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2016-11-02 11:19:45
170K More Homes Needed in County By 2025

Phillip Molnar 'How to get more housing in San Diego? Report offers suggestions' www.sandiegouniontribune.com November 02, 2016. Retrieved on November 02, 2016 at https://www.sandiegouniontribune.com/business/real-estate/sd-fi-mckinsey-global-20161031-story.html 

California needs to build 3.5 million homes by 2025 to keep up with population growth, says a new report from the McKinsey Global Institute, and local experts put the number around 170,000 new units for San Diego County. 

The state is losing billions of dollars each year because of a lack of housing, and individuals are feeling the cost burden, said the institute, the research arm of New York-based McKinsey & Company management consulting firm. 

It said the Golden State would need to more than triple its current pace of building to keep housing costs at affordable levels.

“As an individual, because of the chronic affordable housing issue we have, I end up spending a bunch more money on housing than I would like to,” said Shannon Peloquin, an author of the report. “I’m squeezing out discretionary spending, potential transportation spending, potential healthcare spending, in order to cover my basic shelter needs.” 

McKinsey offered ideas of how California could build its way out of trouble, namely using vacant lots for new projects. It also said communities should construct projects near transit hubs, increase density at underutilized multifamily sites, allow homeowners to add more units to their homes and shorten the land-use approval process. 

It studied maps throughout the state and estimated there is capacity to build as many as 225,000 new homes on vacant urban land already zoned for multifamily housing. 

“It was important for us to have a fact-based perspective on a problem that is on our own backdoor,” Peloquin said, “and to provide objective trade-offs to what can be an emotionally-charged conversation.”

The suggestions are nothing new, but local industry watchers said the report adds more weight to their arguments. 

“What is important is that McKinsey is making these findings. And that should have people pay attention,” said Borre Winckel, CEO of the local Building Industry Association, who contributed to the report.  

He estimated San Diego County would need 12,000 units a year for the time period covered by the report, or 170,000 total. 

Real estate consultant Gary London said the county was delivering about a third of the housing needed, at best, each year. He said the institute’s suggestions were “spot on.” 

He said the county needs high density infill projects, or reworking unused or underutilized urban land for housing, in areas like Hillcrest. Also, he said the county can create new suburbs in unincorporated areas, approve infill projects in older suburban communities and rezone unused industrial land for housing, in areas like Kearny Mesa. 

The institute report focused on using vacant urban land to areas already zoned for multifamily. Peloquin said changing zoning is a good idea but it may be too time-consuming for cities to approve and the report was more focused on immediate things the state can do. 

London said the county needed to allow homeowners to add more units, as suggested by the institute’s report, and recent legislation to make approval of granny flats easier should be a big help. 

“There’s nothing we can do that won’t change communities. I prefer to think of the changes as positive,” he said. 

The state loses $140 billion per year in output, or 6 percent of state gross domestic product, from lack of of housing, the report said. In particular, a lack of building harms the construction industry, which has lost 700 jobs in San Diego County in the last 12 months.

Sure to be controversial, the report looks at ways to penalize anti-growth cities. Some of the suggestions are increasing property taxes for communities that don’t meet targets for new housing or hold back state dollars for cities that don’t approve more units.  

Other report notes: 

  • New York added nearly 80 percent more housing units than California relative to population growth from 2009 to 2014. 
  • California’s housing affordability gap is $50 billion to $60 billion annually. Nearly 70 percent of the state’s low-income to very-low-income households need to spend half their income for housing. 
  • California ranks 49th among the 50 states for housing units per capita. Utah is No. 50.
  • The institute estimates shortening land-use approvals could save more than $12 billion by 2025 and accelerate project approval times by four months on average. 


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