San Diego might be having its slowest year ever for newly built housing

San Diego County has shattered construction records over the past few years for apartments.

Yet when it comes to finding a newly built home, one that is actually for sale rather than a rental, potential buyers may be shocked just how limited the options are.

There were 50 active developments in March across the county, a mix of single-family homes, townhouses and condos, said market researcher Zonda. That’s compared to more than 143 at the same time in 2019, and is the lowest number of developments in records going back a decade.

San Diego housing analyst Gary London said the biggest reasons for the slowdown are dwindling options for land zoned for residential housing, strict condo defect laws that push developers into rental apartments, density restrictions that prohibit townhouses in most of the county and increased interest rates.

“It’s the perfect storm,” he said.

Around 4,000 new rental apartments are opening this year, near record highs reached the past few years. Rents have been essentially flat for a year, which analysts have attributed to the influx of inventory. The same can’t be said for homes that people can purchase, with the county’s rising median single-family home price sitting at $1.1 million in February.

Laura Wolfe, 40, of Ramona, said she knows all too well how little there is for purchase. Wolfe, who has two children, and her fiance have been looking for a single-family home for four months.

There are no new single-family home projects in Ramona, so Wolfe said they have been putting in offers on resale homes near asking prices but getting rejected. She said she would jump at the opportunity to get a newly built place.

“Who wouldn’t want new?” Wolfe said.

They want a single-family home, with some land, which is not the trend of recent construction.

New homebuilding has shifted to condos and townhouses over the past decade, said Zonda research. For instance, in March 2015, there were 60 single-family home projects and 21 townhouse/condo projects. As of March, there are 23 single-family projects and 27 townhouse/condo developments.

Single-family home construction was more common for decades, only shifting more toward condos and townhouses in the last two years.

London said San Diego developers and community planners are making efficient use of available land. This year, for example, one KB Home project is featuring nearly 40 townhouses that would only have accommodated three single-family homes.

London said the definition of what we consider a “single-family” home is changing, with buyers unable to afford the traditional home — instead going to condos or townhouses that are more affordable.

“We’re shifting away from the single-family home model,” he said. “A single-family home isn’t affordable for most middle-income households. Developers have to move to a (townhouse or condo) model to meet the demand in the market.”

New single-family homes this year in San Diego County range from $900,000 to $3 million. New townhouses run from $600,000 to $1.5 million.

Not counting backyards, the average single-family home size clearly offers more space, even if it is smaller than the larger homes we were accustomed to in the early 2000s. New single-family homes this year are 2,469 to 3,199 square feet. New condos and townhouses are 1,439 to 1,909 square feet.

In the coming years, there may be another factor slowing construction. The threat of wildfires, London said, and litigation using it as a reason to stop development, are already having an impact. He said the trend will further impede attempts to build in San Diego County’s backcountry, again limiting the area zoned for residential land.

A new townhouse project in the shadow of Mission Trails

There are 15 homes left for sale in Prospect Park, a new townhouse development in Santee, and there’s a good chance most are sold by the end of April.

The four-bedroom townhouses start at $772,151, which is as much as a five-bedroom home in Kansas, but near the median home price, $679,500, for a resale condo in San Diego County.

Developer KB Home likes to say its primary focus is first-time buyers. It does this by by keeping homes smaller and having small lot sizes. It said most of its buyers are millennial couples buying their first home or first move-up property. However, it says their buyer profile can run the gamut from singles to older couples looking to downsize.

“We’re proud to say we have one of the lowest-cost townhomes in the county,” said Steve Ruffner, president of KB Home’s Coastal division. (It’s Gateway townhouse project in El Cajon has units starting at $672,490, its lowest this year.)

The layout of the Prospect Park townhouses typically have a bedroom on the first floor, kitchen and living room on the second floor and the rest of the bedrooms on the third floor. The vertical nature of the homes, different than a classic single-family home, reflect space constraints in much of Southern California. KB Home managed to build 38 townhouses in the five-acre space.

An issue in many new townhouse developments is a lack of parking, which typically leave just space for one car in a garage. Prospect Park gets around that by having two-car garages and a short driveway.

A benefit to buyers may be the development’s proximity to Mission Trails Regional Park. There’s a chance an astute hiker could probably see Prospect Park from the top of Cowles Mountain looking northeast.

Prospect Park probably doesn’t appeal to more city-orientated types. It is situated next to a sleepy mobile home park, some single-family home neighborhoods and the park. You need a car to get around. However, a bus — the stop is within walking distance of the development —  is roughly 1.5 miles from the Santee Town Center station for the San Diego Trolley’s Cooper Line.

KB Home is the second largest homebuilder in San Diego County, behind Lennar, and Ruffner said it is all-in on continuing to build.

“We are very aggressively pursuing entitlements,” he said. “The job market here is exceptional, and the (median income) is high. We feel we could grow quite dramatically here.”

San Diego County’s epicenter of new housing

The majority of new housing — right now and most likely in the coming decade — is being built in Chula Vista’s Otay Ranch neighborhood. Another 12,000 homes are planned for the development, with the lion’s share earmarked for for-sale homes.

The masterplan community already has 15,000 housing units built, a mix of condos, townhouses, duplexes, single-family homes, subsidized housing and market-rate rentals.

“Chula Vista, in general, is the epicenter of new housing in San Diego County,” said Kent Aden, president of HomeFed Communities, while overlooking grading work on a rainy day in Cota Vera, which has a mix of single-family homes, townhouses and apartments. More than a dozen yellow Caterpillar bulldozers were flattening land and moving dirt to prepare for an additional 3,000 homes.

Aden said he didn’t think another project of this scale was possible in San Diego County because there is very little residential land available throughout the county. Otay Ranch is nearly the size of San Francisco at more than 25,000 acres. Probably the only way a project could match is it if the military left Camp Pendleton or the city of San Diego decided to turn Balboa Park into housing.

Cota Vera already has about 2,000 homes built and its newest single-family home project is Savona. The Shea Homes development has the biggest new homes in the county, from 3,157 square feet to 3,577 square feet. They also come with a hefty price tag, starting at $1.2 million.

Unlike the trend toward smaller homes, Savona homes boast four to five bedrooms, three to four bathrooms and up to three-car garages.

Residents will have access to a pool, several community parks, stores and restaurants (being built), a 70,000-square-foot Life Time gym to be completed by this summer and, unlike most of Otay Ranch, an MTS bus line.

Another community being finished is Haddington, a mix of single-family homes and duplexes for residents 55 years and older. Costs range from $723,900 to $883,900 and are sized from 1,453-square-feet to 2,226-square-feet.

Across Wolf Canyon, in the western half of Otay Ranch, is a project selling from Lennar called Anden that is entirely duplexes. Homes — from 1,463- to 1,536-square-feet — are priced at $664,900 to $694,000. Anden might appeal to music fans because it is about a 10-minute walk from the North Island Credit Union Ampitheatre. Anden, along Chula Vista’s Main Street, will one day connect to Cota Vera with the planned construction of a new bridge.

Aden said most buyers tend to come from South County, essentially serving the community where homes are being built.