San Diego Metropolitan - The House As Building Block

The basic building block of California is the new house. It is the core component in building an entire community, an entire economy, an entire society.

In San Diego County, some $3.1 billion in new-home construction was permitted by local governments in 2002, a big fraction of the $5.7 billion or so in direct consumer spending to buy those homes.

That’s what pays for the houses, condos and apartments, but the larger sum also pays for the land, the streets, water, sewer, gas and electricity supply lines, the parks and recreation centers, the schools and fire stations. And, of course, once you’ve got all those elements, the stage is set for others to come in and develop additional commercial, industrial and institutional improvements nearby that contain the jobs, products and services desired by the people who buy and live in those new homes.

So while developers get “dissed” politically by those wishing for no growth, the fact remains that home-builders are key providers in a system intended to accommodate a growing population. The alternative is more crowded existing neighborhoods and schools, with home prices escalating even faster than they have been.

Over the last decade, master-planned communities have built 32 elementary schools, nine middle schools, four high schools, 31 parks, two libraries, 11 recreation centers and five fire stations, reports the Building Industry Association of San Diego.

“Since Proposition 13 (in 1978), government doesn’t build schools or parks,” says Russ Valone, president of Market Point Realty Advisors. “The developer puts them in. And the new home buyer pays for it. Over the last 20 years, a vast number of parks and fire stations have been paid for by new home buyers.”

At least 90 percent of the community amenities paid for by new home construction have come from master-planned communities, but that is about to change, says Donna Morafcik with the BIA.

“We’re going to see a shift out of the master-planned community because we don’t have the large tracts of land available anymore,” Morafcik says. “So we’re going to see infill and redevelopment.”

Development impact fees include scores of line items: design review, file map, sensitive land, inclusionary housing, special districts and others, whose processing and administration fuel the local, state and federal programs that aim to improve everyone’s life.

Together, fees range from $16,000 in some areas to $50,000 in La Costa Canyon. The fees on an average 2,000-square-foot, three-bedroom, two-bath, detached single-family home are $23,660 in San Diego.

Looked at another way, the National Association of Home Builders reports the construction of every 1,000 single-family or multi-unit homes generates $42.5 million and $17.8 million, respectively, in combined federal, state and local tax revenues and fees, or an average $42,500 per house and $17,800 per condo or apartment.

Plus there’s work for planners and painters, brokers and bankers, decorators and ditchdiggers.

“As the home project is being planned, a lot of consultants are employed — all kinds of geologists, architects and engineers — and you’re actually employing the government to move this through the process, all generating income to the economy,” Valone says.

“Once the project is approved, you go into the land element, and you bring in the heavy equipment operators to grade the lot. Now you build, and you employ carpenters, drywallers, electricians and plumbers who work on site. You also employ workers at factories who manufacture the carpeting, tile and insulation.

“Then the house is built, and now you’re buying drapes and flooring upgrades at the design center or some other retail outlet. Then you look at that nice piece of dirt outside and bring in landscapers to plant grass and shrubs. Then you have an open house and employ caterers.