It was an interesting question coming from my 14-year-old son a few weeks ago.
“Will I be able to buy a house when I get older?”
The best response I could come up with was, “Eric, that’s a very good question.”
At 14, the world is his oyster. In his eyes, he still has a shot at the big leagues, or he could be the drummer for some rock group.
I, on the other hand, think a bit more conservatively: college, perhaps law school, landing a job at a prestigious law firm, help support the old man in his retirement
So, what if a professional baseball team never drafts him? What if he never makes the bar exam? The question remains, will he be able to buy a house in San Diego when he grows up?
Never has that been a more difficult question to answer. A recent report revealed only one of every four San Diegans has the means to buy a house. The American dream is quickly becoming the American nightmare.
Despite the gloomy prognostications, the bright side is our children likely will be able to live and work in the community where they’re growing up. We always seem to find a way to make our frayed ends meet.
Let’s peek into the future. Local planning groups point toward 2020 as a target year for many of their economic and social forecasts. Conveniently, my son will be in his early 30s by then , prime time to buy real estate.
As you’ve probably heard, by 2020 our county’s population will have grown by another 1 million people. Considering the recent census concluded we’re at a cozy 2.8 million people here in the county, we’ll be approaching 4 million residents in 20 years. I have a home, you have a home, but where will our kids live?
By then, all of our coastal communities will be built out, and North County is filling up fast, too. That doesn’t mean all construction will grind to a halt come 2020. If there’s a patch of vacant land, chances are someone will develop it.
Most of our growth will happen in east Chula Vista and Otay Mesa. In the past 10 years, the population there has exploded by 28 percent, and it shows no signs of slowing down. Five master-planned communities will offer some 33,000 homes. Neighboring Otay Ranch will build 10,000 homes over the next 30 years.
That doesn’t sound like a housing shortage.
There will be homes. But at what price? Last month the median price of a home hit $255,000. Just one short year ago, that same home cost $218,000.
Let’s step back in time a minute: In 1980, that same median house was well under $50,000. So what will that house cost in 2020? A conservative estimate would be $500,000.
A very average house, your garden variety, three-bedroom, two bath, 1,300-square-foot home , probably built in the late ’60s or early ’70s , will cost around a half-million dollars.
Of course, salaries will have to rise in an attempt to keep up. But will it be enough?
Twenty years from now schoolteachers could make a starting salary of $50,000. That means little if an affordable house costs $400,000 to $500,000.
Our housing market is the nation’s 10th most expensive, yet we rank 70th in terms of income. At some point you’d have to figure that gap will narrow, that home prices eventually will let income catch up. Unfortunately, it doesn’t look like that will happen any time soon.
As it now stands, a two wage-earner family earning between $70,000 and $80,000 annually is being squeezed out of the county’s home-buying market. It’s just a matter of time until these families decide they can no longer afford to live here.
Business owners, already bemoaning the fact they can’t find a skilled labor force, simply will move to communities where their employees can afford to live. Despite what some may think, not every skilled worker is making $100,000 plus stock options a year. Most of us struggle along with our spouses to attain that $70,000 to $80,000 mark as a dual-income family just so we can afford a decent house in a safe neighborhood.
Though it seems government agencies are finally taking a hard look at the crisis, it may be an exercise in futility. Analyzing our housing needs, as well as making serious commitments to our infrastructure needs, should have occurred 25 years ago.
While analysts bandy about the term “smart growth” and talk enthusiastically about future housing that will cost under $200,000 , well, I’ll believe it when I see it. I can’t imagine any Southern California developer building 1,600-square-foot homes on 9,000-square-foot lots for $200,000.
The county let too many builders get away with shabby, prefab housing in the ’70s. A decade later we were dealing with poorly built condos and apartments.
Now we face a crisis where the gap between affordability and income continues to grow. Until that gap narrows, our kids better get used to renting, because buying a house will be about as attainable as a career in pro baseball.
Bell is the Business Journal’s managing editor.
