Decisions, Projects, and Programs Shaping San Diego’s Housing Supply and Affordability: An Updated Overview

San Diego continues to navigate a complex landscape marked by rapid growth, community concerns, and innovative solutions in its quest to address the pressing housing affordability crisis. While the city has laid a robust foundation through legislative reforms, development projects, and safety investments, recent developments highlight both progress and ongoing challenges. From new statewide programs to local debates on zoning and infrastructure, San Diego’s strategies reflect an evolving effort to build resilient, equitable communities capable of accommodating its expanding population.

Accelerating Housing Production Through Legislative and Land-Use Reforms

San Diego’s efforts to streamline housing development advanced significantly in recent months. Notably:

• AB-2525, recently enacted, permits lands within Mission Bay Park to bypass certain surplus land restrictions, facilitating higher-density development on publicly owned lands. This move aims to expedite approval processes while maintaining environmental standards, aligning with the city’s broader goal to maximize land use efficiency.

• The city continues to update its Land Development Code to promote higher-density, mixed-use projects, including mid-rise buildings and adaptive reuse initiatives. These updates are designed to reduce bureaucratic hurdles, accelerate project approvals, and expand housing capacity to meet San Diego’s demographic growth.

• On the heritage preservation front, Mayor Todd Gloria has proposed a comprehensive package that balances historic preservation with development needs. The reforms include easing restrictions on adaptive reuse and modifying protections for historic sites, enabling existing structures—such as old warehouses and historic buildings—to be transformed into modern housing units. This approach seeks to preserve neighborhood character while increasing density in key areas.

Community Conflicts and Local Policy Debates

Recent community conflicts underscore the tension inherent in San Diego’s development push:

• In the southeastern neighborhood of Jamacha, the repeal of the controversial Footnote 7 zoning policy has reignited debates. Footnote 7 had previously restricted certain types of residential development in the area. Its repeal, driven by legal challenges and community protests, opened the door for increased housing density but also raised concerns about neighborhood character, traffic congestion, and strain on infrastructure.

• Residents are calling for thoughtful planning and community engagement to ensure development aligns with local needs. These conflicts highlight the importance of balancing housing needs with preserving community identity.

• Additionally, residents and officials are actively seeking input on the upcoming county budget. A new initiative invites the public to share priorities for the fiscal year starting July 1, emphasizing housing, safety, and infrastructure. This participatory approach aims to align funding with community needs, especially amidst fiscal constraints.

Major Projects and Creative Land Use Strategies

San Diego’s housing expansion is propelled by both large-scale projects and innovative land use approaches:

• The UCSD Pepper Canyon Mega-Village remains on track, aiming to add approximately 6,000 student beds. This project addresses on-campus housing shortages, helps relieve spillover pressures on neighboring communities, and supports both student and workforce housing needs.

• The AVA Pacific Beach project received approval for its expansion to include 138 new apartments, exemplifying the city’s support for urban infill and density-focused development in vibrant neighborhoods.

• To support essential workers, the city is developing 1,674 units for school staff, including teachers and critical personnel, fostering stable, resilient communities.

• Adaptive reuse projects continue to accelerate, such as:

  • A downtown hotel in Escondido being converted into 32 affordable apartments.
  • Office buildings in transit-rich neighborhoods being transformed into mid-rise housing, preserving neighborhood character while increasing housing options.

• The private sector remains active, with recent sales exemplifying market demand—such as a seniors housing community selling for $47 million, reflecting the growing need for supportive and senior housing.

New Developments: Senior Housing and Community Engagement

Adding momentum, a recent affordable senior apartment complex near Vista has opened, providing vital supportive housing for older residents. This project exemplifies San Diego's commitment to addressing senior housing shortages and fostering age-friendly communities.

Furthermore, residents are encouraged to participate in shaping the county’s budget through surveys and engagement tools, ensuring that funding aligns with local priorities in housing, safety, and infrastructure.

Funding, Market Interventions, and Affordability Strategies

San Diego’s comprehensive toolkit to combat housing affordability includes:

• Securing $1.67 million in state funds dedicated to veteran housing initiatives, supporting vulnerable populations.

• The reopening of the Down Payment Lottery now offers up to $150,000 to assist first-time homebuyers, aiming to bridge the affordability gap for many residents.

• Enforcement against illegal house-flipping operations has intensified, targeting entities like California Dreamin’ Properties to stabilize the market and protect residents from exploitative practices.

• Policy proposals are advancing for higher taxes on second homes and vacant properties, including the upcoming Empty Homes Tax, scheduled for discussion at the Rules Committee meeting on February 25. If approved, this tax could incentivize owners to rent or sell unused units, thereby increasing housing inventory.

• The FY27 budget hearings, scheduled for late spring, will be pivotal in determining allocations for land reform, safety, and infrastructure projects—key to enhancing San Diego’s capacity to implement effective housing initiatives.

