Urban-Growth Boundaries and Housing Affordability

Lessons from Portland

Executive Summary

Urban-growth boundaries are emerging as one of the most popular growth-management tools in the fight against suburbanization. More than 100 cities and counties have adopted them, and statewide mandates for growth boundaries exist in Oregon, Washington, and Tennessee.

Urban-growth boundaries, however, have potentially large, if unintended, negative impacts on housing. The burden of these impacts will most likely be felt by low-, moderate-, and middle-income households since their housing choices will be the most severely constrained.

  • Housing production fell by 74.2 percent when strict growth controls in Napa County, California were implemented, creating an effective countywide urbangrowth boundary; and
  • Housing prices soared in rural parts of the county as demand outstripped supply, increasing the price “premium” for rural housing from 16.3 percent in 1985 to 84.8 percent over the county average in 1997.

Similar impacts were found in Portland, Oregon where a regional-growth boundary hems in 24 cities and three counties. A review of research and housing data found:

  • Portland now ranks among the 10 percent least affordable housing markets in the nation;
  • The average housing density has increased from five homes per acre to eight homes per acre while multifamily housing units makeup about half of all new building permits;
  • Even with these increases in density, the Portland area is expected to have a housing deficit of almost 9,000 housing units by 2040;
  • High rates of infill and redevelopment were associated with low overall levels of housing production; and
  • More than 80,000 single-family homes became “unaffordable” to Portland residents as a result of housing-price inflation.

Several lessons were gleaned from Napa County and Portland’s experience with growth boundaries:

  • Growth boundaries contribute to higher housing costs, although the magnitude is uncertain. Metro, Portland’s regional-planning agency, could alleviate housing costs by releasing more low-cost vacant land for development but chooses not to;
  • Growth boundaries encourage consumers to buy larger homes with fewer openspace amenities such as private yards;
  • Growth boundaries create new specialinterest groups that will oppose growthboundary expansion, including high-income hobby farmers who want to protect their rural lifestyle;
  • Recalls of local officials and the defeat of new funding for the regional-rail system suggests that public support for urbangrowth boundaries in Portland may be weakening; and
  • Higher housing prices are contributing to concerns by low- and moderate-income households that the growth boundary works against their interests, weakening overall support for regional-growth management.

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