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Coping with San Diego’s Housing Shortage

The Corky McMillin Center for Real Estate at SDSU’s Fowler College of Business hosted a panel session on Tuesday, October 3 titled “A New Paradigm: How San Diego Must Cope with its Supply Constricted Market.”

The panel members consisted of SDSU alumnus, Jeff Meyers (’84, financial services), president of Meyers Research; Bill Ostrem, president of CalAtlantic Homes; and Brad Termini, president of Zephyr Partners. Tim Sullivan (’93, MBA), managing principal of Meyer Research, served as the announcer and moderator for the event.

From Left: Bill Ostrem, Brad Termini and Jeff Meyers

From left: Bill Ostrem, Brad Termini and Jeff Meyers

Coming Labor Shortage?

Sullivan opened the session by pointing that home prices are still rising and that there may be a shortage of construction workers in the near future. He also noted that there is a notable gap in the price of new homes which are far more expensive than existing homes.

Bill Ostrem – CalAtlantic

Bill Ostrem was the first of the panel members to offer a presentation by sharing with the audience the development projects that CalAtlantic was working on which include the multi-family mixed use development, Millenia, in the East Lake area of Chula Vista, single family homes in the Whittingham at Harmony Grove Village development, and single family homes in the Del Sur development located in San Diego’s North County.

Ostrem sees aggressive real estate development continuing into the next year.

Brad Termini – Zephyr Partners

Brad Termini explained to the audience that Zephyr Partners is developing a multi-use project across from Balboa Park at 6th Avenue and Palm Street which features the most expensive non-waterfront luxury units built in San Diego. He noted that most of the buyers for these properties are buying these units as second or third homes. Termini also discussed two other high-end developments his company is currently working on, one of which is along the Del Mar coast and the other is located at Dana Point in Orange County.

Termini says that he is cautiously optimistic that aggressive real estate development will continue in the coming year.

Jeff Meyers – Meyers Research LLC

Jeff Meyers was the only member of the panel who was not directly involved in developing residential property. Meyers sees significant roadblocks to potential buyers due to the lack of available credit and the difficulty in qualifying for credit. However, he sees this situation as improving in the near future.

Meyers continued by saying that his analysis indicates that there will be a renewal for condo conversions and that there will be a stronger market for smaller housing developments as opposed to larger ones.

Technology may create a disruption in the real estate development arena, Meyers observed, and he believes that the ability to count subdivision lots in real time or even viewing the number of cars in the competition’s parking lot will impact the future of real estate development.

Unlike the other panelists, Meyers believes that “the money is not there for aggressive growth” and it’s hard to move forward without money.

In conclusion, the panel was clearly divided on the direction of the real estate development market in the short term, however, it is clear that there is a lack of supply for available homes in the San Diego market.