Among the top crises facing California is the affordable housing issue. Just in San Diego alone, the city will need 108,000 new homes by the end of the decade to meet the demand of all income levels, according to the San Diego Association of Governments’ Regional Housing Needs Assessment. A scarcity of such size drives up competition and costs, making the available homes on the market shockingly unaffordable.
But, we don’t need to explain the basics of supply and demand to you, or convince you of the gravity of the issue. Coronado has been dealing with its own version of affordable housing shortfalls for years.
So let’s call it as it is: A statewide crisis. A strategy that fundamentally, is not sustainable, no matter how many bills legislators throw at it.
To attempt to curb the affordable housing mess and put more units back on the market (and more money in the city’s general fund), our neighbors across the bridge are considering adding an empty home tax to houses that sit vacant for more than half the year – a move San Diego voters will see on their ballots in June.
From the outset, we should be concerned about “money grabbing taxes” that boost the city’s general fund in the middle of a huge budget shortfall.
If it passes, an initial annual tax of $8,000 would be imposed on homes that are empty for more than 182 days of the year (or six months) starting in 2027. Corporate-owned dwellings would need to add a $4,000 surcharge.
Every year after that, the rate would rise to $10,000 plus a $5,000 surcharge for corporate-owned homes.
This proposal is punitive in nature, penalizing home owners who leave their houses vacant for a chunk of time, rather than addressing the root of the affordable housing issue. Why aren’t we instead, implementing additional housing tax policies that reward permanent home ownership?
The empty home tax has been adopted in other California cities such as Berkeley and San Francisco, the latter of which is now in a legal dispute over whether the law is constitutional.
San Diego’s independent budget analyst says the move could generate $9.2 million to $21.4 million in the first year, according to an article from the San Diego Union Tribune.
While Coronado is not currently considering the empty home tax, and currently has a balanced budget, this is an interesting case study to observe from afar, since the island has more-than-double the amount of vacant homes compared to the San Diego-Chula Vista-Carlsbad metro area.
According to 2024 U.S. census data, 26% of Coronado’s homes are vacant, and a high portion of those fall under seasonal or recreational use. In San Diego, the percentage lands at 7%.
The numbers speak for themselves. If Coronado was to follow suit, many homeowners would be affected.
But we should be wary of this move as a money grabbing scheme – a technique to fill a budget deficit caused by overspending – and avoid following in the footsteps of San Diego.
Rather than penalize homes that are underutilized, there should be tax incentives for primary homeowners. The tax structure needs to be shifted to address home affordability. The last thing we need is another tax that will run folks out of California.
