SLO County Housing Summit focuses on supply, affordability
By Stephen Ellison
Special to the Business Times
Housing supply and affordability, issues that are all too familiar to Californians these days, were the underlying themes during the annual San Luis Obispo County Housing Summit on April 8.
As real estate experts, homebuilders and housing advocates gathered for the sold-out event at the Embassy Suites in San Luis Obispo, they were reminded by keynote speaker Shane Phillips that supply is not just about increasing housing stock in accordance with current and projected population growth. It’s also about adapting to other elements such as an aging population, larger household sizes, rising incomes, and the expansion of remote and hybrid workforces.
“The mismatch between housing supply and housing demand is the root cause of unaffordability in most U.S. cities and really around the world,” said Phillips, researcher and policy analyst with the UCLA Center for Regional Policy Studies. “Housing scarcity and housing affordability are mutually exclusive of one another; they cannot coexist. Housing abundance is not always enough to achieve affordability by itself, but it is an indispensable ingredient; you can’t have an affordable city without it.”
Jordan Levine, senior VP and chief economist with the California Association of Realtors (CAR), opened the summit with some context on the San Luis Obispo County housing market, noting a median home price of $990,000 as of February and a median income of about $93,400 in a county of just over 281,000 residents.
Home sales were down 5.2% last year, and 40% of listings sold at reduced prices, Levine said. But the most telling number: Only about 400 homes for sale at any given time.
“When you look at the median price compared with that (median income) and ask just a very simple question: How many people that live in this county can afford to buy the median priced home today at current interest rates?” Levine said.
“If you look at what that income threshold is and you go out into the census data and see how many people make that number or more, it’s only 14% in San Luis Obispo County. We have a 60% homeownership rate, so a lot of that 86% that can’t afford it are already homeowners, but they probably wouldn’t be able to buy that same home today at current incomes and rates, and this is all a function of our underlying supply.”
Also contributing to the supply and affordability issues are the barriers and risks market-rate homebuilders are facing, according to one summit panel.
Rachel Hollander, senior planner with RRM Design Group, briefly outlined some of the key hurdles, including longer timelines, increased fees and costs, environmental review delays, and community pushback.
Michael Stotley, board president of the Home Builders Association of the Central Coast, then piggybacked on those factors, speaking from a developer’s perspective about the complexity and the financial impact of completing homebuilding projects.
With the idea that the money has to come from somewhere, he said real estate investment has become a more challenging and expensive process and is leaving the builder with more to lose.
“So, on the developer’s side, it’s becoming extremely risky … and ultimately what that means is a lot of projects aren’t getting done that could,” Stotley said. “Or if they are getting done, they have to be expensive, the housing is very costly.”
When asked about affordable housing, Phillips, author of “The Affordable City,” said he can empathize with local governments in the difficult position of wanting to produce the benefits for low-income residents who need them now.
But subsidizing affordable units is costly, he said, and the overall impact is minimal, typically meeting the needs of less than 10% of the low-income population. Phillips pointed to Portland, Oregon, as one city he felt had the right idea.
“They’ve started doing a 10-year property tax exemption for new housing specifically for those units, and the intent is to offset the cost of it,” Phillips said. “That actually has boosted production overall, and it’s one of those things where some of those projects probably wouldn’t have happened without the tax exemption.”
The summit was hosted by the San Luis Obispo Chamber of Commerce and the Housing Collaborative of the Central Coast.
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