San Diego is one of 10 metropolitan areas suffering from “critically low home building,” with 55,825 permits for new homes required to meet demand.
That was the conclusion of a study released Monday by the National Association of Realtors that showed steady job creation combined with low building activity is creating a critical housing shortage.
“Inadequate single-family home construction since the Great Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home – especially young adults,” said Lawrence Yun, chief economist for the Realtors.
“Without the expected pick-up in building as job gains rose in recent years, new and existing inventory has shrunk, prices have shot up and affordability has eroded despite mortgage rates at or near historic lows,” he said.
The study examined the ratio of job growth to single-family building permits over the past three years. Historically there have 1.6 new jobs for every new building permit. But in San Diego and the nine other metros identified in the study, the ratio averages 3.4 jobs per permit.
Other West Coast metro areas suffering from low building rates are San Francisco, Seattle and San Jose. In San Francisco, a whopping 127,412 permits are needed.
According to Yun, most of the metro areas with the biggest need for increased construction have strong appetites for buying, home-price growth that outpaces incomes, and quick home sales.
“Their healthy job markets continue to attract an influx of potential homeowners, only fueling the need for more housing,” he said.
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