Severe housing shortage predicted

[XBoxBoy]

Here’s a write up about a study done for the Chamber of Commerce that claims we are not building near enough housing in San Diego to meet our needs and thus we can expect the housing market to continue to be tight. I have no idea how reliable or unbiased this study is, but thought everyone might find it interesting.

Daily Business Report-Nov. 10, 2015

[spdrun]

Remember that if prices/rents go up, it will reduce population growth/influx.

[Coronita]

I see a lot of homes off of 56. Is affordability more of the issue?

[The-Shoveler]

[quote=flu]I see a lot of homes off of 56. Is affordability more of the issue?[/quote]

It’s both,

1) Millennials coming of age (24-34) is the largest generation in history (EVER).

2) We are building homes at a rate about half normal over the last 30 or so years.

No matter how you slice it, it’s going to be tight.

[The-Shoveler]

Agriculture is maybe about 5-10% of our GDP, but we are zoning like it is 80%, same thing in Ventura county.

[spdrun]

Time to encourage millennial twitter-twits to go to grad school for basket weaving. Call it “wicker engineering.” Keep ’em in debt so they keep renting and don’t get uppity about buying 🙂

[poorgradstudent]

[quote=flu]I see a lot of homes off of 56. Is affordability more of the issue?[/quote]

This is my guess. It seems like the market for SFH under 600k is pretty tight, but there’s pretty decent inventory in the 800+ range and also for “luxury” condos.

It makes sense, as those are probably the two areas where developers get the most bang for their buck.

[The-Shoveler]

[quote=poorgradstudent][quote=flu]I see a lot of homes off of 56. Is affordability more of the issue?[/quote]

This is my guess. It seems like the market for SFH under 600k is pretty tight, but there’s pretty decent inventory in the 800+ range and also for “luxury” condos.

It makes sense, as those are probably the two areas where developers get the most bang for their buck.[/quote]

If you priced every available home in SD under 500K I predict they would be all gone within a month.

Price is an issue but demand and limited supply is why.

[scaredyclassic]

maybe the oldest one will move back in with us and commute for a while. that would be very good if it all worked out just right. we like him so much. it would be kind of strange if he stayed and got married and there were kids here too. actually, that would be amazing.

maybe it’s just a fantasy, but from my perspective, I cannot think of anything I would like more than a multigenerational household, if Im the oldest. not so much if i were in the middle. probably be great for the little guys.

[FlyerInHi]

[quote=spdrun]Remember that if prices/rents go up, it will reduce population growth/influx.[/quote]

Individual owners might like house value increases. But business care about growth and sales. If sales don’t grow, business cut back and stop salary increases. Then people find it hard to make ends meets.

Unless people already have money, or bring money from somewhere else, high housing costs is really bad. Silicon Valley and Manhattan can sustain, but I have doubts about San Diego.

[The-Shoveler]

[quote=FlyerInHi]
Unless people already have money, or bring money from somewhere else, high housing costs is really bad. Silicon Valley and Manhattan can sustain, but I have doubts about San Diego.[/quote]

If they even were building (or start building) at a normal rate I would agree, but if they do not, then I don’t really.

I am afraid We may have permanently zoned out affordability (well at least until the next great recession, but those are not likely events really).

[spdrun]

At a certain point, price increases will choke out growth, though, so inflation-adjusted prices will not rise forever.

And another ‘cession is quite likely. Maybe not a “great recession” but a “good recession” 🙂 Seems to happen at least every ten years and we’re going on six.

[The-Shoveler]

If you get just a recession prices might drop 10 or 15%, OK that would help, but it would be temporary and not enough for most to really feel affordable.

Without building (or over-building really) you are still left with more people than housing.

[Jazzman]

There’s two issues here; demographics and new housing supply, and available inventory of existing homes. There is probably a big overlap but when you hear that the availability of affordable homes is low it is about home prices. Likewise when you here about months supply. When you look at demographics and the the rate at which the supply of new homes is keeping up, that poses a different kind of question. The overlap is when supply of existing homes is so low, it puts pressure on new builds to keep up with the extra pace. That is where I believe we are at the moment. The solution probably lies somewhere between the two; increase in new builds, but encouraging existing home inventory for sale. I believe the stranglehold for both has been the very distorted housing market in recent years that acts as a disincentive to many sellers, which impacts the move up market, and timing issues for developers who plan around long time frames not wishing to get caught out by boom bust cycles. There are very likely many other issues that impact this supply issue. For example, low interest rates inter alia have been stimulating demand. Had that not been the case you might find supply and demand more in equilibrium.

[poorgradstudent]

[quote=scaredyclassic]
maybe it’s just a fantasy, but from my perspective, I cannot think of anything I would like more than a multigenerational household, if Im the oldest. not so much if i were in the middle. probably be great for the little guys.[/quote]
We did a multigenerational household for a little less than 6 months when we were looking to buy our house; partially to save money (at the start) and partially because it took us a couple months longer than we had expected to find a place.

It definitely wasn’t ideal for us in the middle. I think it would have been easier if it was our house we were letting the older generation move into and live with us. Even things like sharing one fridge for 4 adults and 1 child and dealing with parking with 4 cars were headaches.

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