San Diego Real Estate…in 2050

Eric-Schneider-AppraiserLast week, Eric Schneider, MAI, ASA, attended LEAD San Diego’s HOT TOPICS program on what the San Diego region will look like in 35 years. The program was lead by Clint Daniels of San Diego Association of Governments (SANDAG), who provided an overview of how San Diego is expected to change and where the growth is expected to occur. His PowerPoint presentation can be found here, but here are the big takeaways on what real estate will look like in 2050.

Where San Diego will grow

SANDAG projects that approximately 333,000 housing units will be built in the next 35 years. Of these units, about half will be developed in the City of San Diego with major growth occurring downtown and in central San Diego along University Ave. and El Cajon Blvd. Growth is also projected to occur in the unincorporated areas of the county; almost 20% of the new housing units are projected to be located in areas like Ramona, Valley Center, and Alpine. Areas that are not expected to grow are the north county coastal cities; Del Mar, Encinitas, and Solana Beach have imposed strict regulations on development, so virtually no new housing is projected over the next 35 years.

What will be built

As evidenced by current trends, most of the development in San Diego will be focused on multifamily projects. Of the 333,000 units, about 80% will be multifamily units (apartments, condominiums, etc.). In fact, it is projected that 100% of new housing development in San Diego will be multifamily development.

The reason for this trend is that the San Diego region has essentially run out of land. As of today, about 7% of the county’s 2.7 million acres is developable (189,000 acres), and about one-third of the county has been dedicated as open space. The majority of developable land (both for single family residences and multifamily residences) is in Otay Mesa, Carmel Valley, and the outskirts of Escondido. Due to a lack of land, developers are focusing on infill projects or mixed-use developments.

Other takeways

– California is currently experience a drought, but according to the San Diego Water Authority this is not expected to curb development through 2050. There is not enough of a risk to cap development in the short-term, but the question that remains is what the cost of water will be in the future.

– That said, the San Diego craft beer scene is not expected to significantly expand due to lack of water. With breweries like Stone and Green Flash opening operations on the East Coast, Mr. Daniels projected that the rate of breweries expanding in San Diego is expected to decline.

For more information on San Diego county over the next 35 years, including SANDAG’s outlook on transporation, check out this link. Also, if you have any need for a real estate valuation in San Diego, contact us today at 858-259-4900 or sandiego@irr.com.

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