For many years, Salem — Oregon’s capital — was a sleepy, slow-growing town. The legislature met in the capitol building (designed, some say, to look like a tree stump) only six months every two years. So the city did not attract a lot of the high-powered lobbyists that you find in Washington, Sacramento, or other capitals with full-time legislatures.
Oregon’s capitol building in the state capital of Salem; photo from salemoregon.com.
When Portland housing prices started climbing in the early 1990s, Salem — located just 45 miles away — was one of the relief valves for people needing affordable housing, the other being Vancouver, Washington. Vancouver remains affordable, but now Salem is rapidly losing its affordability.
Between 1990 and 2000, Salem overtook Eugene as the state’s second-largest city by growing at 2.4 percent per year (compared with 2.0 percent for Eugene). This rapid growth is due mostly to Portland workers looking for affordable homes. Like every other city in Oregon, Salem has an urban-growth boundary, and this (despite claims to the contrary from planners who believe that nothing bad can come from their work) means higher land and housing prices.
Salem’s response is infill development, which in this case means that the city is freely allowing property owners and developers to subdivide lots in single-family neighborhoods into parcels as small as 4,000 square feet. Such partitions, say planners, “delay the need to expand the urban growth boundary,” as if such expansion was some terrible thing (which it is to Oregon planners).
Of course, partitions are bound to make neighbors upset. I don’t really have any sympathy for someone who wants to stop home construction on a vacant lot because they are used to using the lot as their own private park. But I can understand how people living in a neighborhood of nice homes on quarter-acre lots would be disturbed by someone subdividing their lot and putting up two or three “skinny houses” on the new parcels. Planners can pious talk about the value of mixed-income neighborhoods, but residents in many areas can justifiably say that such houses don’t fit in with the character of their streets.
Portland encourages developers to partition quarter-acre lots into four parcels. The existing home on this lot was torn down so they could build four of these “skinny houses.”
But even beyond this, the whole question of infill development is based on a series of myths that are demonstrably false.
- Myth: We can’t expand the urban-growth boundary because we are running out of farmland. Reality: A study commissioned by an Oregon smart-growth group found that eliminating growth boundaries and all other planning rules would lead to the development of only 1 percent more land in Oregon’s Willamette Valley in the next 50 years.
- Myth: The costs of sprawl are so great that infill is cheaper.Reality: The Costs of Sprawl 2000 found (using someone questionable techniques) that sprawl added $11,000 to the cost of a new suburban home. Meanwhile, my research has shown that Oregon’s land-use planning has added at least $60,000 to the cost of a Portland home and $23,000 to the cost of a Salem home (and that is every home, not just the new ones).
- Myth: Sprawl imposes higher urban-service costs on cities.
- Reality: At some point, when you increase densities, you have to completely replace the water, sewer, and other infrastructure to serve those higher densities, as is happening in the Portland neighborhood shown below. This costs far more than extending services for greenfield development on the urban fringe.
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When Oregon first began land-use planning in the early 1970s, I was acquainted with one of the state’s first members of the Land Conservation & Development Commission, which wrote the first rules requiring urban-growth boundaries. I asked him what happens when the boundaries fill up. “Then we breach the boundaries,” he said. At the time, I was naive enough to worry that this meant the state would eventually be paved over.
Of course, all urban areas in Oregon only cover 1.25 percent of the state. Without land-use planning, this might be 1.5 percent. Not a big deal for open space. But it is a big deal for homebuyers, because regular expansion of the boundaries could have kept housing prices affordable.
But drawing the boundaries gave people a sense of entitlement. In the late 1980s, 1000 Friends of Oregon joined with some city leaders (who wanted growth to take place in their cities instead of in some suburb or unincorporated area) to form a “zero-option committee” that opposed any expansion of the boundaries. While some modest expansions have taken place (most of them challenged by 1000 Friends), they have not been enough to meet the demand for housing.
Unaffordable housing plays into the hands of planners who think we should live in more compact cities. In 2005, Portland planners were elated to announce that the city’s urban-growth boundary — which they claim has not made housing unaffordable — has driven up land prices to the point that developers, without any subsidies, will buy suburban homes, tear them down, and replace them with skinny houses, row houses, or some other denser form of housing (see October 20, 2005 Oregonian, no longer on line).
That is not something to be happy about. It is something to be ashamed of. Infill can play a role in urban growth, but when it is motivated by artificially high land prices, it is more likely to be destructive than constructive.
Here it is:
“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.
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.” http://tinyurl.com/32uws9
JK: Another planner without a clue to the real world.
I also stumbled on this one (clear cut inside the UGB to save trees outside):
As homes rise and leafy canopies disappear, some residents are concerned that Lake Oswego is too easily letting trees be felled, and they want more public involvement. http://tinyurl.com/3xoyln
Thanks
JK
When Portland housing prices started climbing in the early 1990s, Salem  located just 45 miles away  was one of the relief valves for people needing affordable housing, the other being Vancouver, Washington. Vancouver remains affordable, but now Salem is rapidly losing its affordability.
