Here in Portlandia/Oregon we hire a particularly dim breed of politician. The more they act, the more the results differ from desire, the more, and harder they act!

Yeah, boy, brilliant!

Watered-down housing deal may end up more symbolic than effective, observers say


So, what's up? "An effort by the Oregon Legislature to deal with what many believe is a housing-affordability crisis . . . " Be still my heart. Endeavors like this in Oregon always end with the politicians riding Unicorns, and claiming success. "'I really commend the Legislature for trying to take all this on," said Jim Long, affordable housing manager with the city of Bend." Housing affordability manager? Umm, no! Housing Unaffordability Manager, maybe. But let's grab our Unicorn manure shovels and delve deeper into the Unicorn stable.


The plan is to bring up four bills, in an all or none proposition, and the pols have already rewritten them from the original lobbyists wish list to make them into better bills, you know four politician wish lists!


The Bills


"House Bill 4143 would ban rent increases during a month-to-month tenant's first year and also require landlords to give 90-day warnings when looking to raise rents after the first year . . . Senate Bill 1533, would lift Oregon's statewide ban on "mandatory inclusionary zoning," or local-level requirements that a certain percentage of new housing development is affordable for lower-income residents . . . would also let cities and counties impose construction-excise taxes – 1 percent of a residential building permit's valuation – to fund affordable housing initiatives . . .  House Bill 4079 and Senate Bill 1573, are relatively minor in scope. HB 4079 would create a pilot program under which two cities outside Portland's tai-county area – one whose population is less than 25,000 and one with more than 25,000 people – would expand their urban growth boundaries for affordable housing . . .  House Bill 4079 and Senate Bill 1573, are relatively minor in scope. HB 4079 would create a pilot program under which two cities outside Portland's tri-county area – one whose population is less than 25,000 and one with more than 25,000 people – would expand their urban growth boundaries for affordable housing."


These prescriptions are exactly the opposite of what is needed to make housing affordable, and will make housing at every level, multi-family, single family, regardless of density less affordable.


Thomas Sowell Brains the Smart Growth Fabulists, and Wendell Cox piles on!


"'Soaring" land and house prices "certainly represent the biggest single failure" of smart growth, which has contributed to an increase in prices that is unprecedented in history. This  finding could well have been from our new The Housing Crash and Smart Growth, but this observation was made by one of the world's leading urbanologists, Sir Peter Hall, in a classic work 40 years ago."


Well, they may have know this somewhere 40 years ago, but not in Portlandia/Oregon. Here we hold tight to our Unicorns, lest someone else get a ride. 


"Whether coming from the left or right, economists have demonstrated that prices tend to rise when supply is restricted, all things being equal." Well, yes, it is an axiom. "Dr. Arthur Grimes, Chairman of the Board of New Zealand's central bank (the Reserve Bank of New Zealand), found the differential on either side of Auckland's urban growth boundary at 10 times . . . " Yeah, but that's New Zealand. Oh, I really should finish the last quote, so here goes ". . . while we found an 11 times difference in Portland across the urban growth boundary." Dude? Portlandia? Really? Mon Dieu! 


So much for the politicians wanting affordable housing, they want affordable political jobs, for themselves, with ample space for graft and corruption, and a nice post government job with a high paying firm which they spent their political career feeding. 


Back to the original article. 


"Joe Cortright, principal economist at the consulting firm Impresa who runs the think tank City Observatory, called the policy "pretty inefficient." He said it would likely have a chilling effect on new supply, creating uncertainty among developers at a time when cities need to add housing.


The policy might create a handful of affordable units, Cortright said, but developers would likely make up their profits by increasing market-rate rents, hurting the rest of the tenant pool."


How exactly will raising the rent on everyone else make housing more affordable? It will certainly cause more people to fall into the unaffordable category. It seems a bit counter productive to impose a solution which makes the problem bigger. 


"[Cortright] pointed to cities like Washington, D.C., where mandatory inclusionary zoning produced only 80 affordable units between 2006 and 2014, according to a 2015 report on the policy. In Denver, inclusionary zoning created only 77 affordable units between 2002 and 2014."


So, these mandatory inclusionary zoning rules produce virtually no new affordable housing units, but they do produce more people who now cannot afford housing, brilliant. 


Cortright goes on to answer the question as to why the pols like these policies, they "'don't have to raise taxes . . . can shift costs onto developers... and there will be something demonstrable that [he] can point to."


University of Oregon economist Tim Duy agreed: "Making it less affordable to build housing would not create more housing," he said."


Or more clearly, making it more costly to build houses does not create more, or cheaper housing.


The best planning would be no planning. Otherwise the cost of all of these "good ideas" slowly drives up the price of housing, making the difficult lives of the poor that much more precarious. But ultimately the urban growth boundary and all these other regulations are an attempt by the middle class to create a barrier to entry for the icky lower classes. The middle class also like the idea that the growth boundary locks in supply, and any growth in demand will quickly drive the price of their home upwards. California is the classic housing price inflation story. Millions of average people in average homes became millionaires simple because the price of their home went from $30,000 in 1969 to 1.4 million today. 


But California is also a deeply cautionary tale, of a thin veneer of extremely high priced homes along the coast framing mostly abject poverty inland. The drive from Monterrey to Salinas is only a few miles but it represents a trek from fantastic wealth to abject poverty. But we all know that the San Francisco bay area has no more developable land, so why even think about this problem. Except this is false. The area has copious amounts of land. The bay area comprises 4.4 million square acres, of which only about 700,000 are developed, 61% residential, and 42% non-residential.


San Francisco Bay Area Development


Of the 4.4 million acres, 75% is permanently protected, and only 16% is developed, apparently there are about 322,000 acres still in question. 


Bay Area open space: 75 percent is being protected, but 300,000 acres are still at risk


At risk? With 75% of the land protected they still claim a few pesky acres around the edges to be "at risk?" Wow. Obviously, San Francisco bay area is not land bound, 75% of the land is wild. But it is regulation bound, and this is the driver behind the huge costs of San Francisco housing. Once a urban growth or urban services boundary becomes law, the quickly rising house prices nearly guarantee this bad law will remain on the books. No home owner will voluntarily agree to a reduction in his home price from $1.4 million to $400,000, and any reasonable relaxation of the San Francisco bay area land use laws would result in such a reduction. 


Since anything which cannot go on forever will eventually stop, so this will eventually come to an end. The only question is how, when, and at what cost. 


The morale for any place not yet destroyed by these policies, avoid them at all costs.