There’s a saying in advertising: “Nothing kills a bad product quicker than good marketing.”
I’ve also heard, “Nobody ever turned down a job in San Diego because it meant moving to San Diego.” I find myself preoccupied with San Diego’s viability to attract and hold onto professionals as residents, because of a darker side of both those statements. Here’s why.
Earlier this month, Trulia chief economist Jed Kolko published an analysis of home affordability in the U.S.’s top 100 metros. His analysis was simple: It compared the median household income in the metro area to the median home price.
Since the analysis compares only the homes in that market to the incomes in that market, it automatically accounts for discrepancies in both metrics. In the analysis, Kolko asks whether the median income in your area can afford the median home there. The results don’t reveal anything we didn’t already know: The Midwest is a place to buy and the East and West coasts are places to rent. In particular he notes that San Diego is among the least affordable markets in the nation.
When I posted a link to that article in The Plaza, it received immediate and insightful commentary from the Voice of San Diego community. I posed the question: How can we make housing more affordable? Here are some of the comments.
It is time to restore San Diego’s investment in homes that are affordable to its critical workforce. San Diego City Council established the Workforce Housing Offset (linkage fee) in 1990. … In its 23-year history the Workforce Housing Offset was cut in half and never updated resulting in the loss of hundreds of homes, jobs and millions in investment. What can we do about affordability? We can start by restoring San Diego’s investment in affordable homes for our workforce.
Stephen Goldfarb pointed out:
The city declared a housing emergency, yet continues to set aside land for conservation.
Andy Kopp asked:
To make housing affordable, build apartments. The recent big, scary statistic on home purchases was the percent bought in San Diego with cash. The conventional wisdom is that this largely represents out-of-city (state & country) investors, and that their demand for investment properties in an historically strong real estate market crowds out potential local buyers. So the question becomes, do we want affordable housing, or do we want affordable ownership?
And Mark Griffin echoed that sentiment more specifically:
Conversion into condos would possibly be a low cost alternative (relative). There is at least inventory as opposed to single family homes. There is simply not enough inventory.
If I look at my own situation, the neighborhood I live in (Ocean Beach) is cheaper to rent by half than to buy. Which is to say, we spend roughly 30 percent of our income on rent here. If we were to buy, we’d spend 60 percent of our income on a mortgage (assuming we could afford the down payment and get a loan, which is highly unlikely given those numbers).
What’s troubling for the city is that I make pretty good money, well above the median household income. I can only imagine what it’s like for those who are at or below the region’s median household income.
I’ve long sought an answer to this basic question: Who is buying our unaffordable homes, and why? As Kopp suggested, they are being bought for cash, presumably to be rented and therefore as investments. Is it out-of-towners buying one or two properties at a time or corporate entities buying up real estate en masse? Or should we be looking at land scarcity and lack of new homes as the culprit?
This is a matter of great importance to the general economic output of the region. San Diego is great at getting people to show up. I count myself among the many transplants, having arrived after graduating from Ohio State and growing up in Cleveland and Columbus. I’ve been here for 14 years now. But I’ve also seen many of my cohort leave too soon.
Often the rationale boils down to their inability to get ahead here – not being able to afford a nice place to live here but being able to afford nice places in Boulder or Austin. On Facebook, the people I graduated with shovel snow in the winter but they also own their own homes and live in nice neighborhoods and can put money away at the end of the month for vacations. This hurts our schools (because young people come here in droves but leave once they start having families) and it hurts our businesses (for the same reason).
I go back to my marketing adage and wonder whether the problem with San Diego is that we have a bad product for families. Many choose to move here and many yet choose to leave too soon. The solution, like the problem, is going to have to be big. I hope the new mayor and City Council can begin to make progress together to help us all.
Kelly Abbott is chief executive of the San Diego-based company Realtidbits, which powers the comments and alerts on this site. Abbott’s commentary has been edited for clarity. See anything in there we should fact check? Tell us what to check out here. Want to respond? Submit a commentary.