Increasing housing prices and stagnating wages in the San Diego region are harming the area’s economy, according to a study released Thursday by the National University System Institute for Policy Research.
With families having to spend a larger percentage of their income on housing, less money is available for discretionary purchases like cars, health care, education, food and entertainment, said NUSIPR economist Kelly Cunningham.
That means more cash is going to financial institutions based out of town, rather than local car dealers, restaurants and entertainment venues, he said.
“Rising housing prices are further straining the region’s already pressured household budgets,” Cunningham said. “Housing costs are a key impediment to regional growth and greater economic prosperity.”
He said recent data showed several negative facts for housing affordability:
- A study by the National Association of Home Builders said San Diego County was the 10th least affordable metropolitan area in the U.S. in the fourth quarter last year, with just 25 percent of households able to afford a median priced home.
- While the $430,000 median price of a home in the fourth quarter of last year was 59 percent higher than the recession-era low in 2009, the median household income of just under $73,000 was actually lower by a couple thousand bucks.
- The median price of homes sold was 14th highest in the nation, but San Diego’s median household income ranked 54th.
- Housing prices were six times that of the median household income, well above the historical average of four times, and nearing the eight times seen during the housing bubble in the last decade.
Cunningham said the cost of housing could be reduced by increasing supply. However, fewer than 6,900 housing units were built last year, instead of the 12,800 needed to keep up with population growth.
That leaves families doubling-up, delaying home purchases or moving farther away from their jobs, he said.
— City News Service