Mayor Gloria Housing Construction Claims Face Criticism Amid Rising San Diego Vacancy Rates

The Core Criticism: Market Forces vs. Mayoral Credit

At the heart of the controversy is a fundamental question: Should Mayor Gloria receive credit for San Diego's recent housing construction surge, or are developers simply responding to market conditions beyond city control?

In his January 15, 2026 State of the City address, Gloria announced that San Diego permitted 7,500 new homes in 2025, representing double the city's yearly average from the past 20 years. Over three years, the city averaged 8,700 permits annually, marking what the mayor called clear evidence of San Diego's transformation.

However, Givot's letter argues that Gloria's expedited permit programs—"Affordable Housing Now" and "Complete Communities Now"—merely pulled forward projects that developers already planned to build. The real issue, according to critics, is that these programs came with significant costs.

The letter explains that market fundamentals—rents, building costs for materials, labor, insurance and land, interest rates, and competition measured by vacancy rates—ultimately determine construction levels. Developers will "stop building, hold their properties (land bank) and wait until the market is more favorable for higher rents" rather than build enough to meaningfully reduce rental costs, which would undermine their profitability.

This criticism reflects broader disappointment with Gloria's tenure. A Voice of San Diego article from January 2026 reported that even many of Gloria's supporters view his time as mayor as "a disappointment," with a November poll showing his approval rating at just 33 percent. One City Council staffer was quoted saying, "I've never seen a mayoral office be this ineffective."

The $6.5 Billion Infrastructure Deficit and Waived Development Fees

One of the most serious criticisms in the letter centers on San Diego's massive infrastructure deficit and the decision to waive Development Impact Fees (DIFs) during the housing construction push.

According to a February 2025 report from the city's independent budget analyst, San Diego faces a $6.5 billion infrastructure deficit over the next five years. The deficit describes the shortfall between spending on infrastructure and the estimated cost of work needed to maintain it.

Stormwater needs alone top $4.1 billion—nearly double previous projections—due to cost increases in existing projects and infrastructure "now beyond its useful life." At current funding levels, the city can cover only $394.4 million of these projects over five years, leaving a massive gap.

Development Impact Fees traditionally help fund infrastructure improvements necessitated by new construction. With the adoption of Parks for All of Us and Build Better SD, all new development within San Diego is assessed citywide DIFs for parks, mobility, fire stations, and libraries.

However, the expedited housing programs criticized in the letter waived these fees for participating projects, eliminating a revenue source during a period of unprecedented infrastructure need.

The fiscal pressures are mounting. San Diego entered 2026 with a worsening budget deficit of more than $300 million in the current fiscal year, with the initial $258 million deficit growing larger from declining sales-tax revenue, lower-than-anticipated franchise fees from SDG&E, and increased employee pension costs.

For cash buyers and investors, this infrastructure deficit has real implications. Areas with aging stormwater systems, deferred road maintenance, and inadequate public facilities may face future special assessments or declining property values as infrastructure deteriorates. Understanding which neighborhoods have received infrastructure investment—and which have been neglected—becomes a crucial due diligence factor when acquiring properties in San Diego.

Rising Vacancy Rates in the Premium Market: The Construction Slowdown

The letter's claim that "momentum of those programs has stalled as developers face rising vacancy rates in an overbuilt premium market" aligns with current market data showing significant challenges in San Diego's luxury housing sector.

For Class A luxury apartment complexes, the vacancy rate reached 6.6 percent in October 2025, but the situation is far more severe in specific submarkets. Downtown San Diego's luxury market has seen vacancy rates surge to 11.2 percent, with the overall downtown vacancy rate hovering around 11 percent—much higher than the citywide apartment vacancy rate of approximately 4.0 percent.

Many luxury buildings are struggling to fill units despite offering aggressive incentives, including free rent for as many as three months. This has transformed downtown San Diego into what industry analysts call a "concession-driven" market where landlords must offer substantial deals to attract tenants.

The oversupply in premium housing reflects what critics identify as a fundamental mismatch between the type of housing being built and market demand. Mayor Gloria's programs expedited permit approval for any qualifying housing project, but developers naturally focused on luxury units with higher profit margins. The result is an oversupply in the premium segment while mid-tier and affordable housing remain scarce.

Looking ahead to 2026, approximately 4,800 apartments are projected to come online, with a similar number expected in 2027. However, most planned multifamily developments remain concentrated in higher-income areas, perpetuating the premium market oversupply.

As Givot predicted, developers are beginning to "stop building, hold their properties (land bank) and wait until the market is more favorable."

This creates a critical opportunity for cash buyers. The luxury oversupply and resulting price pressure don't affect all San Diego submarkets equally. Coastal communities like Pacific Beach, La Jolla, and Mission Beach maintain strong demand fundamentals despite the downtown luxury glut. Meanwhile, mid-tier neighborhoods such as North Park, Clairemont, and City Heights offer stronger cash flow potential with lower vacancy risk than premium properties.

What Complete Communities Now and Affordable Housing Now Actually Delivered

To assess whether Mayor Gloria deserves credit or criticism for housing construction, it's essential to examine what his signature programs actually accomplished.

Complete Communities Now Program

The Complete Communities Now program, launched via executive order in January 2024, requires all relevant city departments to review housing projects under the Complete Communities program within 30 days. Complete Communities Housing Solutions (CCHS) is an optional affordable housing incentive program allowing denser housing projects near high-frequency transit, with focus on creating housing for low and middle-income residents.

