The White House announced a plan to increase the supply of homes across the United States — something experts say is desperately needed in San Diego.

San Diego County is averaging around 9,500 total new homes built a year, including apartments, single-family and condos, which is not keeping up with demand. The new plan outlined by the White House Council of Economic Advisers could spur growth through tax incentives and other means.

The Biden administration says it intends to deliver 100,000 subsidized housing units in three years, and use federal subsidies to construct and renovate up to 2 million homes in low-income areas. San Diego housing experts mostly welcomed the news but doubted the federal plan — which mainly uses tax programs to spur growth — would do enough to actually construct homes.

Alan Gin, economist at the University of San Diego, said it’s possible the White House plan could create slightly more housing locally but not nearly enough to have a noticeable effect.

“We have such a big shortage here that we need more,” he said.

Gin said the major issue in San Diego County is the lack of land allowed for new housing, something the White House can’t influence.

Despite the wording of the White House report, which emphasizes the needs of most Americans, it mainly is aimed at the poorest in the nation, said Lynn Reaser, chief economist at Point Loma Nazarene University.

“Housing for average income households — schoolteachers, firemen, nurses and others — remains a major missing link,” she said.

Reaser said the White House proposals to increase tax credits for builders of subsidized housing and efforts to get local governments to relax zoning could have the biggest impact in San Diego. However, she said there are barriers to it working.

San Diegans are generally opposed to sizable increases in new housing in many areas, Reaser said. Also, she cited that regulations represented 40 percent of the cost of new housing — something federal regulators cannot significantly change.

How the White House plan would work:

• Changing mortgage requirements through Freddie Mac and Fannie Mae to allow loans to be used for manufactured homes, such as those built in factories. Right now, many mortgages cannot be used for manufactured homes.
• Expand mortgage options for two-to-four-unit properties where the owner can live onsite. This will allow smaller landlords to build wealth and not be shut out by bigger companies.
  
• Prioritize nonprofits and first-time buyers to buy foreclosed properties at auctions. It would give nonprofits and potential owners 30 extra days to get the foreclosed home, as opposed to a private equity firm.
  
• Use new low-income housing tax credits to incentivize construction and renovation of 2 million homes in economically vulnerable neighborhoods.
  
• Through the U.S. Treasury, move $383 million into the Capital Magnet Fund to encourage subsidized housing production. The fund is a grant program for nonprofit housing groups and community development institutions.
  

Local experts say a lot of the policies would likely benefit other parts of the nation more than San Diego. For instance, buying a manufactured home could be less expensive but the main problem in San Diego — and most of coastal California — is the cost of land, not the actual home.

Nathan Moeder, principal with San Diego real estate analysts London Moeder Advisors, said the White House effort was more of a public relations exercise from federal officials because zoning and growth laws are still controlled at the state level.

“You have a parent here that is not in charge of the child,” he said.

Moeder said adding money to the Capital Magnet Fund may add some new housing, but tax incentives to renovate poorer areas might have the opposite effect the Biden administration wants — increasing the cost of housing there and pushing people out. The area might look better, but Moeder said homes in poorer areas tend to be naturally more affordable.

In its report, the White House noted land issues are largely the responsibility of local municipalities. It specifically called out Los Angeles for having 84 golf courses in the greater metro area, which has one of the biggest housing crunches in the country. San Diego County has run into issues remaking former golf courses into housing, which is often opposed by neighbors.

Residential construction has been on an overall decreasing trend since the 1970s, the White House Council of Economic Advisers said. Using research from the Federal Reserve, it showed housing starts as a share of the population decreased by roughly 39 percent in the 15-year period from January 2006 to June 2021.

Researchers at Freddie Mac estimate the nation is short 3.8 million homes.

The Biden administration can make most of the changes without the approval of Congress, but it also encourages lawmakers to relax zoning restrictions — such as in California where most land is designated for single-family homes — to allow more working families to live in multifamily housing where they work and have more opportunities.

The California Legislature advanced a bill last week that would allow two-unit buildings to be constructed on lots previously reserved for single-family housing. It would work by allowing property owners to subdivide their lots. It still needs to be approved by the state Senate and Gov. Gavin Newsom.

San Diego County supervisors are working on a proposal to buy cheaper, older apartments, called Naturally Occurring Affordable Housing. It also recently approved an additional $25 million to its housing trust fund to support the creation or preservation of subsidized housing.

Source: SDuniontribune by Phillip Molnar