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Q&A: Can inclusionary zoning keep low-car neighborhoods diverse?

Posted by Michael Andersen (News Editor) on November 19th, 2013 at 11:19 am

Vivian Satterfield of OPAL Environmental Justice Oregon and Justin Buri of Housing Land Advocates, two leaders in Oregon's campaign for inclusionary zoning.
(Photos by M.Andersen)

First, Northwest 23rd. Then Southeast Hawthorne. Then Northeast Alberta. Then North Williams.

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One after another, Portland's formerly affordable neighborhoods have seen the rising appeal of low-car life drive their mortgages and rents sky-high, at least by local standards. But what's to be done?

Vivian Satterfield and Justin Buri say they've got a city-level policy suggestion that can help. Their main problem is that in Oregon, it's banned by state law.

I sat down this month with the pair – Satterfield is associate director for OPAL Environmental Justice Oregon, Buri is a board member for Housing Land Advocates, and both get around largely by bicycle – to talk about a concept, inclusionary zoning, that might require all developers within certain areas to include lower-priced, income-restricted units in their new buildings.

The policy is being used in a few hundred U.S. cities, but it's entirely banned in two states: Texas and Oregon. Buri and Satterfield are part of a coalition that's working to end our state-level ban.

We asked them why.

BikePortland: Is income diversity something we should do because we want to help poor people, or is it something that helps everyone?

Vivian Satterfield: Concentrated poverty is bad for everybody in society, and those effects trickle thorugh no matter what. Mixed-income communities mean that we all have access to people of different work ethics, different backgrounds, different experiences. It makes having preconceived notions or discriminatory thoughts much more difficult. Concentrated poverty is where we see society's greatest ills.

"Teachers should be able to live in the same school districts where they teach. Your bank teller should be someone who lives a block from you. The person who bags your groceries should be someone you meet on the bus."
— Vivian Satterfield, inclusionary zoning advocate

Justin Buri: People tend to stay poor if they are surrounded by poverty.

VS: Teachers should be able to live in the same school districts where they teach. Your bank teller should be someone who lives a block from you. The person who bags your groceries should be someone you meet on the bus.

As the daughter of an immigrant: The American dream for immigrant families isn't necessarily to have a white picket fence and two kids. It's to do better than your parents. Inclusionary zoning is a good way to open that door and keep it propped open. That's why I care about it.

JB: As a 30-something white bicyclist with a beard, I don't want to live in a neighborhood where I look around and see everyone who looks exactly like me.

VS (gestures at her and Buri): Two sides of the same page.

BP: What's the connection to transportation?

VS: It gives folks more opportunities to be able to access transportation. If someone does have a car, it gives someone a chance to leave it at home. It allows transit-oriented developments to really be shared by folks of a whole spectrum of class and incomes.

"The market very rarely provides for integrated communities. And when it does, it's usually either because a market is gentrifiying or it's declining."
— Justin Buri

BP: OK, so that's why you think inclusionary zoning matters. How exactly would it work?

JB: In new, private-market developments, it sets aside a certain percentage of those as affordable to people of lower or middle incomes. It's usually somewhere between 10 and 20 percent.

BP: So if I'm a developer and I make a new unit crappy enough or small enough that people aren't willing to pay as much for it, does that count?

VS: Some policies have smaller units.

JB: There are over 400 different jurisdictions with some sort of inclusionary zoning policy in the United States, and no two are alike. The big distinction is that some are considered voluntary and others are considered mandatory. Both usually use incentives, which can include things like tax abatements, density bonuses.

Kidical Mass - August-25.jpg
Should biking be a luxury?
(Photo by J.Maus/BikePortland)

VS: Things to do with parking.

JB: Fast track permitting.

VS: Developer candy. Things they want.

JB: But the problem is that because in Portland we have a progressive planning ethos, we've eliminated some of those restrictions, so we don't have the tradeoffs any more. Which is good for a number of reasons, but it makes voluntary inclusionary zoning more difficult, because you have less goodies.

BP: If you assume that real estate is a perfect market, which of course it isn't, seems like the effect of this is going to be that other units in the building will rise slightly in price, so the other units stay cheap. Doesn't that just squeeze out the middle?

JB: Some jurisdictions want to target certain income levels, depending on what the need is.

VS: Inclusionary zoning really helps integrate moderate incomes. This is for folks who are just teetering on the edge. It can free up public funds to target housing for lower incomes.

JB: The market very rarely provides for integrated communities. And when it does, it's usually either because a market is gentrifiying or it's declining. Basically, the idea is when you put in a public investment like a new light rail or streetcar or a new park or even better lighting, better sidewalks, you want to ensure that those investments don't involuntarily displace the people who live there.

