Growth Limits Harming Affordable Housing Efforts in Oregon

Following up on yesterday’s post, another reality check on smart growth and housing affordability comes courtesy of The Register-Guard:

Soaring land prices and a shrinking supply of vacant property in Eugene and Springfield are straining nonprofit agencies that build low-income housing. Escalating real estate values coupled with constraints on growth in the metro area have made it far more difficult to find new sites for affordable housing projects, including apartment buildings, duplexes and single-family homes, the groups say. . . . . Some worry that people in lower income brackets are being squeezed out of Eugene as both rents and home prices escalate and no new land is added to the city’s urban growth boundary. “Eugene is very quickly on a path to becoming an unaffordable community. It’s gentrifying right before our eyes,” said Kent Jennings, owner of Jennings Development LLC of Eugene, which works with the nonprofit Metropolitan Affordable Housing Corp. No one wants sprawl, Jennings said, but limits on growth drive up affordable housing costs in several ways. Bare land is at a premium and often sells for more than nonprofit developers can pay. Some are turning to land with existing houses or other improvements that can be torn down, but that, too, costs more, he said. “If you start talking about four houses on two acres, each house has economic value,” Jennings said. “You have to overlay that value on top of the value of the land.”

So yet again, we see that the laws of supply and demand actually apply in the real world. And for those of us who like to have their cake and eat it too, the reality of trade-offs in life can be stark. But something in the Smart Growth Kool-Aid apparently brings about a state of denial on trade-offs; many advocates hold the paradoxical belief that you can simultaneously limit land supply and increase housing affordability. Here’s a good example:

Developers and builders are putting pressure on city leaders to start the process of expanding the city’s growth boundary under state land use planning rules. That would free up more land for all types of housing, at least for a while. But affordable housing advocates are wary of expanding the city’s edges too much at once. [Terry] McDonald of St. Vincent de Paul [Society of Lane County] said that, despite the limited supply of land in the metro area, he supports keeping the urban footprint tight. “Ironically I’m my own worst enemy on that. But it makes it possible to get people who have limited ability to move around to the services they need,” he said. “Urban sprawl doesn’t necessarily help us.”

Give McDonald credit for at least acknowledging the intellectual contradiction in his position; many in the smart growth movement see no such contradiction. But to recognize it and still continue to avert your eyes from reality is just whistling past the graveyard. For more on SG & housing affordability, see Reason’s Urban Growth and Land Use Policy resources.