San Luis Obispo Business
December, 1999

Affordable housing - no simple solution

Rising home prices, low inventory and climbing interest rates may spell disaster for first time home buyers looking for a piece of the American dream in San Luis Obispo. Another record year in real estate has left experts shaking their heads and aspiring home buyers shaking in their boots.

The Chamber, always looking for long term solutions, is beginning to look at affordable housing as an issue that must be addressed if the community is to remain successful in the next century.

The latest figures on San Luis Obispo's red hot real estate market were recently released at the Eighth Annual UCSB Economic Forecast Seminar. In 1999, San Luis Obispo County led all Southern California Counties in median price increase and came in second only to Monterey County in median home price increase throughout the state. Predictions for 2000? Not as significant as the increase in ‘99—a whopping 21%—but a continued rise nonetheless. To date, San Luis Obispo's median home price is at a record high $281,000, ekeing out pre-recession highs of the early nineties.

"There is no affordable housing for people at or near median income in the City of San Luis Obispo," said Roxanne Carr, Division President of The Mortgage House, Inc. "With the way things are looking, there probably never will be. Very little land is available for development and the land that is available is very expensive," explained Carr. "We are in a highly desirable area, in great demand, and we'll become more and more desirable as people try to relocate from crowded, urban conditions," she said. Local realtor Tom Swem, owner of Real Property Investments, says the lack of affordable housing is due to low inventory and high demand. "It's the curse of being so desirable," said Swem. "People want to live here."

According to Mark Schniepp, Director of the UCSB Economic Forecast Project, supply and demand are pretty much going in the opposite direction. Schniepp noted that, as housing prices continue to go up, "this poses somewhat of a problem for future affordability." Beverly James, President of The Landmark Company, says part of the problem stems from people moving to the area who can afford to spend a lot of money on a property. And, according to James, they're not just coming from Southern California anymore; they're coming from the North too. "We're seeing a lot of people who've made a lot of money in the Silicon Valley cashing in on their homes and moving to the Central Coast," said James. "A lot of them are semi-retired. And when I say semi-retired, I don't mean older people. These are people with young kids who are looking for higher quality of life."

Cal Poly has started focusing its efforts on addressing the issue of affordable housing, too. With one-third of their faculty set to retire in the next five to ten years, the inflated real estate market will most likely throw a wrench into recruitment efforts. "We're looking at long-term solutions," said Mike Suess, Associate V.P. of Academic Personnel. "We've hired a consulting firm, held focus groups and are in the process of conducting an in-depth study to assess impending faculty housing needs." Suess says that the issue is complex and there is not one simple solution. Some ideas that Cal Poly may explore are more on-campus housing for students, on-campus housing for faculty, or subsidizing or providing financial assistance for faculty members' housing costs.

Pat Veesart, Executive Director of the Environmental Center of San Luis Obispo County said one solution might be to create more multi-family, high density housing. "We need to push the density envelope," said Veesart. "I would love to see a developer step up to the plate and do a really well-designed, high quality project."

One thing that most everyone agrees on is that the housing situation in San Luis Obispo is a serious issue that needs to be addressed. "This is an excellent issue for the Chamber to be working on," commented Pat Veesart. "This is an issue that is going on throughout all of California right now and something needs to be done about it."

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