VS: Investment without displacement.

Source: Census Bureau.
(Graphic by BikePortland.)

BP: How much difference can this policy possibly make? Such a tiny share of the city gets redeveloped each year, and those are the only units that'd be affected, right?

JB: The most difficult part of this is that there are very few immediate impacts that people can actually see. It is long-term planning – what are the impacts going to be 20 or 30 years out?

BP: If BikePortland readers like this idea, what should they do?

VS: They should talk to their family and friends a little bit more about housing and why it's important. Being a Millennial myself, I don't see myself achieving the opportunity of owning my own home. How long can I stay in Portland as a renter before I get priced out?

JB: Talk to your legislators. Ask them if they are familiar with what inclusionary zoning is.

BP: You're saying people should look up their state legislator's name on the internet, call them up and say, "I don't know much about inclusionary zoning, but I'm worried about the end of income-diverse neighborhoods, and I read about it on BikePortland and it seems cool"?

JB: Aboslutely. You'd be surprised how far that goes. Legislators actually do want to hear what their constituents are thinking.

Qs & As edited for brevity. You can learn more about the details of inclusionary zoning policy in Oregon on the Housing Land Advocates' website.

— The Real Estate Beat is a weekly column. Read past installments here. We are looking for a sponsorship partner. If interested, please call Jonathan at (503) 706-8804.

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Comments
  • Peter W November 19, 2013 at 12:11 pm

    People with lower incomes are less likely to own and drive cars.

    If neighborhoods don't want cars on the street, and transportation advocates want more people biking, walking, and taking transit, inclusionary zoning seems like a great tool.

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  • dan November 19, 2013 at 12:20 pm

    "Mixed-income communities mean that we all have access to people of different work ethics..."

    Yikes.

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    • A.K. November 19, 2013 at 12:23 pm

      They just need to bootstrap harder, is all.

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    • Chris I November 19, 2013 at 12:27 pm

      I'm not sure what she means by that, but it can't be good.

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    • JV November 19, 2013 at 1:41 pm

      In the strict sense of the term, I think she has a point. For instance, it would be beneficial for me to have access to the people with low work ethics who make their money solely off investments and other people’s labor.

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  • Joseph E November 19, 2013 at 12:25 pm

    Housing costs are a free-market "problem". In the U.S., almost all housing is built and maintained by private developers and some individuals, on privately-owned land. Housing prices respond to demand to for housing (hence low prices in Detroit!) and supply of housing.

    In Portland, rents are going up because demand for housing is increasing (people want to live in inner Portland, and in the Metro area in genera), jobs and economic activity is increasing (some people can afford to spend more on housing).

    Supply is constrained: rental vacancies are very low - 3.3% - tied for lowest in the nation. The market should respond by building more housing, but only if this is legal and possible. New construction costs more due to strict building codes, regulations like parking requirements, and increasing costs for construction labor and materials. So most new buildings are going to aim for the high end of the market.

    Most importantly, zoning laws greatly limit the supply of housing. You can't just subdivide a house into 4 apartments, like they did back in the day, or build an apartment over your garage or in your back yard. You can't build an apartment building on ~90% of the land in the city (most is zoned for other things or single family homes), and if you can the height and size are limited. And even if you have the legal right to build, financing from banks is limited, and neighbors complain...

    Back in the late 1800's, every U.S. city build thousands of urban residential units at low cost, because there were few of these restrictions. In other countries with less regulation, like some parts of South America and Asia, you see tone of apartment tours and smaller townhouses built when there is demand. But here, even in Portland, it is still easiest to build a new subdivision out on the edge of Vancouver.

    Until supply is allowed to start catching up with demand, overall housing prices in Portland will keep rising. The only alteratives are 1) Increase supply or 2) reduce demand - and #2 is only possible thru a recession or lack of jobs in Portland.

    Inclusionary zoning will mean that a few lucky people will get affordable housing. But 99% of people will still pay the ever-rising market prices.

    The right solution? Make it easy and cheap to build lots of new housing all over the metro area, near existing (and future) jobs. Prices will still rise in inner Portland, but not as much, and some neighborhoods will stay cheap.

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    • spare_wheel November 19, 2013 at 1:08 pm

      housing costs are a non-free market problem.

      *realty associations have listing and sales monopolies (e.g. no redfin in OR)

      *appraisers, lenders, and processors function as anti-competitive cartels (NINJA loans etc.)

      *the mortgage interest tax deduction subsidizes housing to the tune of 70-80 billion dollars each year.

      *the capital gains exclusion subsidizes housing to the tune of 30-40 billion dollars each year.

