The housing committee of the Oregon House of Representatives voted unanimously Monday to back what would be the state’s strongest blow against economic segregation in at least 35 years.
Rep. Alissa Keny-Guyer, the committee chair who’s been battling cancer while assembling an already-historic raft of housing legislation, hurried back to the Capitol so she could join the 9-0 “yes” vote for House Bill 2001, which would legalize duplexes, triplexes, quads and cottages in all low-density zones of the state’s larger cities and counties.
To allow what it calls “middle housing,” HB 2001 would strike down local bans on these moderately priced housing options. Originally wrapped in an ideology of segregation and separation, the bans spread across Oregon and most of North America in the early to mid 1900s, becoming so common that many of us no longer notice the ways these bans continue to shape our lives.
But one of Keny-Guyer’s constituents, a Portlander named Patty Wentz, seems to have done quite a lot of thinking about this subject. On Saturday, she submitted the following letter to the committee in support of the bill.
It’s a perfect diorama of the choice faced by every well-off neighborhood in the thriving cities of the Pacific Northwest.
I’ve boldfaced a few sentences that knocked my own socks off. But read the whole thing.
I do not like the changes that have happened in my neighborhood.
When I moved into my home 18 years ago, I moved to a block filled with young families. It is hard to picture now, but there was a time when our neighborhood was affordable for working class people. Teachers for the Atkinson Elementary and Franklin High School could buy a home within walking distance to their classrooms. People who worked hard could afford to buy a reasonably priced home to raise their children. Back in the day, the street was alive with children playing and evening basketball games. Now, those children have grown up and moved away. New teachers in the school must commute long distances to get here because they cannot hope to live close by. The median home price in my neighborhood has skyrocketed to more than half a million dollars as wages have remained stagnant in the state. I imagine that few of the children raised on our block can ever hope to afford to buy a home for their own young families nearby, short of one of many sterile condos that have erupted on SE Division Street and SE Hawthorne. As a result, today my block is much quieter and less alive. It also remains one of the whitest neighborhoods in Portland, in a city that has already been dubbed the whitest city in America.
In our neighborhood, long time homeowners have benefited greatly from increased housing prices because we are sitting on the kind of home equity that most of us never imagined we would see. I understand the fears that creating more affordable housing mixed in with our single-family homes will somehow take something away from us and there is no denying that the last decade has already changed the city. But by being intentional we can start to broaden the number of people who are benefitting.
It is an illusion to believe that our neighborhoods and communities will always stay the way they were when we arrived and fighting against change is like fighting against the rain. All of us will profit if we look both to the past and the future to help guide that change. As last month’s EcoNorthwest report showed, Oregon leads the nation in homeless people living without shelter. That is a sad mark of distinction for which every single one of us must take responsibility. If we want to have vibrant and thriving communities, we must be open to both old and new ways of living on the limited land we have.
If we want to truly protect our quality of life in our neighborhoods and protect our property values, we can take steps to reduce the number of our neighbors who are sleeping in the doorways of our local businesses, or under our freeway overpasses. We can open the possibility for young families, people of color and seniors on a fixed income to join us on our beautiful tree-lined streets close to good schools within blocks of some of the most beautiful public parks in the country. We can start to address racially discriminatory policies that historically kept people of color out of our neighborhoods. Once again allowing a few new duplexes, tri-plexes and four-plexes on single lots on my block with HB 2001 will do more to help people than any charitable contribution I can make, any march or rally I go to or any volunteer activities I can do. While the changes will be slow-moving, they will be significant so we must act now to put ourselves on a different path where more people can afford to live in our communities.
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As a long-time homeowner in a now-affluent neighborhood, I can handle maybe not being able to park right in front of my house or waiting a few more beats to make a left-hand turn at an intersection because there are a few more cars on my street or more children in the crosswalks because it means that more people have access to the same overall quality of life that I enjoy.
Just as important to me, HB 2001 will restore some of the original character of my neighborhood. I have researched the history of my three-bedroom, one-bathroom home and learned that decades ago it was owned by a single-income blue collar family that raised six children here. I want to make it possible for these kinds of families to return.
