26 Feb 2005 Portland Home Prices: Higher Than Necessary?

An Oregon Congressman apparently is offended by National Center Policy Analyst Ryan Balis’ observation in the Washington Post that “smart growth” anti-sprawl policies in Portland, Oregon have tended to push housing costs higher.

The Congressman responds with his own letter to the Post:

In his Feb. 9 letter, “The Cost of Containing Sprawl,” Ryan Balis wrote: “Suppressing housing development as demand for it grows will cause prices to skyrocket. This is evident in Portland, Ore., long considered a model for ‘smart growth’ planning.”

According to the National Association of Realtors’ Web site, the median price for a single-family home in the Portland region in the third quarter of 2004 was $215,000. This compared favorably to the cost of homes in sprawling Denver, $241,800 (second-quarter data); Las Vegas, $283,200; and the Washington area, $362,400. Also, The Post has run several articles about skyrocketing housing prices in Northern Virginia, an area known for its lack of growth-management policies.

Sprawling onto unlimited supplies of land has never made housing affordable and never will. Portland’s housing remains relatively affordable in large part because its smart-growth policies have curbed sprawl onto farmland and made it easier to build more types of housing on less land inside the urban-growth boundary. The result is a more livable community — and less expensive housing. Indeed, Portland’s housing prices are substantially lower than those of every West Coast city from San Diego to Seattle.

EARL BLUMENAUER
U.S. Representative (D-Ore.)
Washington

Says Ryan:

Congressman Earl Blumenauer claimed the following: “Portland’s housing prices are substantially lower than those of every West Coast city from San Diego to Seattle.” However, a just released housing affordability study by the National Association of Home Builders placed at least three West Coast metro areas ahead of Portland for the 4th quarter of 2004: Salem, Oregon; Olympia, Washington and Eugene-Springfield, Oregon.

My two cents: The Congressman is mixing apples with oranges. Knowing that Denver’s home prices are higher than Portland’s tells us nothing about the impact of “smart growth” policies on Portland prices. Furthermore, the Congressman’s contention, for which he provides no support, that reducing the available supply of land for homebuilding reduces home prices violates the law of supply and demand.

We still contend: “Smart growth” policies tend to increase home prices, making homeownership more difficult for lower-income individuals and families. But we agree with the Congressman on one thing: When they do find a way to buy a home, the homes will probably be built on smaller lots.