Did Smart Growth Policies Save Oregon's Housing Market?

19 May 2008 - 2:00pm

Oregon's housing market has faired far better than other areas of the country, with some experts agreeing that the state's more restrictive land-use policies helped to prevent an oversupply of homes during the free-wheeling mortgage years.

"Here at the western edge of the Portland metro area, green fields flow into fir trees and foothills and eventually the Coast Range. They are a developer's dream: flat, picturesque and a quick freeway spin from the region's high-tech center.

If this were Phoenix or the San Francisco Bay area, real estate experts say, master-planned subdivisions would carpet these fields all the way to the mountains. Instead, their foot-high grass faces out on just one new, 15-lot cul-de-sac, buffered by strict growth controls that help North Plains maintain its rural feel and help shield Oregon from the housing crisis stunting the national economy.

While home prices fell by about 20 percent in the Sun Belt and the Midwest over the last year, values here in the northwest corner of Washington County rose 4.5 percent, according to local real estate statistics and a federal housing index. Prices overall in the Portland metro area dipped slightly; only Charlotte fared better among major cities.

When presidential hopeful Hillary Clinton tried to highlight housing woes in Oregon last week, the experts she assembled acknowledged the market here has been holding up better than most. Analysts say Clinton and other politicians could learn from this state, where the Democratic presidential campaign has turned in advance of its Tuesday primary, and where experts credit land-use restrictions and a late-blooming economy with keeping housing prices afloat.

While other cities confront half-built or half-empty housing developments, Portland's longtime fight against sprawl ensured that the supply never got too far ahead of demand."

Full Story: Oregon's growth limits help ease housing pain

Source: The Chicago Tribune, May 18, 2008

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I wouldn't say always, but ....

Submitted by Michael Lewyn on Sun, 05/25/2008 - 18:52.

"Michael: Do you think all transit-oriented urban development is desirable, regardless of how it relates to its immediate physical context--how tall or dense it is, or how it fits into the surrounding neighborhood?"

I wouldn't say "all." I'm sure if you presented me with the right set of facts, I would say "Gadzooks! That's inappropriate."

But on the other hand, I certainly reject the notion that all development should "fit into the surrounding neighborhood" because I think that if we are basing development policy on that view, infill development would be virtually impossible.

It seems to me that as population grows and gas prices increase, we have two choices: (1) allow a lot more infill, which means a lot of neighborhood change or (2) prohibit neighborhood change, which means that we impoverish people by forcing them to live further and further out in suburbia and spend more and more on gas in order to get affordable housing.

Land Use Restrictions and Sub-Prime Market

Submitted by JMc on Tue, 05/20/2008 - 12:15.

It's good to know that land planners have the power to shake the entire global financial system and bring it to its knees. Oh that it was true. But the sub-prime scam wasn't driven by the scarcity of residential product due to "destructive land use regulations" (wonder if the Heritage Foundation every saw a "productive land use regulation") replacing "more traditional yet environmentally sound regulation" (I'm not even going to comment on this one) without "the slightest consideration of economics" (guess the author missed the extensive literature and law cases discussing the economic impact of land restrictions - although I will admit that there probably hasn't been much discussion about Portland's land planning laws crippling the international financial system -seems like everyone from the city planning commission to the World Bank missed that one.)

The sub-prime scam wasn't built on real estate supply and demand but on the over abundance of cheap credit and low lending standards. If the underlying asset was truly scarce and in high demand, the loans might not be sub-prime. (Not to mention all of the other sub-prime messes such as credit card debt, auto and boat financing, etc., unless you want to blame them on restrictions on parking lots and boat docks - but don't give them any ideas.)

But yes, smart growth limits do both reduce the supply of new construction and increase the costs. So do roads, sewers, fire and health safety systems, sound and safe construction techniques, etc. Housing would be much, much less expensive if anyone could build anything anywhere. But homeowners don't like it when the neighborhood burns down because of someone's faulty wiring or a garbage dump moves in next door. So as with so much else, it is a balancing of what the community wants, restrictions it is willing to endure, and what it can afford - which is complicated by different sections of the community having different wants, tolerances, and purchase power. What the sub-prime market did was to temporarily inflate purchase power and thus inflate demand - and now the moment has passed and deflation is setting in.

Where supply was elastic, the increase in purchasing power resulted in increases in supply and the decline in purchasing power in oversupply.

