Opinion: New Building Tech and Lower Permit Fees Can Make Home Ownership Attainable Again

Until local governments take the bold steps needed to reduce permitting fees, utilize new construction methods and streamline the overall building process, home ownership in San Diego County will continue to be unattainable for approximately 90% of residents.

Only about 11% of households in the county make enough money to comfortably afford a home. San Diego has the fastest rising home prices in the nation, and with an average home price at over $1 million dollars the dream of home ownership is becoming unattainable for most.

San Diego home prices are up 12.1% over the past year. In addition to high home prices, we pay some of the highest electricity rates, home insurance, gasoline prices, auto insurance, water rates and the list goes on. San Diego has been ranked as the most expensive city in the nation, and even though home sales are at a record low home prices are still increasing along with most everything else.

With historically low home sales many would think that San Diego is in a housing slump, which would mean prices should be dropping, but surprisingly home prices keep going up. A lot of this had to do with high interest rates. Rising interest rates affect a person’s debt-to-income ratio, a formula used by lenders to evaluate the risk associated with lending money. Additionally, homeowners are holding on to their low interest rates with little or no motivation to sell, keeping the housing inventory low.

San Diego families need an income of nearly $275,000 a year to afford a mortgage on a home, which is nearly double what it was in 2019 when interest rates where half of what they are today. Between 2020 and the end of 2023, the median single-family home price increased by about $180,000 and prices have continued to increase. Consequently, a median household income of $96,964 would need a nearly impossible down payment to afford mortgage.

One way to make the dream of home ownership in San Diego attainable is by drastically reducing or waiving of permitting fees. Regulatory costs to build a home are high in San Diego, representing between 34% and 51% of the average cost of building housing.

Local governments can help by reducing regulatory costs to make housing more affordable. Although the permitting process in the city of San Diego has improved in efficiency, further streamlining is still necessary to help reduce costs.

San Diego needs single-family homes priced at $500,000. While half a million dollars is still a significant amount, homes at this price point would be more affordable for many buyers. Additionally, the property taxes generated from new home construction would significantly contribute to government funding.

Another way to bring home prices down is through new building technology such as 3D-printed homes. Homes constructed with this technology are about 10% to 30% cheaper to build compared with traditional techniques. While the initial investment in 3D printing technology can be high, the overall savings in labor, materials, and time can make 3D-printed homes more cost-effective in the long run.

Another way to bring building costs down is with modular homes, which are typically 10% to 20% less expensive than traditionally built homes. They can be built faster and are often more energy efficient. Modular homes are also considered better able to withstand environmental threats than traditionally built homes.

San Diego County built more housing last year than it did in any of the past 17 years however, the county is still short at least 100,000 units after years of underbuilding. Many more homes need to be built at a much faster rate or we will continue to see home affordability unattainable for most and that is simply unacceptable.

Governments have several options when it comes to bringing down home prices in San Diego County and we need elected leaders to take the necessary steps. While permitting fees can serve an important purpose, they are making it impossible to build homes that the average San Diegan can purchase.

By reducing permitting fees and utilizing new technology and constructions methods, we can help many more San Diegan’s achieve the American dream of home ownership.

Mark Powell is a former San Diego County Board of Education member and president-elect of the San Diego Association of Realtors.