White House has plan to build more housing but San Diego could run out
The White House on Wednesday announced a plan to increase the supply of housing across the United States – something experts say is desperately needed in San Diego.
San Diego County has an average of about 9,500 new homes built per year, including apartments, single-family homes and condos, which is falling short of demand. The new plan presented by the White House Council of Economic Advisers could boost growth through tax incentives and other means.
The Biden administration said it intends to deliver 100,000 subsidized homes in three years and use federal grants to build and renovate up to 2 million homes in low-income areas. San Diego housing experts mostly welcomed the news, but doubted the federal plan – which primarily uses tax programs to stimulate growth – would do enough to build homes.
Alan Gin, an economist at the University of San Diego, said it was possible that the White House plan would create a little more housing locally, but not enough to have a noticeable effect.
“We have such a great shortage here that we need more,” he said.
Gin said the major problem in San Diego County is the lack of land cleared for new housing, something the White House cannot influence.
Despite the wording of the White House report, which focuses on the needs of most Americans, it is primarily aimed at the poorest in the country, said Lynn Reaser, chief economist at Point Loma Nazarene University. .
“Housing for middle-income households – teachers, firefighters, nurses and others – remains a major missing link,” she said.
Reaser said White House proposals to increase tax credits for subsidized homebuilders and efforts to get local governments to relax zoning could have the biggest impact in San Diego. However, she said there are obstacles to its functioning.
San Diego residents are generally opposed to a significant increase in the number of new homes in many areas, Reaser said. Additionally, she cited work she completed in 2015 that found regulations made up 40% of the cost of new housing – something federal regulators can’t change significantly.
How the White House plan would work:
- Changed mortgage requirements through Freddie Mac and Fannie Mae to allow the use of loans for manufactured homes, such as those built in factories. Currently, many mortgages cannot be used for manufactured homes.
- Expand mortgage options for properties with two to four units where the owner can live on site. This will allow small owners to build wealth and not be left out by big business.
- Prioritize nonprofits and first-time buyers to buy foreclosed properties at auction. This would give nonprofits and potential homeowners an additional 30 days to get the home foreclosed, as opposed to a private equity firm.
- Use new tax credits for social housing to encourage the construction and renovation of 2 million housing units in economically vulnerable neighborhoods.
- Through the US Treasury, transfer $ 383 million into the Capital Magnet Fund to encourage the production of subsidized housing. The fund is a grant program for non-profit housing groups and community development institutions.
Local experts say many policies would likely benefit other parts of the country more than San Diego. For example, buying a manufactured home might be cheaper, but the main issue in San Diego – and most of coastal California – is the cost of the land, not the house itself.
Nathan Moeder, director of San Diego real estate analysts, London Moeder Advisors, said the White House effort was more of a public relations exercise on the part of federal officials, as zoning and growth laws are still controlled at the state level.
“You have a parent here who is not in charge of the child,” he said.
Moeder said adding money to the Capital Magnet Fund could add new housing, but tax incentives to renovate poorer areas could have the opposite effect the Biden administration wants – raising the cost of housing and kick people out. The area might look better, but Moeder said homes in poorer areas tend to be naturally more affordable.
In its report, the White House noted that land issues are largely the responsibility of local municipalities. He specifically called Los Angeles to have 84 golf courses in the greater metro area, which has one of the biggest housing problems in the country. San Diego County has had problems turning old golf courses into housing, which is often contested by neighbors.
The White House noted that housing shortages – resulting in higher prices – were occurring before the pandemic, but COVID-19 accelerated the problem. San Diego County home prices rose 27.1% year-on-year in June, the S&P CoreLogic Case-Shiller Indexes reported Tuesday.
Residential construction has been on an overall downward trend since the 1970s, the White House Council of Economic Advisers said. Using research from the Federal Reserve, he showed that housing starts as a percentage of the population fell by about 39% over the 15-year period from January 2006 to June 2021.
Researchers at Freddie Mac estimate that the country is short of 3.8 million households.
The Biden administration can make most of the changes without Congressional approval, but it’s also encouraging lawmakers to ease zoning restrictions – like in California where most land is set aside for single-family homes – to allow more families. working to live in multi-family dwellings. where they work and have more opportunities.
The action of the Biden administration’s ideas joins a variety of other state and local efforts that could potentially increase the housing supply in San Diego County.
The California legislature last week introduced a bill that would allow the construction of two-unit buildings on land previously reserved for single-family dwellings. It would work by allowing landowners to subdivide their lots. It has yet to be approved by the State Senate and Governor Gavin Newsom.
San Diego County supervisors are working on a proposal to buy cheaper, older apartments called Naturally Occurring Affordable Housing. It also recently approved an additional $ 25 million for its housing trust fund to support the creation or preservation of subsidized housing.