Point Loma Nazarene University’s (PLNU) Fermanian & Business and Economic Institute (Institute) has released a new study on housing affordability in the San Diego region. The study, Opening San Diego’s Door to Lower Housing Costs, attempts to quantify and present an objective analysis of the cumulative economic impact of government fees, regulations, and requirements on the cost of new single and multi-family housing, including both purchased and rented units, in various jurisdictions in San Diego County.
Chief Economist at the Institute, Dr. Lynn Reaser, unveiled the study’s findings at a press conference on April 29th. “To put it simply, total cost of regulation amounts to approximately 40% of the cost of housing across the various price segments in all of San Diego County,” said Reaser. “These costs are essentially a ‘hidden tax’ on all residents and further limit the accessibility of San Diego’s housing supply.”
Joining Reaser at the release were members of “Housing You Matters”, a region wide coalition of non-profits, housing advocates and members of the business community. Speakers included; Past President of the San Diego City Council, Tony Young, Jerry Sanders, President and CEO of the San Diego Regional Chamber of Commerce and Lori Holt Pfeiler, Executive Director, Habitat for Humanity San Diego.
In addition to an assessment of cost drivers, the study researched the ripple effects of the regulatory environment, including the effect on households priced out of the market, the overall implications for population, business formation, jobs and economic growth.
“At the San Diego Regional Chamber we know that making San Diego a place where businesses can succeed and grow, means ensuring our workforce can afford to live here and yet San Diego is one of the nation’s least affordable housing markets,” said Sanders. “We have known for some time that high housing costs are a major impediment to the region’s economic health and this study is a validation as it quantifies what we have been saying for years.”
According to the research, nearly 233,000 households throughout San Diego County are priced out of the market for owned or rented housing. Affordability is expected to further decline as home prices rise faster than wages. “The impact of regulation on housing is not fundamentally a builder or developer issue. It is about the policemen, school teachers, and others who provide us with goods and services every day who are being priced out of the housing market,” said Reaser.
During her presentation Reaser also discussed the potential economic benefits that could accrue from a relatively modest reduction in the regulatory costs restricting housing access. “A 3% reduction could open up housing alternatives to approximately 6,750 additional households in the course of one year,” said Reaser. “Ultimately, our desire is that the results of our work will have a positive impact on a local level and will be used by elected officials to affect change in our region.”
Opening San Diego’s Door to Lower Housing Costs, is the most recent report published by the Institute, which serves as a strategic unit of PLNU, providing expert business and economic consulting, commentary, studies and research. The study offers a series of best practices and recommendations for local government to simplify and standardizing the building permit review process, with the overarching objective to increase housing affordability for all housing types. Coalition members intend to actively support the adoption of recommendations identified through concerted efforts aimed at local government in the coming months.
The full study is posted on the Institute’s website, as well as the “Housing You Matters” coalition site, HousingYouMatters.org.