I urge state lawmakers help restore my neighborhood to the way it used to be and vote yes on HB 2001.
Wentz, who works in state politics—among other things, she was a spokeswoman for the Stable Homes for Oregon Families campaign that united around Oregon’s milestone renter protection and anti-rent-gouging bill—said in a brief interview Tuesday that it was the first time she’d been moved to submit personal testimony on a bill in Salem.
“I’ve never done that before, actually,” Wentz said. “I just kept seeing people on Nextdoor calling for testimony against it, and decided to submit my own.”
The bill now advances to the Oregon legislature’s Joint Committee on Ways and Means.
Thanks to Holly Balcom for spotting Wentz’s comments.
Wonderful letter and sentiments.
“…fighting against change is like fighting against the rain.”
What a wonderfully Oregonian way to put it.
As Portland and my age has changed, I have modified my rain mitigation strategies through the years. As I now have a family and finally a house in a quiet and safe neighborhood, my strategies for change have evolved. We moved from a rental in highly dense Sabin to Beaumont-Wilshire. Less dense, the kids use the sidewalks (no cross parkers) , play basketball in the street (about 2 per long block on the 42nd-47th run) because everyone can see them. Why? Minimal cars on the street, no cut throughs and modest family houses fronting the street to watch the kids.
All the statistics say that the only structures that will be built are the ones that can attract quality tenants that will not need a legal team to remove.
We have a 10 unit apartment on our street which is owner occupied and is clearly an asset to our street, as we share our yard gladly with the children occupants.
Higher density, up zoning and missing middle are all strange bait words for housing social justice. Social engineering will not remove us from the “New Urban Crisis” nor will it change the economics of high paid talent flocking to City centers.
Affordable housing can only be successfully built where the decades long planning infrastructure has prepared the expansion with economic incentives to developers to risk their capital. Note that the “inclusionary housing rule” has brought new work to a stand still.
That said , I understand that a pluralistic society engaged in an urban setting is Portland’s way to innovation and not building an island.
For those of us who aren’t savvy with the legislature process, what happens now that the bill is in the Joint Committee on Ways and Means?
It awaits a committee vote there, and if it clears that committee goes to the House & Senate floors.
I wish Seattle took the same approach by allowing higher density (ADU, cottages, town homes) in ALL low density neighborhoods instead limiting it to Urban Villages essentially preserving economic redlining for wealthy neighborhoods.
“I have researched the history of my three-bedroom, one-bathroom home and learned that decades ago it was owned by a single-income blue collar family that raised six children here. I want to make it possible for these kinds of families to return.”
Guess what? Nothing being built will be able to accommodate a family of this size. Even if you were lucky enough to find a new 3 bedroom duplex/apartment/etc., it wouldn’t have a yard or space out front for the kids to play. This person believes they can get back to the 1980’s. She’s right, though, that wages have stagnated relative to housing price increases. This isn’t a housing problem, it’s a wages problem. And on a relative basis, you’re going to get a lot less for your money (i.e., price per sq. ft. is much much higher).
“I imagine that few of the children raised on our block can ever hope to afford to buy a home for their own young families nearby, short of one of many sterile condos that have erupted on SE Division Street and SE Hawthorne.”
This argument that this missing middle housing allows for more ownership opportunity is a joke. Few of the new things are condos, so most of what gets built that is not SFR is going to be rental property, mostly owned by large corporations or absentee landlords. We will have more renters who will largely have no opportunity for home ownership and building equity.
Lots of Portlanders definitely do have a wage problem, and we should be doing everything we can to fix that too. But housing price per square foot tracks *median* wages pretty well … and that’s bad, because what you really want is for stuff to stay the same price when your wages go up. Instead, because they correlate so closely to wages, housing prices per square foot have risen a lot faster in Portland than the prices for other goods.
