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Beautiful City of San Diego Now Undersupplied in Land

There is limited space across the nation for new housing, but nowhere more than San Diego.

Real estate research firm Zonda said Wednesday in a new report that the San Diego metropolitan area had the fewest available lots in the nation according to its quarterly index that assigns values to the number of vacant spaces available for single-family housing.

It also said that the number of available lots had decreased 28 percent in a year, as of the third quarter 2020. That was the second biggest reduction in the nation. Nashville had the biggest drop at 30 percent.

Zonda has classified San Diego as “significantly undersupplied” since 2015. Ali Wolf, chief economist at Zonda, said a lack of space for housing would increase home prices for the foreseeable future because builders will continue to pay a premium for land.

“Lot inventory is extremely tight in San Diego and topography challenges make it hard to replace,” she said. “As builders pay more for the land, consumers should expect prices to rise as well.”

Zonda said the nationwide lot supply was down 9 percent, but not all markets saw a decrease. San Francisco and Los Angeles, both considered traditionally undersupplied, actually had increases. San Francisco was up 22 percent and Los Angeles was up 13 percent.

National slowdowns were largely the function of slow downs in home building due to the pandemic, Zonda said. It also said an increase in available lots in more affordable parts of the nation helped keep the total reduction low.

San Diego has been at the bottom of available lot space on Zonda’s list for a year. As of the second quarter of 2019, before San Diego took over the bottom spot, it was Las Vegas with the fewest available lots.

The index ranking is based on values assigned to the number of vacant lots zoned for housing. Zonda said San Diego County had about 1,137 vacant spots in the third quarter compared to 1,728 at the same time in 2019 and 1,997 in 2018.

Zonda’s ranking only applies to single-family homes so it does not take into account a lot of the housing growth the region has been able to accomplish with vertical construction, such as in downtown’s East Village and Little Italy. However, San Diego County homebuilding, even with multifamily construction, is down historically.

San Diego-based London Moeder Advisors said the region’s state-certified housing plan, called a Housing Element, shows just how far behind construction is. It said the plan for 2012 to 2020 shows San Diego County fell short by more than 35,000 housing units based on what it told the state was needed.

Analysts often point to community opposition to new housing as a reason for limited construction, but Wolf noted San Diego also faces geographic obstacles to new housing. The county is landlocked by the ocean to the west, Mexico to the south and Camp Pendleton to the north. Much of areas to the east is desert, difficult terrain to build on or not zoned for housing

Wolf said it is unlikely that construction would noticeably increase in San Diego County. She said it is always up to builders where they choose to go, and they may choose to go to other places where opportunities are greater.

“Without the pressure from the building community and/or city officials, development will keep status quo,” she said.


By Philip Molnar

San Diego ‘significantly undersupplied’ in land for housing, report shows – The San Diego Union-Tribune

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