Solar panel mandate shakes up housing industry

Solar panel mandate shakes up housing industry
New homes are being built with solar panels in San Diego County. Photo by Shana Thompson

 

CARLSBAD — In May, the California Energy Commission passed a rule mandating all new homes built in the state must have solar panels.

The rule takes effect on Jan. 1, 2020, and does not require any further approvals at the state level.

In addition to new homes, condos and projects three stories or less will be required to install solar panels. While it’s a start, Scot Sandstrom, president and founder of New Pointe Communities, said the state must also consider resell homes and giving the home building industry a reprieve.

“I’m fine with adding solar if the state can focus on increasing production to increase the supply,” he said, “especially with the mid-range housing, that $500,000 to $700,000 that middle income can afford. We either have affordable subsidized by the government housing or these very expensive million dollar homes.”

Sandstrom started New Pointe Communities in 2007 and the priority is to include solar panels on every new home. He said only the first five homes his company built do not have panels.

He said including solar panels well before the mandate was part of the business model, being eco-friendly and adding an amenity for homebuyers. His company focuses on small infill projects and mostly competes against the resell market.

However, speculation is swirling about whether the new mandate will help with the affordability crisis in the state and San Diego County. It costs at least $10,000 for the builder, which is then passed on to the buyer in the sale price.

The median price for a new home in the San Diego region is $619,500, according to CoreLogic.

“I prefer to build a $500,000 or $600,000 home because there is a bigger buyer pool,” Sandstrom explained. “I would love to see the state be as equally passionate about providing supply as they are about providing energy efficiency.”

Other issues include a growing population and the resell market, where older homes are not as energy efficient and most do not have solar panels.

The job market demands housing, but one issue municipalities struggle to overcome is the pushback from residents opposing new or denser developments. Meeting the needs, Sandstrom said, is important as tens of thousands of homes are required, which would take nearly 20 years at the current rate.

“Everyone has to step back and look at the bigger issues,” he added. “We are going to cheer when Qualcomm hires 5,000 people, but stop when the 5,000 homes get built for them. That, to me, doesn’t make sense. You have to be honest about providing housing for those people.”

New Pointe’s homes didn’t see a price appreciation to justify increasing the cost for homebuyers. Instead, the company absorbed the cost and their homes sold faster, Sandstrom said.

Another hurdle, he said, is development fees, which run about $74,000 per home at his recent project on Camino De Las Ondas and Paseo Del Norte. Those fees are typical for many cities in San Diego County, plus a 30 percent increase in labor costs due to a smaller labor pool.

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