San Diego North EDC: High mortgage rates, slower life-science leasing and tight labor market shaping Carlsbad outlook

Eric Buevold, president and CEO of the San Diego North Economic Development Council, told a Carlsbad economic development subcommittee that several regional trends — elevated interest rates, slower life-science expansion, rising vacancy in local business parks and an ongoing housing–jobs imbalance — are likely to shape the city’s economy in 2025.

"Inflation's likely to remain modestly elevated, and consequently, we're not gonna see a rate cut," Buevold said, adding that mortgage rates have tracked the Federal Reserve and have recently been "well above 6%" and at times above 7 percent. He said that high mortgage rates and higher borrowing costs have reduced home turnover and suppressed nonresidential construction.

Those mortgage-rate dynamics have curtailed home sales in Carlsbad: Buevold showed data indicating the market recorded just 65 home sales during a recent month, and he said the city added about 9,500 net jobs between 2013 and 2023 while adding roughly 3,100 housing units in the same period. "That is not sustainable," he said, linking the imbalance to continued developer interest in rezonings, accessory dwelling unit requests and other housing actions.

Buevold also described a softening in the local office/industrial market: Carlsbad's business park experienced negative net absorption of about 54,000 square feet, he said, driven in part by a pullback from large users such as Amazon and by reduced leasing by a major life‑science real estate investor that has prioritized assets in Torrey Pines.

On federal policy, Buevold highlighted two risks for the region. First, he said the National Institutes of Health supplied "over $1,000,000,000" to the region in 2024 and warned that cuts to indirect‑cost reimbursements could create "multi‑hundred‑million dollar" shortfalls at research institutions that support local jobs and labs. "People who you are who are your constituents will get laid off," he said. Second, he described tariff proposals affecting U.S.–Mexico cross‑border manufacturing as a concern for North County firms that rely on Baja supply chains, noting manufacturers such as Thermo Fisher and TaylorMade operate cross‑border production.

Buevold said unemployment is likely to remain low and that CPI in the 3–4 percent range should not materially reduce retail sales. He recommended local efforts to support shop‑local programs and workforce development, and he flagged health‑care funding risks, saying potential Medicaid cuts could threaten emergency‑room operations at regional hospitals that serve Carlsbad residents.

Council members thanked Buevold for the briefing and pressed for more data tying housing costs to recruitment and retention at local employers. Buevold said his organization plans targeted research on midlevel manufacturing roles and professional development as a strategy to retain and grow local talent.

The presentation and council questions focused on trends rather than formal actions. Staff and regional partners said they will continue monitoring mortgage and labor indicators, NIH funding proposals, tariff developments and Medicaid policy for implications to Carlsbad.