Since Complete Communities was adopted in December 2020, the city issued 22 building permits creating 1,600 homes, including 280 affordable homes.

Affordable Housing Now Program

The Affordable Housing Now program targets 100 percent affordable multiple dwelling unit projects and emergency shelters that don't require discretionary permits and seek ministerial permits for 100 percent affordable housing units.

Over three years, Gloria's administration averaged 8,700 housing permits annually—more than double the city's average during the previous two decades. Community plan updates added capacity for 105,000 new homes in neighborhoods including Mira Mesa, Barrio Logan, Clairemont, the College Area, University, and Hillcrest.

However, these impressive numbers require context. Critics argue these programs simply accelerated projects already in the pipeline rather than creating new housing development. The city's geography—ocean to the west, mountains to the east, and protected land in between—severely limits buildable areas.

Despite the permit surge, San Diego continues falling short of projected housing demand. Year after year, the city permits barely two-thirds of homes needed based on long-term targets. The San Diego region routinely ranks among residents' top concerns for housing shortages, with disputes over specific projects among the region's biggest policy fights.

For investors, the key insight is that expedited permitting helped clear a backlog but didn't fundamentally change development economics. As market conditions shifted—particularly rising vacancy rates in luxury segments—construction momentum predictably slowed regardless of streamlined city processes.

Strategic Opportunities for Cash Buyers in San Diego's Shifting Market

The controversy over Mayor Gloria's housing policies and the premium market oversupply create distinct opportunities for cash buyers and investors who understand the market's structural dynamics.

San Diego's housing market in 2026 strongly favors well-capitalized cash buyers, particularly in mid-tier neighborhoods offering better cash flow potential than premium coastal areas while benefiting from strong rental demand and limited inventory.

Current Market Conditions

The current market shows 4,683 active listings countywide, with single-family home prices up 3.0 percent year-over-year to a median of $1,050,000, while condo prices have softened slightly to $660,000.

The rise in prices due to limited available property has forced many first-time homebuyers and traditional financed buyers out of the market, giving cash-heavy investors the upper hand. In the luxury segment, 68 percent of buyers pay cash, demonstrating the strong competitive advantage cash provides.

Top Neighborhoods for Cash Buyer Investment

Coastal Markets: Different Dynamics

Coastal communities maintain different dynamics than mid-tier neighborhoods:

• La Jolla shows remarkable resilience with a $2.8 million median price and 9 percent annual appreciation, though some reports cite $2.6 million with 21.5 days on market
• San Diego luxury market (homes $2M+) has median of $3.2 million (up 8.5% year-over-year), 45 days on market, and 68% cash buyers
• Pacific Beach remains heavily in demand with severe property shortage and overwhelming demand, with homes typically selling faster than San Diego County average
• Mission Beach offers similar appeal with slightly more family-friendly atmosphere

Optimal Timing Strategy

For investors seeking high cash flow, focusing solely on premium coastal neighborhoods limits returns due to high acquisition costs. Sophisticated investors target more affordable, high rental-demand neighborhoods where income potential relative to purchase price is stronger.

Infrastructure Deficit Creates Opportunities

The infrastructure deficit also creates opportunities. Properties in neighborhoods that have received recent infrastructure investment (new fire stations in Black Mountain Ranch and Otay Mesa, expanded parks) may outperform areas with deferred maintenance.

Conversely, distressed properties in infrastructure-neglected areas may present value-add opportunities for buyers who can navigate future assessment risks.

As the letter predicted, developers will increasingly "land bank" properties waiting for more favorable market conditions. This creates opportunities for cash buyers to acquire stalled development sites or distressed developer inventory at advantageous prices, particularly in areas zoned for mid-tier housing that faces less vacancy pressure than luxury segments.

Frequently Asked Questions: San Diego Housing Policy and Market Impact

Conclusion: Understanding Market Forces Beyond Political Rhetoric

The criticism of Mayor Gloria's housing construction claims highlights a fundamental truth for real estate investors: market forces ultimately drive development decisions, not political initiatives or streamlined permitting processes.

While San Diego did permit 7,500 homes in 2025—double the 20-year average—this achievement came at significant costs: a $6.5 billion infrastructure deficit exacerbated by waived Development Impact Fees, eliminated affordable housing requirements, and a luxury market oversupply with downtown vacancy rates hitting 11.2 percent.

For cash buyers and real estate investors, the key takeaways are clear:

• Luxury market is overbuilt—downtown vacancy at 11.2% creates pressure but doesn't affect all submarkets equally
• Mid-tier neighborhoods offer better fundamentals—North Park, Clairemont, City Heights provide strong cash flow with lower vacancy risk
• Infrastructure deficit creates due diligence requirements—understand which areas have received investment vs. deferred maintenance
• Developer land banking creates acquisition opportunities—stalled projects and distressed inventory at advantageous prices
• Cash buyers dominate luxury market—68% of transactions, demonstrating competitive advantage in speed and certainty

As developers increasingly "land bank" properties waiting for more favorable market conditions, savvy cash buyers can capitalize on the gap between political rhetoric and market reality. Understanding these dynamics—particularly the luxury oversupply, infrastructure challenges, and strong fundamentals in mid-tier neighborhoods—positions investors for strategic acquisitions in 2026.

Whether you're looking to acquire investment properties or sell your San Diego home quickly for cash, understanding market forces beyond political claims is essential for making informed decisions.