

The Geographical Disconnect

Shortage / Surplus of Housing Units (2012-2050)

Chula Vista

• 5,240

San Marcos

• 10,413

San Diego 15,620 Unincorporated

Carlsbad

• 8,739

Inferior Agriculture Land is on the Rise

Superior vs. Inferior Farmland in San Diego County

40,000 60,000 80,000 100,000 120,000 140,000 160,000 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Superior Farmland Acres Inferior Farmland Acres

A maldistribution of the types of housing we are supplying – mostly multifamily and not single family.

Source: The London Group Realty Advisors, US Census, SANDAG

Are We Building What They Want?

60% (697,162) 18% (60,337) 36% (418,065) 82% (273,522)

4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Current Stock Forecasted Growth

Single Family Multifamily Mobile Homes

Source: The London Group Realty Advisors, US Census, SANDAG

60% (697,162) 18% (60,337) 36% (418,065) 82% (273,522)

4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Current Stock Forecasted Growth

Single Family Multifamily Mobile Homes

What does this look like?

Are We Building What They Want?

150,000 100,000 50,000 50,000 100,000 150,000 200,000 Under 5 years 5 to 9 years 10 to 14 years 15 to 19 years 20 to 24 years 25 to 29 years 30 to 34 years 35 to 39 years 40 to 44 years 45 to 49 years 50 to 54 years 55 to 59 years 60 to 64 years 65 to 69 years 70 to 74 years 75 to 79 years 80 to 84 years 85 years + Male Female

983,818 (31%)

Peak Urban Millennials

San Diego Millennials = 31% of Population

Millennials May Become Less Urban

46% 24%

0% 10% 20% 30% 40% 50% City Suburbs

Current

Source: ULI- America in 2015

37% 29%

0% 10% 20% 30% 40% 50% City Suburbs

Would Live if They Could

A pricing and availability problem.

4.9 4.8 4.6 4.3 4.0 3.9 4.1 4.1 4.5 5.0 4.4 4.4 4.2 3.9 3.7 3.5 3.5 3.6 3.9 4.3 4.8 5.3 6.2 7.0 8.7 9.1 8.8 8.3 5.9 4.9 5.1 4.8 5.1 6.0 6.4 6.7 6.8

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Est.

Median Home Price

Median Multiple Median Multiple Median Home Price

Housing Affordability

Median Multiple (Median Price / Median Income)

Broken Housing Ladder = More Expensive Homes

5.45 6.38 6.45 6.46 7.26 7.37 7.44 7.79 7.99 8.18 8.77 8.80 8.82 9.22 11.02 11.16 13.76 15.15

$0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 Santee Chula Vista Poway Lemon Grove Oceanside La Mesa San Diego Imperial Beach National City Carlsbad Vista El Cajon Escondido San Marcos Encinitas Solana Beach Del Mar Coronado

Median Home Price

Median Multiple Median Multiple Median Home Price

Housing Affordability

Median Multiple (By City) as of May 2016

Broken Housing Ladder = More Expensive Homes

33% 36% 34% 37% 36% 44% 30% 39% 42% 42% 44% 47% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Chula Vista Carlsbad Vista Escondido San Marcos Encinitas 2000 2016

Housing Affordability – 2000 vs. 2016

% of Income Spent on Housing

Broken Housing Ladder = More Expensive Homes

And ultimately an economic problem which will challenge, and perhaps even damage, our economy.

• 100,000

200,000 300,000 400,000 500,000 600,000 700,000 Management, business, science, and arts

• ccupations

Service

• ccupations

Sales and office

• ccupations

Natural resources, construction, and maintenance

• ccupations

Production, transportation, and material moving

• ccupations

San Diego County Workforce Working in San Diego County

Regional Workforce

San Diego County Imports Works in 4 of 5 Categories

Employer Dissatisfaction

Housing is the issue businesses are most dissatisfied with

2.0% 3.0% 3.0% 6.9% 6.9% 7.9% 10.4% 27.7% 0% 10% 20% 30% Access to clients and customers Access to capital Access to relevant vendors and suppliers Ability to retain valued employees over time Ability to find qualified entry to mid-level employees Ability to recruit experienced, high-level talent Ability to attract new employees that live outside the region Ability to find reasonably priced housing for employees that is close to work

Employer Difficulty

Retaining, recruiting and replacing workers close to work

49.0% 50.0% 61.4% 64.4% 64.4% 65.8% 67.3% 69.3% 0% 20% 40% 60% 80%

Providing training opportunities so current employees are able to advance within the organization Providing training programs so current employees are productive and stay up-to date on changing technology and industry requirements Recruiting entry-level employees with appropriate training and education Recruiting non-entry level employees with adequate skills and industry experience Retaining valuable employees who could move up within the

• rganization

Replacing retired workers with qualified employees Recruiting employees who can find adequate housing within a reasonable distance from work Retaining valuable employees who want to purchase housing within a reasonable distance from work

Workforce Conclusions

The price and availability of housing will have a growing impact upon the quality and quantity of the regional workforce.

• The labor market is tightening (10% to 4.5%) and demographic

profile is greying (21% to 23%)

• Almost half (47%) of SDC renters spend over 35 percent of their

gross income on housing – housing costs drive affordability in the region.

• Average commute times from 2011 to 2015 are increasing and will

make it more costly to commute from the same distance in the future

Workforce Conclusions

San Diego County businesses are increasingly dissatisfied with their ability to retain workers who want to live in and around their workplace

• Over a quarter of businesses are dissatisfied with their ability to

find housing close to their work location

• Small and medium sized businesses are more likely to indicate

dissatisfaction with the workforce housing(>35%) options in the region

• Lack of housing impacts industries differently, but the impacts are

considerable

Quote in SD UT, April 23, 2016. One citizen’s reaction to the proposed 2,100 home Newland Sierra Development:

“…to take it an put it right next to the freeway…is irrational.”

VOSD, February 23, 2016, former coastal North County Supervisor Pam Slater-Price

“You would have to be a complete idiot to be openly pro-development.”

What We Are Facing