Market Trends and Short-Term Rental Impacts

Despite active development, housing affordability remains a significant concern:

• Home prices are projected to continue rising into 2026, reaching record highs despite increased construction. Although there has been some marginal relief, the market remains tight, with only about 1.6% of homes considered affordable for the median household.

• Elevated mortgage rates, compared to pandemic lows, continue to restrict access for prospective buyers, widening disparities across neighborhoods.

• The proliferation of short-term rentals (STRs) adds further complexity:

  • Recently, a San Diegan homeowner received an eviction notice claiming the owners intended to move in, only to discover the property listed as an Airbnb afterward. Such cases highlight tensions between property owners’ use of homes for STRs and the community’s need for long-term housing.

  • The city is actively enforcing regulations on STR platforms to balance tourism benefits with housing availability.

Infrastructure, Safety, and Climate Resilience

San Diego continues investing in infrastructure and safety measures:

• To reduce traffic fatalities, the city plans to lower speed limits across over 679 miles of roads, complemented by pedestrian improvements like crosswalks and traffic calming—especially in busy neighborhoods such as San Ysidro.

• The Police Department is undergoing modernization, including renovations to Police Plaza and the establishment of a state-of-the-art police training center at the former Chargers stadium site, emphasizing community engagement and responsiveness.

• Climate resilience efforts include Lake Hodges water releases to mitigate flooding and a $6.3 million settlement paid to insurers for flood damages, reinforcing the city’s preparedness against climate impacts.

• Local safety concerns persist, such as residents near Lake Murray demanding a stop sign at a hazardous intersection. These localized efforts highlight the importance of targeted traffic safety measures.

• Urban projects like the Gaslamp Promenade face setbacks due to funding constraints, illustrating broader budgetary challenges impacting urban mobility and beautification.

Fiscal and Legal Developments: Flood Settlement and Budget Outlook

A key recent development is the San Diego City Council’s approval of a $6.3 million settlement with insurance carriers over damages from 2024 floods. This settlement:

• Addresses financial repercussions from severe flooding that caused widespread infrastructure and property damages.
• Reinforces the city’s commitment to climate resilience, ensuring resources for future flood prevention and infrastructure upgrades.
• Demonstrates proactive fiscal management amidst climate challenges, providing a foundation for continued safety and resilience investments.

Meanwhile, the city faces an estimated $120 million budget deficit for the upcoming fiscal year. In response:

• Community input is prioritized, with surveys indicating residents want the city to focus on affordable housing, infrastructure, and public safety.
• The FY27 budget hearings will be critical, as potential cuts could impact land reform initiatives, safety projects, and housing programs.

Policy and Process: Heritage Preservation and Development Timelines

The Heritage Preservation Program received its first comprehensive update in 25 years, aiming to modernize policies and integrate preservation into broader development goals.

Simultaneously, Land Development Code revisions are progressing, with proposals scheduled for public hearings and council votes in the coming months. These revisions aim to balance development needs with community input and align zoning policies with housing objectives.

Upcoming milestones include:

• The February 25 Rules Committee discussion on the Empty Homes Tax—a potential catalyst for increasing housing inventory.
• The late spring FY27 budget hearings—vital for funding housing, safety, and resilience projects.
• The mid-2026 city council votes on land use reforms and heritage policies, which will shape San Diego’s growth and preservation landscape.

New Initiatives and Recent Developments

Adding to these efforts, two notable recent articles highlight ongoing policy developments:

• California’s Dream For All Program now offers 20% down payment loans for qualifying first-time homebuyers. This initiative aims to expand access to homeownership, particularly for those facing entry barriers in the housing market.

• The Encinitas City Council is advancing the Santa Fe Drive redesign, aiming to improve traffic flow, safety, and urban aesthetics. The project has faced community debates over construction impacts and neighborhood character, but officials emphasize its role in supporting sustainable growth.

Current Status and Outlook

While San Diego demonstrates substantial progress through project approvals, policy reforms, and funding initiatives, the housing affordability crisis remains acute:

• Home prices are projected to continue rising, with limited affordable options for median-income residents.
• Community conflicts—like the Jamacha zoning debates—and fiscal constraints pose ongoing hurdles.
• Nonetheless, the city’s comprehensive, multi-pronged approach—combining legislative reforms, innovative projects, targeted funding, and safety investments—reflects its commitment to building resilient, inclusive communities.

The success of upcoming policy discussions, budget allocations, and project implementations will be decisive in translating strategic plans into tangible improvements in housing supply and affordability.

In conclusion, San Diego’s evolving landscape exemplifies a city actively seeking solutions amid challenges. As new initiatives unfold and policies adapt, the coming months will be critical in determining whether these efforts lead to meaningful, lasting change for residents across the region.