Where supply was inelastic, the increase in purchasing power resulted in increases in prices and the decline in purchasing power resulted in declining prices.

Tenants are better off in the first case since the oversupply will dampen price increases as the local economy recovers. Investors are better off in the second case since the lack of oversupply will allow for price increases earlier in the local economic recovery.

Take your choice.

PS - In Manhattan the City bent over backward to accommodate developers but purchasing power grew faster than a growing supply driving prices up even as restrictions were loosened.

PPS - Free market economists have criticized Oregon's laws since they were first introduced by a Republican Governor 35 years ago. I suppose it could be an example of predict a downturn long enough and you'll eventually be right.

Oregon's growth limits help ease housing pain

Submitted by Zelda Bronstein on Mon, 05/19/2008 - 18:14.

This article equates fighting sprawl with fighting speculation. It also equates sprawl with detached single-family housing. Both equations are questionable.

Sprawl can go up as well as out. The past decade saw plenty of speculation in high-density, vertical housing that has crashed, along with overbuilt "master-planned subdivisions." Think Miami or (closer to my Berkeley home) downtown Oakland, where hulking condo projects sit half-finished and covered in scaffolding.

And how do we square this piece with the April 28, 2008 article from the Oregonian (also posted on Planetizen) headlined "Sprawl belies Oregon's rep for planning"?

Two points

Submitted by Michael Lewyn on Tue, 05/20/2008 - 06:31.

1. I don't see how "high-density, vertical housing" is necessarily sprawl. Is Ms. Bronstein trying to say that ALL new development is sprawl?

2. This article is perfectly consistent with the April 28 article, as long as you understand that the two articles mean different things by "sprawl." This article implicitly defines sprawl as "where we grow"- housing far from the urban core, in undeveloped areas. So the point of this article is that Portland has limited sprawl by focusing development in cities and older suburbs.

By contrast, the April 28 article focuses on the "how we grow" element of sprawl- that is, sprawl as automobile-dependent development regardless of its location. And the point of THAT article is that, even in cities and older suburbs, Portland has plenty of automobile-oriented development.

the nature of sprawl

Submitted by Zelda Bronstein on Tue, 05/20/2008 - 08:40.

Zelda Bronstein

Thanks, Michael Lewyn, for clarifying the different meanings of sprawl in the two articles.

As for my own use of the term: Nowhere did I "say that ALL new development is sprawl" or that "'high-density, vertical housing' is necessarily sprawl." Rather, I questioned the assumptions, implicit in the Chicago Tribune article, that all sprawl is "horizontal" or consists only of detached, single-family residences.

Michael: Do you think all transit-oriented urban development is desirable, regardless of how it relates to its immediate physical context--how tall or dense it is, or how it fits into the surrounding neighborhood?

Zelda, perhaps you are using

Submitted by wes on Fri, 05/23/2008 - 09:40.

Zelda, perhaps you are using the wrong word?
As Michael suggests, how I interpret "sprawl" are housing and business parks built far from an urban core. This is most likely going to be single-family detached homes because you aren't likely to see a 5-story multi-family building in this setting. The development will also be supported only by a singular transportation network.
I think what you want to talk about is high-density housing that doesn't match the "character" of a neighborhood? I can understand, if that's what you are talking about. However, I question the use of that as an argument against TOD and general increasing of densities closer to the urban core because I've heard it used for a neighborhood adjacent to the urban core (~30 minute walk from downtown) and where a light-rail station will soon be arriving. Maybe I have taken a tangent away from what you are talking about, but I just think that if developers are coming in with plans for mid-rise (or higher) multi-family TOD and you are interested in keeping the "character" of the neighborhood as single-family detached, perhaps you missed the transition of the neighborhood as often happens over time.
Forgive me if I misinterpreted your message.

Definition Of Sprawl

Submitted by Charles Siegel on Fri, 05/23/2008 - 10:25.

"Urban sprawl, also known as suburban sprawl, is the spreading of a city and its suburbs over rural land at the fringe of an urban area. Residents of sprawling neighborhoods tend to live in single-family homes and commute by automobile to work. Low population density is an indicator of sprawl."

That's how the article begins at http://en.wikipedia.org/wiki/Urban_sprawl.

And that has been the definition of urban sprawl ever since W.H. Whyte invented the term in 1958.

Charles Siegel