Out of Control Policy Blog

Portland's Suburban 'Tipping Point'

According to Portland planners, the area's "tipping point" -- the point at which land value exceeds its improvement value -- has been achieved, thanks to the metro area's urban growth boundary. Rising suburban land values in turn spur the development of remaining underdeveloped parcels, as well as teardowns in existing neighborhoods and replacement with higher density developments. According to The Oregonian:

    [W]hat appears certain is that other underdeveloped parcels left inside the region's urban growth boundary will sooner than later tip the same way as prices for land and demand for new housing continue to rise.

    "There's a point where land value becomes so much greater than its improvement value," said Stephan Lashbrook, Lake Oswego's community development director. When the former exceeds the latter by enough, that's when its sale and redevelopment become almost a foregone conclusion, he said.

    Plans approved in 1997 by Metro, the regional government, envisioned this phenomenon, but in a general sense. Metro's so-called functional plan sets goals for each suburb regarding how many new housing units it should be prepared to accept.

As Randal O'Toole handily reminds us, Portland planners have been less than forthright about their intentions here: the plan "envisioned this phenomenon," even as planners continue to claim that the UGB doesn't increase land & housing prices. Got to give them credit for their skill at pulling the wool over the public's eyes.

Back to the article:

    The higher densities these new units will create may jam roads and increase supermarket lines, but they also promote efficiency in provision of municipal services, said Gerry Uba, Metro's project manager.

    "Instead of laying a pipe two miles to connect outlying subdivisions, higher densities allow us to dramatically reduce that distance," he said. "That has a tremendous impact on costs, which translates to what we pay for housing."

Exactly...smart growth's tremendous impact on costs and housing is to make them soar.

Randal also points out another glaring piece of the article -- a discussion with a broker whose claims that their new project of 1,200 sq. ft. townhouses priced between $279,000 and $310,000 "is perfect for first-time homebuyers." What?! Maybe if your household is pulling in over $100K per year, but how many first-time homebuyers fall into that category? Don't homes under $150K sound a bit more feasible for first-timers? Here in Houston, you can pick up a brand new single-family suburban home for under $150. Randal hits it right on when he points out that less land use regulation tends to equate with regional housing affordability. Too bad that Portland planners don't get this.

(Hat tip: American Dream Coalition blog)

Leonard Gilroy is Director of Government Reform


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