The San Diego Metro area continues to be ranked as one of the least affordable places to live in the nation.

These rankings are based on the U.S. Department of Housing and Urban Development's housing wage that defines affordability as "no more than 30 percent of gross income is spent on housing." San Diego statistics have defied this definition for years both for buyers and renters.

According to one study, the average San Diegan would have to earn $19.46 an hour to afford an average 2-bedroom apartment. No drop-off in the demand for housing is imminent. The county's population is expected to grow by another one million residents by 2020. The region is expected to fall short of the new homes needed to accommodate the area's growing population by this time by at least 100,000 housing units.

There is a case to be made for diminishing demand for large single homes due to the reduced housing requirements of Generation X vs. the Boomers that have driven up both the size and price of single dwellings for 30 years. This theory known as the "generational bubble" has been predicted since the 1990s. Now the thinking is that though late by 20 years, this bubble will start showing itself by 2010. My thought is that what happens will not be a "bubble" but rather the current drop in prices will attract investors to purchase a large share of the "for sale" housing inventory. More houses will be moved into the rental inventory and demand will be maintained for these houses due to their continued appeal to immigrants and transplanted families that are not in a position or choose not to buy. This shift will shore up value while new housing alternatives will be built, but at a slower rate restricting and diversifying the supply side of the housing equation.

Historically, about half of San Diegans rent vs. own. Though the pendulum has swung toward more ownership (closer to 60 percent) during the last 7-10 years; it has recently and will continue to shift back to 50/50 over the next several years. San Diego tends to attract what is known as "lifestyle renters." These "lifestyle renters" are becoming more common. The rising cost of homeownership means that it is out of reach for more San Diego residents that question whether they want the "hassle of homeownership." California also tends to attract a lot of newcomers, who tend not to buy homes right away. These include educated immigrants and upwardly mobile professionals that are currently enjoying the San Diego climate and lifestyle, but will eventually choose other places to raise a family.

According to industry leaders, land is simply not being zoned fast enough to keep up with the demand for rental housing. Therefore, price reductions and/or slowdown in sales activity that creates more homes as rentals will only be temporary.

The average rental owner has seen steady increases in their rental rates from previous years. Rents are expected to continue to rise, although at moderate increases.

Some statistical information is included courtesy of the San Diego Union Tribune and/or SignOnSanDiego.com. Much has been written about the "generational bubble," although conclusions and opinions herein are the sole responsibility of Neil Fjellestad.