When the San Diego City Council voted to reform its parking regulations as part of the city’s plan to make housing more affordable, it did not fully take into consideration the unintended consequences of such a move. The city’s parking reform strategy was an effort to alleviate the city’s shortage of affordable housing. Removing parking space requirements on newly constructed condos and apartments, however, may actually increase the costs to rent or purchase, because units with parking spots will become even scarcer and more expensive. As San Diego becomes more densely populated, parking could become a luxury exclusively for those who can afford it.
A city report estimates that San Diego’s current parking requirements add from $40,000 to $90,000 to the cost of a housing unit, which translates into thousands more a year in rent and mortgage payments. Initially, eliminating parking requirements could save homebuyers or renters money. But future costs due to a demand in parking spots could outweigh these savings, as the price for condos with parking spots will increase substantially. And when properties in an area increase the surrounding properties also increase, pricing out even more homebuyers. We have seen this occur in other cities that have limited parking for homeowners.
Parking a car already costs thousands of dollars in other areas of the country. It was reported that at least two new condo developments in New York City were charging $1 million for a parking space. In the Back Bay neighborhood of Boston, two tandem spots sold for $560,000 together and in San Francisco, a single downtown spot sold for $82,000 and there wasn’t even a condo associated with the spot. The high cost of parking will invariably be passed on to property owners and tenants, driving up housing and rents further adding to San Diego’s affordable housing crisis.
Knowing that parking spots will one day be a commodity in San Diego, savvy investors may start to buy up the few remaining affordable condos with adequate parking, knowing that rents and property values for these units will start to increase as parking spaces will be a bonus reserved for the well-to-do. Those who rent or purchase condos with no parking spots may end up parking their cars in nearby residential neighborhoods. Visiting friends or relatives may also look to adjacent neighborhoods to park, further impacting the quality of life for many nearby homeowners. This would inevitably trigger a push for neighborhoods to implement residential permit parking which already exists in several San Diego communities, such as Hillcrest, College Area, Logan Heights, Mesa College and El Cortez/downtown.
Residential permit parking is intended for areas that are severely impacted by all-day commuter parking generated by a nearby facility or institution and the homeowner must pay for their parking permits. Essentially, neighborhood public streets are turned into paid permit parking zones and only a limited number of permits are issued per address. Residents are allowed to park in their designated parking areas and if they park in the wrong area they could get a hefty parking ticket. All residential permit parking areas are enforced throughout the entire year except city-observed holidays.
Our elected officials and community leaders must continue to advocate for policies that address climate and housing challenges in a reasonable manner. Innovative policies are essential, as are visionary leaders who support them, but more thought should be put into San Diego’s parking requirements. With San Diego parking and traffic among the worst in the nation, we need to look for long-term solutions to reduce traffic congestion such as telecommuting and other practical and cost-effective strategies.
If a developer feels that there is a need for condos or apartments with zero parking spaces, they can now build these housing projects in transit-priority areas. The cost to purchase or rent these units will be determined by unrestricted competition, which is a good thing in a free market. The desire for a clean environment, however, should also be balanced with the need for well thought-out affordable housing solutions, and it appears that the San Diego City Council may not fully understand or have planned for the unintended consequences of their parking requirement reforms. In their effort to manage San Diego’s affordable housing crisis, the City Council may have moved in the wrong direction when it comes to completely eliminating parking requirements on some building projects.
Mark Powell is a licensed California real estate broker and a member of the San Diego County Board of Education.