Why is the price of housing behaving oddly? Various reasons, but I bet some of them have to do with the fact that we’ve never made it illegal for a store to sell more than a certain number of apples or sweatshirts.
A couple of your points seem to be based on the assumption that duplexes, triplexes, etc., will be rentals beneath a certain size because the homes in five-story apartment buildings are mostly rentals beneath a certain size. That’s an understandable assumption! But one thing I didn’t know myself, until learning more about this stuff, is that the economics are different for low-rise low-density stuff. Its costs are about 20% lower per square foot, and its max unit counts are lower, so it naturally lends itself to larger homes than a five-story apartment building. Also there’s just a lot more demand among larger households to live in a duplex, triplex, etc, than to live in an apartment building. As the parent of a two-year-old (and resident of an ADU) that makes sense to me.
So the family with 6 kids that the writer mentions grew up in a 3 bedroom home…what kind of middle housing do you see them living in that offers the same kind of quality of living? That house will get torn down and replaced with something larger overall, but that offers less to any of the two or three renters/families that move into it. I don’t have a problem so much with the fact that “middle housing” is being built, it’s that it is going to built where housing already exists. I see many empty lots around PDX and wonder why we don’t create huge incentives (or perhaps costs in the form of a usage tax, I think it’s called) to build there first. But instead, this legislation is a very blunt instrument designed to eventually replace SFR with much denser and, primarily, multi-family housing. Those that want SFR will at some point in the future need to look elsewhere in the City, or put further pressure on a UGB expansion.
Michael, you state: “Why is the price of housing behaving oddly? Various reasons, but I bet some of them have to do with the fact that we’ve never made it illegal for a store to sell more than a certain number of apples or sweatshirts.” It seems that answering this question should be a necessary pre-condition to making the sort of sweeping changes HB2001 proposes. We should just guess or “bet” about why things are happening. We should really study these issues and have more certainty about the outcomes, rather than just hoping for the best. I do not believe Kotek and the sponsors of this bill have done the leg work. They are trusting the “advice” and rhetoric of others who will profit handsomely from this. I’m not questioning Kotek’s sincerity in wanting to address the problem, but I am questioning her judgment in following the advice of groups with profit motive.
In the last legislative session, HB2007 (I think it was) before moving to SB1051 legalized ADUs almost anywhere. I have yet to see if and how this has helped and whether it achieved the outcomes it promised. I know ADUs alone won’t cut it, but my point is that I don’t believe this legislation is grounded in well-researched and proven approaches or in validating the outcomes once passed.
I think the general idea is that a lot of the older, larger homes are currently occupied by much smaller families, in part because so few high-quality smaller homes are available. Speaking only for myself, I can tell you that my wife, son and I might have wound up owning a freestanding home that was larger than we wanted if we hadn’t had the option to live in an ADU in our friends’ backyard instead.
46% of existing Portland homes (including apartments and condos!) have more than two bedrooms, but only 32% of Portland households have more than two people. We need to keep building some larger homes, but our main shortage is of smaller homes.
Specifically regarding whether “missing middle” would create three-bedroom homes like the author’s: Portland’s local duplex legalization proposal caps duplexes on a standard lot at 3,000 square feet, so 1,500 square feet per unit. That’s plenty of room for a three-bedroom home with a living room.
As I understand the logic underpinning this and similar initiatives, allowing developers to build multi-residential structures in neighborhoods previously zoned for single family occupancy will result in so-called “missing middle” and lower income housing. Simultaneously, these and similar initiatives will simultaneously be profitable enough to attract developers (and investors, bankers, real estate investment trusts and so on) to build them. Everybody will be happy!
Assuming that’s all correct, this legislation is perfectly consistent with standard Republican “trickle down economics”, albeit dressed up with groovy pseudo-progressive verbiage. Why? Because this plan – emotionally attractive as it is simplistic – ignores basic economics: Land prices are high because demand exceeds supply. That part of the investment cost is fixed at market rate. Rents (or leases or sales) are also set by market forces and no capitalist-minded investor will forgo profit, given the opportunity to make more money. Similarly, savvy investors won’t continue to invest if profits are falling.
