Whether it is a shortage of inventory or residents being priced out of the housing market, one of the biggest issues facing San Diego is affordable housing.
In 2020, many candidates promised to look into ways to make homes more affordable. Now that they are elected, some are advocating for a climate action plan that could make homes less affordable if environmental mandates place a disproportionate amount of the financial responsibilities on property owners.
Climate change is real and we have witnessed its devastating effects through disastrous California wildfires and ongoing beach erosion. The extent to which human activities impact our climate has been the focus of debate for years and we need to be prudent and proactive.
Without a doubt, there is a need for a countywide comprehensive climate action plan—but we should not underestimate the unintended consequences that mandating a climate action plan could have on affordable housing.
The San Diego County Board of Supervisors has already launched a push for a climate action plan with zero carbon emissions by 2035. The county will require all new and replacement water heaters in residential units in unincorporated county areas to transition from tank-based natural gas systems to either solar, electric-powered, or tankless systems by 2021. Many homes in older neighborhoods will need to have their electrical panels upgraded to accommodate an electric water heater or solar unit.
A subsidy will be provided to existing homeowners who meet certain income criteria to reduce the cost of replacement, but if the homeowner does not meet that criterion they will be stuck with the bill—and that expense will most likely be transferred to the buyer when the homeowner decides to sell. Therefore, any retrofit subsidy should be extended to everyone who is required to upgrade their water heater to help alleviate the expenses homeowners may incur prior to selling.
State lawmakers passed a mandate making California the first state to require that all new homes be fitted with solar panels. The solar fittings are expected to add an estimated $10,000 to the cost of building a single-family home. And this could cost tens of thousands of dollars in upgrades needed prior to selling.
Older home furnaces that operate on natural gas leave homeowners will huge monthly heating bills, but prices for new, high-efficiency heaters can be steep. Energy-efficient window replacements are also pricy and installation costs vary depending on several factors, but are never cheap. All this is to underscore that upgrading a home’s heating, electrical and window efficiency is expensive.
Housing affordability is generally measured as the share of a family’s income that is spent on monthly rent or mortgage payments. Any family that spends more than 30% of household income on housing is considered “cost burdened,” and families that spend more than 50% are “severely burdened.”
Families that devote a very large share of income to housing may not have enough left over to cover the costs of food, transportation and healthcare. Therefore, in an effort to help make homes affordable, it is important not to place the entire retrofit responsibility on homeowners without providing local, state and federal financial incentives.
To help make homes more climate efficient and affordable, property owners should be given tax incentives, subsidies or a reduction in permit fees for making upgrades to their properties. Costly point-of-sale requirements should be negotiated between buyers and sellers, not mandated by the government. Governmental mandates drive up housing costs, pricing buyers out of the market, which is the opposite of what affordable housing advocates want.
The best way to address our climate action plan and San Diego’s housing shortage is through collaboration. Landlords, apartment associations, builders and other stakeholders need to collaborate with our elected officials and work together on strategies that will make homes more affordable.
An energy-efficient water heater may not appear to do much to help with climate change, but it’s a start in the right direction. Yet, we must still keep in mind that the desire to have a clean environment and a viable climate action plan should be balanced with the need for affordable housing, and it appears that some of our elected officials may not fully understand the unintended consequences of placing significant environmental mandates on property owners without adequate funding assistance or other incentives.
Mark Powell is a San Diego real estate broker, small business owner and university professor.