Vancouver has an urban growth boundary and plans under the WA Growth Management Act.
How can Vancouver be affordable under this scheme, Randal, and Salem not? Don’t UGBs make housing unaffordable?
Are you saying that being stuck in your car for 90 minutes a day makes it less affordable? [and, say, what’s the median home price of Salem vs Vancouver and what’s the household income?]
DS
Check you numbers. Vancouver used to be affordable but, since they are doing “growth management” and planning it is no longer much less expensive than Portland and the Oregon suburbs.
“This rapid growth is due mostly to Portland workers looking for affordable homes.â€Â
I question this statement. Could be true, but as you’ve probably guessed, I am not going to take your word for it. I’m assuming you have information to back up the claim that you can point me to. (IE. Total number of people who moved from portland vs. those who moved from elsewhere).
â€Âsuch houses don’t fit in with the character of their streetsâ€Â
Do suburban homes fit the character of farmland they are replacing? Is the character of a neighborhood static?
â€ÂWe can’t expand the urban-growth boundary because we are running out of farmland. “
Logical Fallacy: Strawman. The boundary is expandable, most planners see it as something expandable. It’s purpose isn’t intended to entirely stop the expansion of the city, it is intended to slow it and make it more compact. Running out of farmland? How about the amount of land available to farming is being reduced? I think that would be more accurate. Putting the two together (as well as ignoring other aims) to set up your strawman, beautiful.
â€ÂSprawl imposes higher urban-service costs on cities.â€Â
You don’t disprove this in your “Reality†section. You give an unbased statement that it costs more to update utilities in dense areas (as if this never needs to happen in suburbia) than to build totally new, yet there are no numbers, data, etc… Wouldn’t maintenance costs to update utilities (which I’m assuming will need to be done at some point, regardless of where it is) cost more the more there is to update?
â€Âareas in Oregon only cover 1.25 percent of the stateâ€Â
This of course ignores the quality of land, what the land can be used for, and how close it is to jobs and work. It also ignores how fragmented the remaining land is and to whether it can be used for recreation, whether it can be wilderness, used for farming, etc…
The claim, johng, is that Vancouver remains affordable.
I’m asking how this is possible if they have a UGB and a statewide growth management policy.
DS
But Vancouver has not remained affordable. They once were but then instituted a UGB and statewide growth management policy. The cost of houseing then began a metioric rise. Now Clark County is just as unaffordable as the rest of the area. Just look at these ratios:
3Q 2006 1yr Ago 5yrs Ago Average Dev. from Avg.
Percent Income 26 20 19 19 +36%
Mortgage/Rent 1.3 1.0 0.9 0.9 +44%
Price/Income 4.3 3.7 3.1 3.2 +34%
Price/Rent 258 226 162 187 +37%
These home affordability measures are for the entire Portland-Vancouver-Beaverton, OR-WA metropolitan area as determined by the percentage of income required to finance a single family home, the mortgage payment to rent ratio, the home price to income ratio and the home price to rent ratio are shown within.
The median sales price for homes in the Vancouver area as over 13% less than that of the Portland metro area in December 2000. By December 2005 the difference was only 3%.
Thank you johng. When I looked at similar numbers, I too wondered how Randal could use Van as an example.
Plus, I know a couple of the planners there, and their hard work at providing amenities that the community asked for has paid off.
Of course, when you supply amenities, amenity-seekers bid up rents to live in that area. It doesn’t hurt that PDX is nearby, either.
DS
Oh, I see. The Law of Suppy and Demand were repealed, I didn’t catch that in the paper.
It’s basic micro and urban economics.
DS
It has been a while since I got my Economics degree Dan but I think the supply and demand relationships are still pretty much the same. I also think the supply curve for housing is upward sloping.
Demand curves may be problematic to predict in the near-term, johng. Anyway,
Macro is too simplistic in its supply and demand predictions, and one must consider Tiebout sorting, agglomeration economies, rent-seeking, etc. This is why the discipline of urban economics broke off from micro, as urban complexities were not well-served by macro or micro. The choices people make, being humans, have complicated consequences, which urbecon tries to predict.
Urban economists are increasingly turning to things such as regional adjustment models or equilibrium models to identify choices made by folks in their movements [that movement which seeks x and ultimately turns into demand for x – x being amenities, schools, jobs, climate, etc] and the resultant efforts by localities to supply these things people seek.
An expression of this amenity seeking by descriptions of chance, germane to a general topic often found here, can be found in this recent article. One thing I’ll say is that the discussion in the article did not include Plantinga and Bernell 2005 [128 kb pdf], which discussed the tradeoffs folks make that turn into consequences, specifically obesity; some people, BTW, don’t like me bringing up results like what is found in the Plantinga and Bernell, which makes me an unpopular planner in some circles.
DS