Keeping the profit motive in mind, the insightful developer/investor will target the lowest price homes in the highest priced neighborhoods. Many of those who live in such homes and will be displaced when they’re sold are on fixed incomes, renters, and (likely as not), minorities. Where will they go? That’s not addressed by this and similar legislation. Once neighborhoods have been “infilled” in the metropolitan Portland area, it won’t be here.
According to Katherine Boyle (writing in “The Washington Post” on April 9), “A family of four making nearly $120,000 in San Francisco is now considered low-income by the Department of Housing and Urban Development. According to a recent report from rental website Zumper, the median market monthly rent for a one-bedroom here has hit an all-time high of $3,690 — nearly $45,000 a year…Meanwhile, if you’re looking to buy a single-family home, good luck: Although there are about 100,000 vacant homes in San Francisco and neighboring communities, many aren’t for sale; some have been bought, likely as an investment, and simply left empty. (It isn’t uncommon to find apartment buildings here that are one-fourth to one-half empty, an experience that is a little eerie, not to mention inefficient.) Those with the means to buy a home in these parts will find it challenging to lock one down, and the most-discussed topic among young people is: Will I ever be able to afford the apartment I am renting?”
A study by Freeman (at MIT) was published about a month ago. He studied the effects on rental prices resulting from building multi-occupancy buildings in Chicago. That study yielded discouraging results: rents remained high and the targeted demographic didn’t enjoy the hoped for benefits.
What’s to prevent the same phenomenon from developing in Portland? Certainly, the expectation that letting builders, REITs, realtors, bankers and so on build ad lib based on the premise that benefits will rain down on the rest of us seems a bit naive (at best). More likely, this is pure Paul Ryan. Given the recent reports by R. Davis in “The Oregonian” (clearly demonstrating that corporate financial donations to legislators in our state are per capita the highest in the country), I’d put my bets on that explanation. Follow the money, as the adage goes.
A couple of issues with your reactionary screed.
1, the supply of land may be fixed, and therefore its price high, but the supply of homes need not be coupled to that. Because you see, if you can build multiple homes where you could previously only build one, the high cost of land is split between the multiple homes. Recently, we humans have acquired the ability to create structures that have multiple floors. Perhaps that is something that could be explored.
2, regarding the idea that developers will naturally target the cheapest neighborhoods. A study of the projected effects of SB50, a bill in California that would legalize housing near transit, showed that the majority of the new housing construction would occur in wealthier neighborhoods with better amenities and access to opportunity. So-called “rent gap theory” is pure poppycock.
3, vacancy rates are often overcounted, as often they include homes that are in the process of being bought/sold/rented. Furthermore, your speculation that most new apartment buildings are mostly empty is just that, speculation. This should not include new buildings that just opened and are in the process of leasing up. All apartment buildings are 100% empty when they open. I suspect you don’t actually have any idea what you’re talking about.
4, that’s a pathetic misreading of Freemark’s study. It studied a limited rezoning in one neighborhood, and noted that nothing new was actually built during the limited study period. This in a city notorious for aldermanic corruption with regard to construction. Yonah Freemark himself makes it very clear what his study does and does not say.
5, regarding your addendum, an empty apartment doesn’t make any money for investors. It’s absurd to suggest that prices have no connection to demand.
I look forward to the passage of housing legalization throughout Cascadia as a big repudiation of people like you.
Here’s Freemark’s follow-up comment regarding his widely circulated study from Chicago:
“The study absolutely does not find that increasing an area’s housing-unit count reduces affordability.”
His work didn’t focus on just one neighborhood, but it is definitely compromised by the fact that an alderman in Chicago has de facto veto power over new developments regardless of initial zoning, and also by the fact that it was just a five-year window he looked at.
Thanks for your response. However, Freeman reached two primary conclusions in the addition to his original piece:
1). “I identified two primary conclusions about the effects of the zoning changes. First of all, I found no perceptible uptick in new housing-unit permitting in the upzoned areas compared to the unaffected areas over five years…But my study shows that the zoning reform itself did not induce a specific increase in construction compared to other neighborhoods.”
