San Diego desperately needs new apartments; Can it keep up with increasing demand?
Published - 07/15/17 - 07:48 AM | 6721 views | 1 1 comments | 46 46 recommendations | email to a friend | print
Housing in San Diego – we know there is a problem, but how much of a problem is it? A recent study on apartments by the National Multifamily Housing Council and National Apartment Association showed that San Diego needs 72,775 new apartments by 2030 to keep up with increasing demand.

To reach that goal of 72,775, San Diego will need to make an average of 5,198 units per year, which is a tall order considering data from Axiometrics shows only an average of 1,857 investment grade units were built the last five years.

Older apartments

Alan Pentico, executive director of the San Diego County Apartment Association, said, “Nationally, as well as here in San Diego, we’re experiencing fundamental shifts in our housing dynamics, as more people are moving away from buying houses and choosing apartments instead.”

Pentico also notes that more than half of the current apartments are categorized as older units, meaning that not only does San Diego need to build new housing, but also update much of its existing apartments.

According to research by Hoyt Advisory Services and commissioned by National Apartment Association (NAA) and National Multifamily Housing Council (NMHC), 51 percent of apartments were built before 1980.

“The growing demand for apartments – combined with the need to renovate thousands of apartment buildings across the country – will make a significant and positive impact on our nation’s economy for years to come,” explained NMHC chair Bob DeWitt. “If plans for more construction and renovations come through, jobs are sure to follow.”

Causes for increased demand

The report points to three main causes for the steep growth in the renting population: an increasing aging population, immigrants, and declining home purchases.

The biggest chunk of this new demand is the older population. As more people reach retirement, the have several reasons for moving out of houses and into apartments. After their families move out, the multi-bedroom homes retirees have are unnecessarily spacious, and they decide to downsize.

Moreover, many lost property value or were unable to hold onto their homes because of the recession. Furthermore, the recession also led to others losing substantial amounts of retirement benefits. These problems are further exacerbated considering the generation currently reaching retirement age is the baby boomers. Owning a home is no longer attractive, needed, or viable for many baby boomers, so they settle for an apartment.

Another population seeking apartment are immigrants, who tend to rent at higher rates and rent for longer periods of time.

NAA chair Cindy Clare said, “The Western U.S. as well as states such as Texas, Florida and North Carolina are expected to have the greatest need for new apartment housing through 2030.”

A big reason why the Western states have that difference is because of immigrants. Nationally, they make up around 51 percent of population growth, but in border or coastal states’ regions like San Diego, that percentage is higher.

The reason immigrants stay in apartments longer than others is directly related to the next point – a vast majority of people are currently unable to afford homes. Moreover, rent for apartments are also considerably expensive in the San Diego region, compared to other parts of California. The report shows that the propensity to rent is higher in high-growth and high-cost states, which spells problems for San Diego and all of California.

Government action

The two reasons why housing is so expensive right now are the cost and lack of land as well as the amount of regulations in place. NAA and NMHC stress that government and the private sector need to work together to reach a solution.

In order for San Diego to reach the goal of 72,775 apartments by 2030, the housing program must have secure funding, tax incentives for building affordable apartments must be enacted, and red tape needs to be cut. Local leaders have to collaborate with business and community to pinpoint key issues unique to San Diego.

Clearly there is much to be done, and local leaders have not been idle. Mayor Kevin Faulconer, City Council members Scott Sherman and Chris Ward, and housing advocates, joined together on June 21 to promote the “Housing SD” plan, which contains proposals aimed at increasing housing supply, lowering costs, and promoting smart growth to increase affordable housing.

To see a full report on the plan, read San Diego Community Newspaper Group’s story at

For more information and a detailed breakdown for each state and 50 key metro areas, including San Diego, visit Visitors can also use the Apartment Community Estimator (ACE) tool that allows users to see the trends in their state or metro area to determine the potential economic impact locally.

For more information on the National Multifamily Housing Council (NMHC) or the National Apartment Association (NAA), visit or, respectively.
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July 18, 2017
Conversions to STVRs (AirBnB etc) are what is driving out renters and driving up market rents in general. More of the same is not the answer, the answer it to enact laws to restrict "whole home" short term vacation rentals in most areas. They are currently against the law, but our divine mayor is in the pocket of AirBnB and is doing nothing about it (PS thanks to term limits, he is not accountable to anyone in this his forced last term). We need a simple mechanism to allow neighbors of violating STVRs to take the owners to small claims court and receive judgements. Simple as that.
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