Oceanside talks housing costs, needs

OCEANSIDE — The Building Industry Association of San Diego County presented its report on the county’s housing at City Council’s Dec. 5 meeting, using the opportunity to ask that council allow for developers who meet all the city requirements to build more houses in the city.

Michael McSweeney, senior public policy advisor for the association, presented the report to council at the request of Councilman Jack Feller and now former Councilman Jerry Kern.

The report shows prices for homes are rising while the amount of homes being built in the county isn’t keeping up with population growth. The San Diego Association of Governments wants approximately 12,000 building permits annually to meet population growth demands, but the county hasn’t met that amount since 2005.

In almost 50 years, California has nearly doubled its population. In 1971, the state’s population was 20.35 million with about 1.4 million people living in San Diego County. Today there are 39.53 million people living in California with 3.318 million in San Diego County alone.

“So we’ve doubled the number of people that live in this state but yet we’ve cut back by 50 percent the number of houses we’ve built,” McSweeney said at the meeting, noting that San Diego County is building approximately 70 percent less houses today than in the 1980s.

Oceanside, like the rest of the county, saw a spike in the number of homes being built in the 1980s. In 1987, there were more than 4,500 housing units built in the city, but only 300 to 500 houses were built annually in the last 12 to 15 years.

“While there seems to be a tremendous amount of construction going on, the reality is we’re falling short as a county of what our housing needs are,” McSweeney said.

While homes in San Diego County have always tended to cost more than the national average, the difference has grown over the years. According to the report, the cost of San Diego County homes in the early 1990s averaged 23 percent more than the national average, but by 2010 homes cost nearly 117 percent more. That average dropped to about 57.5 percent more than the national average in 2016.

McSweeney noted that approximately 66,000 people drive to work in San Diego County from where they live in southern Riverside County, where it’s more affordable for them to live.

“If houses aren’t built where people work and can afford them, they drive to where they can afford housing,” McSweeney said.

The need for more housing is caused by job growth. According to Keyser Marston Associates, a California-based real estate advisory firm, a housing unit is needed for every 1.74 jobs created.

“Houses are where jobs go to sleep at night,” McSweeney said.

McSweeney then asked City Council to allow a developer who meets all of the city and state building and zoning requirements to build homes within the city.

JP Theberge, chair of the Elfin Forest/Harmony Grove Town Council and founder and executive director of Grow the San Diego Way, a housing and land use think thank, pointed out at the meeting that the type of housing San Diego County is short on is for low- to moderate-income households.

According to the latest Regional Housing Needs Assessment mid-cycle report, San Diego County is producing only half as much housing as it should be. Theberge noted that the report also shows the county is over-producing above moderate housing and not enough low- to moderate-income housing.

Theberge said the average new home being built in San Diego County costs about $650,000, adding that a buyer would need to make about 200 percent of the median income to afford that price. He then encouraged the industry to build more entry-level housing.

Diane Nygaard, president of Preserve Calavera, a nonprofit advocate for natural open space in North County, also spoke at the meeting. She said many Oceanside residents are concerned about the kind of growth the city is experiencing.

“Of course we all know we need to grow but it’s not just more, it’s how we grow and where we grow and that we do it in a way that protects our jobs,” Nygaard said.

“It’s not up to us to make up for San Diego County’s shortfall on housing,” she continued. “We need to deal with our issues here in Oceanside and how we do that is critical, and do that in a way that protects our open space and agricultural land.”

Oceanside voters struck down the proposed Measure Y during the November 2018 election. Measure Y was a citizens’ initiative petition started by a group called Save Open Space and Agriculture Resources, or SOAR. The group strongly opposed the North River Farms project, a proposed development that would consist of commercial buildings, a boutique hotel and about 700 homes in the rural Morro Hills area.

If it had passed, Measure Y would have required a majority vote from Oceanside residents to authorize rezoning open space, park or agricultural land to other uses, such as commercial or dense housing. Those types of projects and zoning changes can be approved by the majority vote of City Council.

“Developers don’t just wake up in the morning and just decide to build houses, they build houses based on the need in the market place,” McSweeney said responding to Theberge. “The reason you’re not seeing any entry-level homes — entry-level homes are $600,000 and above.”

According to McSweeney, the cost of land labor and materials has increased by 40 percent in the last two years. He added that thousands of construction workers are retiring, creating a shortage in skilled workers.

Developers choose to build what will “pencil out,” McSweeney said, adding that developers would “love” to build homes that sell for $350,000 but can’t based on all the costs involved.

“The market is brutally efficient. If you try and go against the market, you get wiped out,” he said. “What’s being built today is what the market demands and what you can get financing for. There’s nobody building entry-level apartments, there’s nobody building entry-level housing because it simply doesn’t pencil out.”

Then-Councilman Jerry Kern said fees from the city add a significant amount to the cost of homes, noting that he thinks Oceanside’s fees are reasonable.

“I don’t think we should pick up the county’s burden as far as building, but we should do our share,” he said in response to Nygaard’s comments. “We are the third largest city in the county, we should be able to move forward.”

Councilwoman Esther Sanchez said she agreed with Theberge and Nygaard with regard to needing more affordable housing.

“We’re talking about teachers … people working that would make so much more sense to live within the city and not add to road congestion,” she said. “We have to think about economic and environmental sustainability.”

In response, Kern said it’s only going to get tougher to build housing within the city.

“The harder we squeeze and try to stop it, the worse it’s going to get because the state’s going to come down and mandate it,” he said. “We are losing control over land use in this city because of the state legislature, and now with the supermajority of one party in the state you’re going to see a lot of legislation come down that will actually force you to build housing because we have basically put the breaks on it.”

Kern said he fears losing a generation of people from California, noting younger people are moving to states like Texas, Arizona, Utah, Oregon and Idaho.