2). “Second, I found an increase in property values in upzoned areas roughly equivalent to the increase in allowed density. This finding extended to existing residential units in some of the models I used, indicating that the cost of living in certain neighborhoods actually increased in the period I examined.”
Freeman concluded: “Together, these two findings paint an interesting picture: In the first few years following an upzoning, construction may not immediately increase but the cost of property will.”
That brings me back to the original issue: the simplistic, panacea solution of “more construction = lower costs” is specious because (as Freeman also notes) market forces still obtain. This, of course, will result in higher acquisition costs for any developer and thus higher rent costs to the eventual renter. So much for greater affordability. As I recall, this last point was candidly conceded by the Oregon commissioned Johnson study, correct?
Also overlooked by this (and relevant Oregon legislation) are the demands on existing infrastructure (roads, sewers, power, schools, etc.) which – if optimistic projections obtain – will exceed capacity. Costs for necessary enhancements are passed to taxpayers. Any comprehensive solution must include these “ancillary” costs, none of which are borne by the developer(s).
Finally, having read and re-read both Freeman’s original article and his recent addition, I cannot understand your comments, “it is definitely compromised by the fact that an alderman in Chicago has de facto veto power over new developments regardless of initial zoning, and also by the fact that it was just a five-year window he looked at.” First, the alderman veto is simultaneously true in certain instances and is also true absolutely: any legislators or regulators can veto construction in any city. This is a red herring argument, especially as no instances of such interference were documented. Second, the “five year” qualification is implicit in the study: the program doesn’t have longer follow-up because it hasn’t been around that long.
Let’s not overlook what’s important: any sound plan must simultaneously address immediate, intermediate and long-term needs. At least for the 5 year timeline – simple rezoning doesn’t seem to help renters. What the proposed Oregon legislation does appear to address though are the desires of dubious profit-making enterprises and – if the “creative” financial instruments that yielded the 2008 crash are similar to today’s real estate CLOs (they are essentially identical), the economy will likely tank once again.
You’re not correct – Portland’s city council, and the vast majority of city councils, don’t have aldermanic privilege. Some of them use spot zoning to make particular projects possible, but in the overwhelming majority of cities, a project that’s legal on the zoning map gets to happen and the council would get sued, and usually lose, if it tried to intervene.
As for five years, you’re right, he did the best he could for this program. I’m not saying it was a bad study, just a limited one.
Higher land costs for a developer don’t manifest as higher rents, they manifest as the project not happening in the first place because rents (set by the housing market) won’t deliver enough of a profit margin after that higher expense. The one and only odd thing Freeman found was that sale prices (not rents, just sale prices) go up for developable parcels, and nearby parcels, even without development taking place within a few years. That’s odd! I’m saying it’s not exactly an earth-shaking finding given the five-year horizon and the local context in Chicago.
It’s entirely true that upzoning doesn’t always lead to more homes! Sightline has made this point many times. The financing has to work, too. But more homes are good, and if we need more homes (or expect to need them in the future) it doesn’t make sense for zoning to be the limiting factor.
As for your infrastructure point: more homes on the suburban fringe will have greater infrastructure costs. The only way we save money on infrastructure is by not having anyone move to the area.
As a coda to my comment, I’ll add the following consideration:
One explanation for the phenomenon of the explosion in apartment construction in spite of partially rented buildings throughout these cities might be that the demand is not renter driven but instead simply feeds the new rental bundled securities that banks are creating which are then immediately sold to pension funds, money market funds and individual investors. A house of cards but as Jamie Dimon (JPMorganChase CEO) said, the banks won’t be left holding the bag. It certainly explains to me why construction continues at break-neck speed in PDX but with vacancies advertised everywhere in already existing buildings. The market for these apartments isn’t renter demand for $1800 apartments but rather the demand of an artificial financial creation.