NFABC HOUSING POLICY POSITION STATEMENT

THE REALITY

1. Real estate is and always has been a capital asset. Investment in real estate is driven by long-term profit potential.

2. The housing rental and for-sale markets operate separately. Rental rates in San Diego and nationally have stabilized over the past few years due to high levels of investment in new rental housing. For sale housing costs has continued to increase due to higher interest rates and constrained supply, conditions which should loosen over the next year. California is an outlier in both rental and ownership housing affordability - we need to change our system to be more like other parts of the country.

3. Wall Street corporations entered the single-family market (market includes all individually owned homes whether one unit or condo) after the 2008 Great Recession, when millions of foreclosures and little buyer demand created an historic profit opportunity for investors with capital.

4. Wall Street single family home ownership peaked around 2015 and has been steadily decreasing ever since. Corporations own 2% of single-family homes in the US. Total investor ownership (mostly mom and pop investors) peaked at about 15% in 2015 and dropped to 10% in 2024 (US Census Bureau American Community Survey). San Diego is on the high end due to the higher cost of entry favoring higher net worth individuals and businesses.

5. Housing Real Estate Investment Trusts (REITs) almost exclusively operate large, well-managed apartment complexes. They sell stock and represent an excellent opportunity for small investors to enter the real estate market. They represent a relatively small fraction of the apartment rental market which is dominated by mom-and-pop landlords.

6. Rent control is the worst long-term solution for housing affordability. It suppresses new supply by reducing capital return and shifting rental housing investment to other cities. Economists across the political spectrum are nearly unanimous on this point. It is therefore no surprise that the strongest rent control is in the most expensive rental markets – e.g. New York City, San Francisco, Santa Monica.

7. San Diego's rental market is relatively affordable compared to the recommended HUD standard. The median rent is close to 30% of the median household income (State and Federal standard for affordable housing cost) in San Diego. A building boom in apartments has stabilized rents and should continue for the next couple of years as over 10,000 units under construction hit the market (San Diego Tribune). The slow drift down of rents will likely result in lower apartment construction going forward as potential future investment returns drop.

8. More building does result in greater affordability. States with much higher per capita housing construction (Florida, Texas, Tennessee) experience much lower rents and home prices even in the face of much higher population growth – units built per capita in those states is 2.5 to 3 times that of California (US Bureau of Labor Statistics Building Permit Report); median rents in those states are 25% to 44% lower and median home prices are 52% to 61% lower than California (US Census American Community Survey; Redfin).

 9. We need smarter, planned growth, not the reckless, scattershot housing policies slanted to special interests that Sacramento and City Hall offer as quick solutions. There are no quick solutions, and most of what has been offered aren't solutions at all. It took decades to get where we are today.

10. Trickle down affordability does occur but it is unlikely to do much more in San Diego than keep market rate housing affordable at the median income (half of the units affordable at incomes below that rate, but likely between 80 and 100% of median). The market is unlikely to provide units affordable below 80%, unless San Diego becomes Detroit or Cleveland with a decimated economy and a massive surplus of legacy housing. 

11. Most households below 80% of median income pay more than 50% of their income on rent. That is why those households are and should continue to be the focus government housing programs. 

12. San Diego can and has done a lot of smart, planned growth through updates to community plans, adopted with full environmental review, public hearing input, and transit-oriented development (not Complete Communities) programs that allow slight increase in Floor to Area Ratio (FAR) and relaxed standards for 30% of base density on site as affordable.

NFABC supports the following positive housing agenda:

1. Reasonable tenant protections and relocation assistance for displaced responsible tenants.

2. Eviction prevention assistance for tenants with short-term financial distress.

3. Public notice for all Bonus ADU and other housing incentive program projects to provide transparency building a constituency with responsible/balanced incentives and identify pressure points for code revisions to improve trust and outcomes of the system.

4. Support more transparent community plan updates with full public participation and environmental review by providing additional City resources, including State and Federal grants, to expand the number of plan updates. Potential resources include a community plan update fee on all planning/building applications.

5. Encourage responsible small lot single family and ADU subdivision standards to increase supply of more affordable for-sale single family housing.

6. Simplify subdivision standards for condominiums to expand multiple family ownership opportunities that balance developer and future homeowner concerns.

7. Consolidate city affordable housing incentive programs into a single program to reduce confusion and better balance interests and increase certainty and trust for both developers and neighbors.

8. Support increased government affordable housing resources to subsidize targeted and innovative housing programs like Section 8, land trusts and gap financing for lower income families, handicapped and seniors (may also include programs that make shared rentals easier for able bodied single adults). Potential sources are existing impact fees on new construction, bond issues, transfer fees, etc, all requiring ample public discussion and support.

9. Support State legislation that:

• Protects local control

• Authorizes more local tools and innovation

• Minimizes one size fits all standards

• Rewards communities that produce housing

• Avoid or rescind costly preconditions

• CEQA revisions that exempt discretionary and environmentally vetted land use and zoning

• State finance revisions to make housing pay for local government by providing more subventions per capita (i.e. sales tax is currently 100% situs favoring non-residential)

• Build local/State partnerships for housing