Policy, projects, and market data shaping San Diego’s housing affordability and supply

San Diego’s housing landscape in 2026 continues to evolve amid significant policy reforms, major development projects, and ongoing market challenges. The city’s multifaceted approach aims to increase housing supply, improve affordability, and enhance community resilience, though hurdles remain.

Policy Reforms and Land-Use Innovations

Recent legislative and regulatory efforts are central to San Diego’s housing strategy:

• AB-2525, enacted this year, permits lands within Mission Bay Park to bypass certain surplus land restrictions, facilitating higher-density development on publicly owned lands. This legislation is designed to expedite project approvals while maintaining environmental standards, supporting the city’s goal to maximize land use efficiency.

• Land Development Code updates are underway to promote higher-density, mixed-use projects. These reforms aim to reduce bureaucratic hurdles and accelerate approvals for developments like mid-rise buildings and adaptive reuse initiatives, significantly expanding housing capacity.

• On heritage preservation, the city has approved its first comprehensive update in 25 years. These reforms streamline approval processes for preservation projects while balancing historic character with development needs, enabling conversions of historic buildings into modern affordable housing.

Major Projects and Land Use Strategies

San Diego’s pipeline includes large-scale projects and innovative land use approaches:

• The UCSD Pepper Canyon Mega-Village continues on schedule, adding approximately 6,000 student beds to address on-campus housing shortages and reduce spillover into neighboring communities.

• The AVA Pacific Beach project received approval to expand with 138 additional apartments, supporting urban infill in a vibrant neighborhood.

• To support essential workers, the city is developing 1,674 units dedicated to school staff, fostering stable, resilient communities.

• Adaptive reuse projects are gaining momentum, such as converting a downtown hotel in Escondido into 32 affordable apartments and transforming office buildings in transit-rich areas into residential units. These strategies help increase housing stock without extensive new construction.

• Additionally, efforts to support seniors include the opening of an affordable senior apartment complex near Vista, addressing the critical shortage of age-friendly housing options.

Community Conflicts and Regulatory Enforcement

Development progress is sometimes challenged by community concerns:

• The repeal of Footnote 7 zoning restrictions in Jamacha has reignited debates over neighborhood character, infrastructure capacity, and traffic. While it opens opportunities for increased density, residents advocate for more thoughtful planning and community engagement.

• Enforcement actions against illegal practices, such as illegal house-flipping operations (notably California Dreamin’ Properties), aim to stabilize the market and prevent speculative distortions.

• A proposed Empty Homes Tax, scheduled for discussion at the Rules Committee on February 25, seeks to disincentivize vacant properties, encouraging owners to rent or sell unused units, thereby increasing available housing stock.

Market Trends and Affordability Initiatives

Despite supply expansions, affordability remains a pressing concern:

• The median home price in North Central San Diego has stabilized at about $973,000, reflecting a 0.26% decrease from previous years. However, only 1.6% of homes are considered affordable for the median household, indicating persistent disparities.

• Mortgage rates, still above pandemic lows, continue to restrict access for many prospective buyers, especially in high-demand neighborhoods like Rancho Bernardo East and Chula Vista North, where median condo prices are around $587,500.

• Programs like Dream For All offer 20% down payment loans to qualifying first-time buyers, helping to bridge the affordability gap.

• The city’s Down Payment Lottery has reopened, offering up to $150,000 to assist first-time homebuyers, aiming to stimulate homeownership.

Infrastructure, Safety, and Climate Resilience

San Diego invests heavily in infrastructure and safety:

• Over 679 miles of roads have adopted speed limit reductions to improve pedestrian safety, particularly in busy neighborhoods like San Ysidro.

• Upgrades along North Park’s 30th Street include protected bike lanes, promoting sustainable transportation.

• Climate resilience initiatives include water releases from Lake Hodges to prevent flooding, and a $6.3 million settlement to fund flood mitigation and ecosystem protection—measures vital as climate-related risks intensify.

• Emergency sewer work in Escondido, prompted by last summer’s declaration of a local emergency, addresses aging infrastructure to prevent environmental hazards and support ongoing development.

Safety and Community Well-Being

San Diego’s efforts to enhance public safety include:

• A decline in violent crime rates, bolstered by targeted law enforcement and community engagement.

• Schools are updating safety policies; recent incidents, such as the arrest of a 17-year-old for terroristic threats, have prompted reviews of security protocols.

Community Engagement and Future Outlook

Public participation remains vital. The city’s FY27 budget hearings, scheduled for late spring, will prioritize funding for land reforms, safety, and infrastructure projects. The launch of interactive dashboards tracking progress on ending homelessness exemplifies transparency and accountability.

While progress is evident through legislative reforms, major projects, and policy initiatives, affordability challenges persist. Rising home prices, community conflicts, and fiscal constraints pose ongoing hurdles. The upcoming February 25 discussion on the Empty Homes Tax and the FY27 budget will be critical in shaping San Diego’s housing future.

In summary, San Diego’s comprehensive strategy—combining policy reforms, innovative development, enforcement, and resilience investments—demonstrates a city committed to creating a more equitable, safe, and sustainable housing environment. The coming months will be decisive in translating these efforts into lasting improvements for residents across the region.