Does the Urban Growth Boundary Mean A Less Volatile Housing Market?

I was just looking for something to write a post about this afternoon when an email came in a Portland Architecture reader named Keegan regarding the local and national housing markets.

While home sales have admittedly slowed here as part of a nationwide trend, the Portland metro area housing market isn't doing as badly as most elsewhere. Keegan wonders if this is possibly a reason to "really trumpet the Urban Growth Boundary and the fact that it helps control us from over-supplying too many housing units."

"I believe one of the tragedies in the built environment is the abandonment of so many central cities with their stock of beautiful, historic houses, all while excess housing stock is built on the edges (i.e. Detroit). Portland instead focuses inward as best as possible, and perhaps now some benefits can be seen."

There are others out there who know more about this stuff than I do. However, my feeling is that while there probably is at least a loose correlation there, I'm not sure we could ever really prove it. The evidence is anecdotal. I know the Urban Growth Boundary drives prices upward in general, regardless of economic figures' natural ebb and flow. Look at the nation's most expensive real estate market: Manhattan. It's a very finite piece of land - a skinny island.

The fact that Portland also seems to increasingly be an emblem to the rest of the country of healthy living--weekend mountaineer/kayaker/cyclist, weekday pedestrian/cyclist--also can't help but affect the perception of the land here and its corresponding value. In most ways, we have more or less the same problems as any city: crime, traffic, etc. But at least here the system feels a little bit more sustainable, not even just in the sense of ecology but also in not being as susceptible to collapse should peak-oil or other economic threats come true.

It's also important that we have the right balance in the conversation. It doesn't serve us well to just pat ourselves on the back. I probably do too much of that already. When you look at dangers like Measure 37's land-use holocaust and Bill Sizemore's ballot initiatives assaulting the government's ability to raise sufficient funds for things like schools, police, libraries and social services, it's amazing there's as much back-patting as there is. Those are not architectural matters, but of course it's all related too.

To tie this back around to the original question about land use and real estate, does anyone know if any realtor organizations have taken a stand on Measure 37 or its proposed "fix" on this November's ballot, Measure 49? The local architecture community is throwing its support behind Measure 49, even the normally apolitical Architecture Foundation of Oregon. We could use local realtors to join the growing political consensus across all traditional boundaries (urban-rural, left-right) devoted to saving the state from strip malls.

Comments

[stan]

A couple of points:

I think Detroit isn't a very good comparison to Portland. Detroit and a lot of eastern cities have issues of white flight and general decline of employer base that Portland didn't have to deal with to the same extent. And Portland isn't a booming Sunbelt city where speculators/developers got greedy and assumed the gravy train would continue forever.

Second, I'm not sure the UGB(and companion policies) has actually limited the number of housing units built in the metro as much as shift where houses get built and what kind of houses are constructed. Without the UGB there would far more houses built in Washington County on larger lots, with less being built in Northern Clackamas. I also don't think you'd see as many revitalized close in Portland Neighborhoods, in the late 80's Portland had about 3000 vacant single family homes.

[Robert]

Great topic Brian.

Unfortunately there are so many factors in play that you can never isolate the affects of the UGB.

One item that skews the data is the fact that Portland is no LA, San Fran, or Seattle. It's not the most desirable major City on our coast, but it's most affordable (Read Palahniuk's "Fugitives and Refugees").

People who leave those high cost markets have no idea what normal home values are in the real world.

Once they sell their million dollar run-down bungalow in those markets, they will pay less, but still way too much, for a close in fixer-upper bungalow here in Portland, artificially inflating the values.

[Hawthorne]

While it's easy to say today that Portland doesn't have issues of white flight it isn't true to say that it didn't have these issues in the past.

It is also no longer true to say that Portland is the most affordable.

That being said, how can you not say that the UBG has something to do with this?

[gerry]

It's hard to imagine that the relentless demand for the vintage inner city (or the modern condos overlooking it) relates above all to the line, miles off, keeping subdivisions ten miles away instead of thirty. What constitutes "close in" desireability can evolve to include more and more neighborhoods east and north, but I doubt it will come to include Washington County anytime soon.

As far as the implication that a leveling off or decline in housing prices would signify market unhealth, I'd have to say that too many years of 15 or 20% increases in prices was unhealthy because it was so clearly amplified by excess speculation.

[ws]

The effects of the UGB or of not having one, are hard to calculate exactly, but some effects seem likely. For one, without UGB, new housing development probably wouldn't have been concentrated as densely as it has been with the UGB.

Developers would have been building in far flung places where land was cheapest or carried a high premium based on view for those that could pay. All the resulting developments would likely have demanded quality roads allowing them efficient to highways and urban centers. That costs lots of money, and many people forget that the federal government in future isn't going to be forking out road and highway money like it did in the nuclear paranoia era.

With big populations, it just logically has to be easier to create living centers that are more efficient with cost of living that is more manageable and stable when those living centers are located within a specified area where they can realistically be the focus of continuing efforts to refine and improve their functionality.

What Oregon does not seem to quite have yet, is a clearly conscious knowledge of what form living centers within the UGB should be and what the area as a whole should be evolving to. If housing market volatility is an issue, major uncertainties such as this aren't going to be of help in avoiding it.

[george]

there is always this:

http://www.brookings.edu/metro/pubs/20060810_landuse.htm

its just about the only thing out there that actually compares land use laws and real estate value.

conclusion: laws like UBG laws have a very modest effect on real estate values. something under 5%.

but then is portland more or less volatile? slightly different issue. i know some developers believe it keeps volatility down, and this encourages development to an extent (they are less afraid of losing their shirts, market is more predictable, etc).