The Big Disconnect in SD's Housing Market

London: “Never in my career have I seen the housing problem as acute as it is today. The gap between what most people can afford and what housing prices are has never been wider.”

SAN DIEGO—We’re not building enough housing to meet the near-term needs of our largest cohort of residents— Millennials , who are seeking affordable homes as they approach child-rearing age, the London Group Realty Advisors ‘ president Gary London tells GlobeSt.com. London will be giving the presentation “Setting the Table: The Housing Crisis in Perspective; Facts and Figures” as the Burnham-Moores Center for Real Estate within the University of San Diego School of Business , in conjunction with the  Urban Land Institute , hosts the next installment of the BMC’s popular “Breakfast at the BMC” lecture series on June 10 . This conference, which will  address and identify regional housing-affordability issues , is the first of a two-part series. The second part, which will address solutions to the problems raised at first event, is a follow-up conference to be hosted by  ULI in the fall. For more information on the conference, click here . We spoke exclusively with London before the conference to discuss what attendees can expect and his thoughts on how the housing crisis is hindering San Diego’s economic growth. GlobeSt.com: What can attendees expect from your housing-crisis presentation? London: This housing summit was my idea. It is being presented as a dual conference. I’ve been in San Diego County since the late 1970s, and all that time it has had housing issues—a lack of available housing and pricing issues—throughout the ups and downs of the markets all those decades. But never in my career have I seen the housing problem as acute as it is today. The gap between what most people can afford and what housing prices are has never been wider. The imbalance between what we’re building and demand has never been wider—the types of units that we’re building and where we’re building them. There’s never been a greater disconnect. We’re building mainly apartments —and to some extent condos —and barely any single-family homes at all. And we’re mostly building in the central and south communities and barely any in the northern inland and northern coastal communities. The premise is that we’ve mostly run out of developable land except for in South County. We have changed the nature of the type of housing we offer up; we can’t build new suburbs and new master-planned communities—we have to focus on infill and vertical building. There’s a demographic imperative at work here: the largest cohort of bucket of population that exists in San Diego today is the Millennials, who are roughly reaching the age of 37 years old now. This is the beginning for most couples of childbearing age, even if they’ve delayed having a family for many years. They can raise children in apartments and condos for a certain period of time, but after that you want a home. San Diego is a network of suburban villages, but it’s hard to be comfortable with that definition any more. The nature of development is such that we’re being forced to change the kind of products we offer, and there’s a real disconnect between who we think needs the product—young families—and the kind of product we’re building. We’ve got to start to concentrate on suburban housing again, at some level. What that leads to is this: the way San Diego County is growing is from within. Some believe the growth can be accommodated in already existing areas, but I beg to differ. It is our challenge and responsibility to find ways to accommodate Millennials in ways they want to be accommodated in the suburbs. GlobeSt.com: How is the housing crisis hindering San Diego’s economic growth? London: What it does is create selective job growth . We’re clearly losing manufacturing and industrial jobs. We’re gaining smart jobs in the business, pharma, bio and tech sectors, and those sectors pay more, but there are a lot of people who need to be accommodated that aren’t in those sectors. When the economy starts to compress or becomes boutique, then only high-caliber jobs and companies will be able to survive. The people who service our economy—teachers, police, firefighters, plumbers—mostly live in Tijuana. We’re finding more people leaving than coming in. This is a defining moment: if we continue to see that phenomenon, it simply means the economy is going to suffer. Right now, the economy is strong and diversified, but at some point it will be narrow in terms of growth that will occur. There’s an inability to survive on the wages being paid. We’re seeing this in Silicon Valley, and it’s a defining moment of who we want to be as we grow up. That’s the reason for this summit. I’m writing a paper that will define the economic playout of the scenario I just described, and I will deliver it at the summit. GlobeSt.com: What do you see as the solution to this problem? London: That will be addressed more completely at the second part of the conference in the fall. I’m going to set the table, and it will be discussed on two panels: one from the economic perspective and one from a policy perspective so we can start to address some of the policy opportunities and choices. In the fall, the symposium will be on solutions. We will drill down to specific legislation and initiatives that we might want to take to our policymakers. That’s our audience: the people who vote.