How San Diego Is Dealing With Growing Affordability Issues

San Diego is has joined Los Angeles and San Francisco on the list of the most expensive apartment markets in the country, according to a new national report from AppFolio and ALN. In Los Angeles and San Francisco, the high rents have resulted in community debates over affordable housing, development and rent control. Now that San Diego has joined the list, the market may be headed down a similar road. San Diego renters are already showing upset over the increased rents, with a recent rental survey from Apartment List giving apartment affordability a D rating.

“All of these top cities are having affordability issues, and they are starting to garner the attention of state and local governments to solve the affordable housing needs,” Nat Kunes, VP of product management at AppFolio, tells GlobeSt.com. “Because there aren’t a lot of local programs for affordable housing, people are using Section 8 vouchers and housing choice vouchers to supplement. We are seeing a lot of restrictions on new construction. For example, every new apartment building that gets built, a certain percentage of the units have to be designated as affordable. We are seeing a lot of new construction fall under those guidelines in some cities, and I suspect the San Diego will follow.”

In Los Angeles and San Francisco, the affordability crisis has manifested as public measures. While the San Diego market has yet to see any public measures, the local government is likely where changes would start. “I am seeing it coming through City Council and local government and less through public measures,” explains Kunes. “What I see driven more through public measures is more rent control regulations, like limiting rent growth on certain units. Portland it the most recent city that went through this. They just enacted rent control in the City of Portland with outlying areas unaffected. You are seeing a lot of cities doing this, and if San Diego were to do this, you would see a lot of outlying areas unaffected. It definitely makes a difference.”

San Diego has always been an expensive housing market, but the recent surge in rental rates has been driven by the growth of tech and science jobs and luxury new development. “There are two main factors: job growth and new construction,” says Kunes. “Having a supply of newer apartment stock that can command a higher price is definitely contributing to the rent growth. Additionally, San Diego is a destination city. People like to live by the coast and there has been a lot of movement to live by the coast. You see a lot of net migration patterns of people wanting to live in the greater San Diego area. These are really the main drivers of growth.”