When it comes to getting new apartments built, San Diego is the 11th worst city in the nation, said a national study released Monday.

Fifty cities were ranked on specific factors, including local regulations and land available for development, that were determined to be critical to construction by trade groups such as the National Multifamily Housing Council and the National Apartment Association.

Honolulu was ranked the most difficult market for building new apartments, and New Orleans was the easiest.

Research gathered by Florida-based think tank Hoyt Advisory Services for the trade groups looked at the Wharton Residential Land Use Regulation Index, a survey of regulatory laws, and a method of mapping developable land created by Sumner La Croix of the University of Hawaii. It also used the U.S. Census and other data and market research.


In California, San Francisco was deemed the hardest to get new supply built at No. 8. Los Angeles was No. 12, Riverside No. 13, Sacramento No. 17, and San Jose No.18. The cities ranked for ease of building were mainly in the South and Midwest.

Residential building permits in San Diego County have plummeted since the start of the year, said the local Building Industry Association. In the first five months of 2017, 2,386 permits were issued, dropping 45 percent from the same time last year.

Norm Miller, a principal at Hoyt and professor at University of San Diego, said the region’s ranking is generous because it does not take into account community opposition to new projects, especially projects that increase neighborhood density.

“We’re not going to add enough supply to lower the rent, unfortunately,” he said.


By using the land use regulation index, researchers looked at how long it took for each region to approve building permits, how often zoning changes were needed to start a project and if a local municipality needs to vote on zoning changes.

San Diego joined the rest of California with heavy regulation, but it also had less land for building than many cities. About 63.4 percent of the county is not developable. There are worst spots in the state. In San Francisco, 73.1 percent of land is not developable. The best spot in California is Sacramento where 15 percent is not developable.

Nationally, Indianapolis has the most buildable land where just 1.4 percent of the region can’t be developed.

The study shows areas that are slower to build housing have higher rents than cities where construction doesn’t face as many hurdles.


San Diego County’s apartment vacancy rate is 3.7 percent, said real estate tracker CoStar, down from 4 percent at the same time last year. Average asking rent is $1,681 per month, up $70 from a year ago, said CoStar’s database of 236,250 apartments.

Rent increases have put San Diego on the map for investors but rising rents also can create hardship for its working population. Almost half — 46 percent — of San Diegans pay 35 percent or more of their income in rent, the report said. For comparison, in Sioux Falls, South Dakota, 31 percent of residents pay 35 percent or more of income for rent.

Research from the study, presented online at WeAreApartments.Org, showed a housing shortage throughout the United States that has led to more competition for apartments and higher prices.

The report also looked at population growth estimates and tried to guess what would be needed in the years to come. New York City would have a demand for 279,000 new apartments by 2030. The population will grow 4.65 percent over the 14-year period.


In comparison, demand for apartments in San Diego is expected to be for 73,000 new apartments by 2030 based on a 12.9 percent population growth. San Diego was ranked at No. 15 for highest demand, behind Dallas, Houston, Los Angeles, Phoenix and others.

San Diego County stood out from much of the nation in having the second-worst housing. It has 58 percent of housing that is considered one or two stars (out of five) because of inferior construction, the study said. Los Angeles was the worst, 61 percent, and Austin had the best, 17 percent.

Norm Miller said good weather led builders not to worry as much about using well-insulated windows and other high-quality items. Also, the incentive to fix up units can be small.

“Landlords and owners don’t need to do anything about it is because rental demand is so strong that people will put up with low quality housing as long as it’s less expensive,” he said.



Business


phillip.molnar@sduniontribune.com (619) 293-1891 Twitter: @phillipmolnar

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