Why No One Is Building for San Diego Families

The math of new construction favors studios and luxury. Families feel the gap.

Data as of October 12, 2026 | Source: CoStar Group

San Diego just finished its biggest apartment building boom in more than 20 years. Look at what got built, though, and one group was mostly left out: households that need more than one bedroom.

The units got smaller

Since 2020, studios and 1 bedroom units have made up more than 60% of new San Diego apartments. In the first 15 years of the century, it was the reverse: 2 and 3 bedroom units held that share.

The reason is rent per square foot:

New unit type	Approximate rent per square foot
Studio	close to $5.00
1 bedroom	about $4.40
2 bedroom	about $3.70

When every square foot costs more to build, developers build the unit that earns the most per square foot.

What it costs to build

New luxury projects in San Diego often cost more than $600,000 per unit. Soft costs (permits, fees, design, financing, and legal) can exceed half of the total.

Each of the county’s 18 cities sets its own rules. Entitlement (the approval process before construction can start) is often long, and opposition to density can add delays through environmental challenges. Some newer buildings have even sold for less than they cost to build.

CoStar puts it directly: “These factors continue to limit the feasibility of workforce housing development.”

Who leaves

When larger units are scarce and expensive, households with children have fewer options. In San Diego, many of them leave.

• Rent-to-income ratios often exceed 40%. Housing affordability standards target 30% or less.

• CoStar reports domestic net migration has been negative by more than 20,000 people a year.

• The share of residents under 18 is expected to keep falling as growing households relocate.

• Metro population fell 0.2% over the past year.

  
  

Zoning isn’t the bottleneck

San Diego has already rezoned for more than 100,000 additional units. The capacity exists. Cost, time, and approvals decide what actually gets built, and right now they push toward small, high-rent units.

Workforce housing is the part of the market these numbers make hardest to build. It’s the part we focus on.

Sources: CoStar Group, San Diego market report, data as of October 12, 2026.