TL;DR
San Diego must permit 108,036 homes by 2029. Through 2024 it permitted just 31,458 since 2021 — less than a third of the way there, with three years left. For developers who know how to work the city's Complete Communities overlay and state Density Bonus law, the gap between mandate and production is one of the greatest opportunity windows in a generation.
The Scale of the Problem
San Diego is not building enough housing — full stop. The State of California has determined the San Diego region needs 171,685 new housing units by 2029, with three out of five required to be affordable, according to SANDAG. The City of San Diego's own RHNA target for the 6th cycle (2021–2029) stands at 108,036 homes.
Against that backdrop, the city's 2025 Annual Report on Homes shows 8,782 new homes were permitted in 2024 — the second-highest total in a decade, and part of a two-year surge averaging 9,200 permits annually, a 40% increase over the start of the current housing cycle. The progress is real. So is the shortfall: at the current pace, San Diego will reach roughly 65,000–70,000 permitted units by 2029, falling tens of thousands short of the state mandate.
The Apartment Pipeline: Where Production Is Concentrated
Of the 8,782 homes permitted in 2024, multifamily and multi-unit developments drove the bulk of output near transit corridors. Axios San Diego reports that roughly 4,700 new apartment units remain in the construction pipeline for the metro area. The neighborhoods generating the most permit activity over the 2021–2024 cycle include Downtown, Uptown (Hillcrest, Mission Hills, Bankers Hill, University Heights), North Park, Mira Mesa, and Navajo.
ADUs — accessory dwelling units — have become a significant wild card. Per a UC San Diego Center for Housing Policy and Design analysis, ADU production in the county grew 247% from 2020 to 2024, with 3,991 permitted countywide in 2024 alone. That's nearly half (45%) of all County-permitted units for the year — a figure that county supervisors have publicly questioned as insufficient to meet the region's structural housing need.
Complete Communities: The Density Toolkit Developers Need to Understand
The City's Complete Communities Housing Solutions program — enacted in 2020 and subsequently extended to the Coastal Zone — is the most powerful entitlement tool available to San Diego multifamily developers today. It provides FAR-based density bonuses in exchange for deed-restricted affordable units, operating through four tiers mapped to transit proximity:
TierMaximum FARAffordability RequirementWhere It AppliesTier 1 (Unlimited)Unlimited FAR40% of units affordable (mix of 30–120% AMI)Highest-frequency transit corridorsTier 28.0 FAR40% affordableHigh-frequency transit priority areasTier 36.5 FAR40% affordableMobility Zone 3 transit areasTier 44.0 FAR40% affordableMobility Zone 4 transit areas
An additional FAR bonus of 1.5 is available when at least 10% of units are two-bedroom and an additional 10% are three-bedroom — a meaningful incentive for family-sized unit production. The program also waives maximum residential density and height limits, making it a genuine entitlement accelerator rather than a marginal nudge.
For a developer site-stacking in a Tier 2 corridor, the difference between base zoning and Complete Communities-enabled density can mean two to three additional floors — and a project that pencils vs. one that doesn't.
Where AVRP Sees Opportunity in 2026
From AVRP's vantage point across dozens of active San Diego multifamily projects, three corridors and typologies are generating the most traction for new development right now:
- Downtown / Cortez Hill / East Village infill: Transit proximity, established entitlement precedent, and Complete Communities Tier 1 and 2 overlays make downtown the highest-density opportunity zone. Projects like 18Ten State Street and The Indiana Apartments demonstrate that well-executed mid-rise residential programs in this corridor perform both aesthetically and operationally.
- Mission Valley / Kearny Mesa transit nodes: The mid-city trolley expansion has unlocked sites that were previously infeasible. AVRP's work on projects like Muse La Jolla illustrates how thoughtful podium design can maximize density while maintaining livability.
- Affordable and faith-based infill: The YIGBY (Yes In God's Backyard) model — pioneered in San Diego by AVRP Founder and Chairman Doug Austin, FAIA — is opening a new pipeline of deed-restricted units on underutilized faith-owned land. AVRP's Imperial Lofts YIGBY project near Grant Hill demonstrates the model at scale, converting church-adjacent land into 26 units for formerly homeless veterans without government subsidy.
The Structural Constraints That Still Limit Production
No honest development analysis ignores the headwinds. Three constraints continue to limit San Diego's ability to reach its housing targets:
- Construction costs: Hard costs for Type III/V wood-frame multifamily in San Diego range from approximately $250–$350/SF in 2026, with concrete podium and Type I steel running $450–$650+/SF. Financing conditions remain challenging at prevailing cap rates.
- Entitlement timelines: Even with Complete Communities ministerial processing for eligible projects, complex infill sites still require 12–36 months from design to permit for non-by-right development.
- Coastal/LCP overlay complexity: While Complete Communities was extended to the Coastal Zone in 2022, Local Coastal Program conformance adds review layers that can extend timelines on coastal infill sites.
Key Takeaways
- San Diego needs 108,036 new homes by 2029 and has permitted roughly 31,458 since 2021 — a large structural gap remains.
- The Complete Communities Housing Solutions program offers FAR bonuses up to unlimited on the highest-frequency transit corridors in exchange for 40% affordable units.
- ADU production is surging (3,991 county-wide in 2024) but is increasingly viewed as insufficient to address structural housing needs alone.
- Downtown, Mission Valley, and faith-based infill corridors represent the strongest development opportunity zones in 2026.
- AVRP has delivered multifamily housing across all these typologies — market-rate, affordable, mixed-income, and mixed-use — and brings both design expertise and deep entitlement experience to every project.
AVRP Studios has spent nearly 50 years designing housing that is beautiful, buildable, and built to last. If you are working on a multifamily project in San Diego — at any scale and any income tier — start a conversation with our team.
Sources
- City of San Diego. 2025 Annual Report on Homes. September 29, 2025. sandiego.gov
- SANDAG. Regional Housing Needs Assessment, 6th Cycle 2021–2029. sandag.org
- UC San Diego Center for Housing Policy and Design. ADU Production in San Diego County Is Going Up Fast. 2025. chpd.ucsd.edu
- City of San Diego. Complete Communities Housing Solutions — Information Bulletin 411. sandiego.gov
- Axios San Diego. San Diego trails major metros in new apartment construction. October 7, 2025. axios.com
- Allen Matkins. City of San Diego Expands Complete Communities Program. January 2023. allenmatkins.com