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Aug. 15, 2017

Size matters: Our new homes are much too big

It's time to do some things differently including looking at the size of the homes we are building.

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By Mick Pattinson
When you get right down to it, there is a lot wrong with our new home delivery system and that includes the size of the homes we are building. Each year it seems our homes get bigger, our house prices go higher and our new home deliveries get smaller. Last year, San Diego County delivered barely 10,000 new homes, the majority of them apartments and condos with just 2,500 single-family homes. Today we are 17% below last year's total at the half year mark.

Today we are building new homes for middle and upper echelon buyers priced from approximately $700,000 to $2 million dollars, leaving behind the majority of potential buyers to rental living - or nothing at all. San Diego is one of the most expensive regions in California with a required annual income of $121,260 to buy a median priced home, which means almost three-quarters of our population are priced out of the market.

It's time to do some things differently including looking at the size of the homes we are building. Today's new home market is driven by zoning and the "entitlement" of land. Where I live in Encinitas, we have a two-acre minimum lot size thanks to city zoning. And in Vista where I inspected two potential subdivisions recently, one-acre minimum lot size requirements. These laws are outdated and a reflection of the agricultural past of much of Coastal California. How do we bring down the size and price of new homes when so much cost is gobbled up by the purchase and development of oversized lots. It's time to modernize our land use regulations with far greater flexibility in lot size and product mix. It's time to cozy up.

Oversized lots together with all the accompanying governmental regulations and fees that go with them put homeownership on its downward trajectory. Approving smaller lots and higher densities would be a critical first step if we ever got serious about solving - not paying lip service to - our housing crisis. Rural land (free of endangered species of course), suburban land and urban infill sites should all be rezoned to give builders a chance of lowering house prices through the development of smaller, more efficient new homes.

The small home movement that is growing across America, but is stifled in regulation-crazy California, should apply to single family as well as multifamily home supply. It should also apply to all sectors of society not just young first time buyers (important though they are), but also to empty nesters, down sizers, seniors and small families. Home design should be driven by life style and pocket book requirements and not by endless regulations from a bygone era.

An example of small home development just broke ground in San Diego's Marina District where Legacy Partners has just embarked on the construction of 168 apartments including 78 "micro" units at 405 square feet, 79 one-bedroom units at 700 square feet and 11 two bedroom units at 1,050 square feet. The six-story $60 million project is due for completion in the Summer of 2019 and will occupy one of San Diego's best locations at the junction of 4th and J Streets.

Meanwhile, Trestle Development has broken ground on Nook East Village, a development that will include 91 micro units, with rents starting at $1,100, including all utilities. Completion is slated for summer 2018.

Also, close to the downtown Central Library, The Richman Group of California is building K1, a mixed-use 23-story tower that includes a total of 222 apartments incorporating 58 studio's, 87 one-bed and 77 two-bed units.

There is nothing new about building small homes. My former company was building studio homes from 310 square feet in our "mini condo" developments in the 1980s and 1990s with homes priced as low as $39,990 which included a furniture package from Sears! Over the years builders have been regulated out of this product line with massive fees and burdens that can add as much as 41% to the cost of a new home, a cording to a study last year by Point Loma Nazarene University. In their haste to defeat developers, housing and growth opponents are destroying working class and entry level housing opportunity.

In return for building its affordable homes in the Marina District, Legacy Partners must pay an affordable housing fee of $875,000 -- almost $5,000 per rental unit -- to the City of San Diego. Instead of taking money from these developers the city should be removing unnecessary regulations and getting out of the way.

Seattle has seen an explosion in the supply of "micro" units and in Manhattan, New York City, units as small as 260 square feet are on offer. In rural America a growing number of manufactured and traditional builders are downsizing the homes they offer in small- and medium-sized towns. The trend to smaller homes is growing fast.

The challenge is to find ways to deliver smaller, more affordable housing choices across the full market. Not just rental units in mid- and high-rise downtown locations (welcome though they are) but across all sectors of the market and in all locations. Our zoning laws are out of date. They are working against our citizens and community interests. It is amazing what our great architects and designers can do with 700 to 1,000 square feet and how most of us could live quite happily with less if that got us a roof over our head and a bit of open space, close to work.

San Diego's new home deliveries are decreasing each year and with this declining trend our problems of affordability and homelessness increase. This housing crisis isn't going to solve itself but we could make a start by giving builders help in builder smaller homes at higher densities. The onus is on mayors and city council members in all of our cities.

Mick Pattinson is past president of the San Diego Building Industry Association and the California Building Industry Association. The opinions expressed here are his own.

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