      *FMCC, FNMA, FHA, FHLMA, VA, and USDA spend tens of billions each year directly subsidizing mortgages.

      *the Federal Reserve has bought $1.2 dollars in mortgage-based securities and agency debt.

      imo, these subsidies represent a truly tragic redistribution of wealth from renters to mortgage holders.

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      • davemess November 19, 2013 at 2:03 pm

        And without those things we would have SIGNIFICANTLY more renters, is that what you want?

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        • spare_wheel November 19, 2013 at 3:02 pm

          what is wrong with having more renters?

          PS: ~61% of germans and ~50% of the french rent.

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          • davemess November 19, 2013 at 4:03 pm

            Then you're putting property owners (and the money landlords generate) into an even smaller group of people.
            I highly doubt that is going to solve the redistribution of wealth.

            And I think most Portlanders would agree that renting in Portland kind of stinks right now (higher prices, rent increases, high occupancy, and low availability).

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            • eric November 20, 2013 at 9:35 am

              If "renting in portland kind of stinks right now," then that is exactly why it would be helpful to do away with restrictive zoning and allow a lot of apartments to be built in the more desirable areas. It's basic supply and demand: zoning limits supply, and demand makes prices go up. Allowing more development would bring prices down and make renting stink less.

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              • spare_wheel November 20, 2013 at 1:00 pm

                bingo.

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              • davemess November 20, 2013 at 2:32 pm

                And not take away anything that would result in more people renting instead of buying homes?
                That's what we were debating.

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      • Chris I November 19, 2013 at 2:22 pm

        Yes, nothing is a true free market, but the basic market forces are there. And yes, the government has horribly biased incentives in the housing market. I say this as a homeowner that took advantage of the $8,000 new home buyer tax credit a few years back.

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        • spare_wheel November 19, 2013 at 3:14 pm

          your understanding of a functioning free market differs greatly from what i recall learning in econ 101.

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          • Paul in the 'couve November 19, 2013 at 3:56 pm

            "Free Markets" in Econ 101 are theoretical constructs and are an idealized version of actual reality. However, the two main drivers of "Free Markets", supply and Demand, are generally the most significant drivers of prices in any market that isn't a "Fixed market" and are factors that can not be ignored even when a government or cartel tries to fix a market.

            Supply and Demand must be primary considerations in how we evaluate development, housing, construction and land use decisions. Same with transportation. Such things can simply not be ignored or waved away with wishful thinking.

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            • spare_wheel November 19, 2013 at 4:23 pm

              so we should still pay attention to "demand" when it's "fixed" or fraudulent? can i sell you a bridge, paul?

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              • Paul in the 'couve November 19, 2013 at 4:50 pm

                What? I can't make sense of your question.

                It isn't "we" it is the people fixing or attempting to fix a price that still need to pay attention to supply and demand.

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                • spare_wheel November 19, 2013 at 8:17 pm

                  demand inelasticity is *one* of the classical ways to model price fixing behavior (oligopoly). /not a popular idea among the rational expectations crowd.

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                • Paul in the 'couve November 19, 2013 at 9:20 pm

                  There isn't any need to specify particular theories of modelling. Theory is theory. The real world isn't theoretical and it isn't a model. Regardless, you can't ignore supply and demand. It doesn't matter what economic philosophy you subscribe to or if you prefer classical fixed demand. Demand must still be considered in the model.

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                • spare_wheel November 20, 2013 at 8:32 am

                  In the real world there are most definitely situations where reduction in competition results in inelastic demand. A classic example of this is the reluctance of airlines to raise prices when a single airlines does so and the tendency for airlines to immediately react to a price drop by a single airline:

                  http://ocw.mit.edu/courses/urban-studies-and-planning/11-203-microeconomics-fall-2010/readings/MIT11_203F10_oligopoly2.pdf

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                • Paul in the 'couve November 20, 2013 at 10:38 am

                  Spare_Wheel
                  Have we lost track of the real point?

                  You responded to Joseph E above points out that housing markets aren't perfectly free markets and your quip to Chris I u about "Econ 101" to which I responded I was taking to be basically the same point, that Housing markets don't function as ideal free markets.

                  My only point all along has been that even if markets are perfectly free Supply and Demand still function and even if the market was far more inflexible and rigged than it is, supply and demand would still be significant and can't be simply ignored.

                  Why do you think it so important that housing demand might be inelastic to a greater or lesser degree?

                  Do you disagree that in the portland metro area housing prices rise and fall (imperfectly) based on supply and demand?

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                • spare_wheel November 20, 2013 at 11:55 am

                  they respond to supply and demand but not according to the "basic market forces" taught in econ 101. i am also very much opposed to laissez-faire free markets when it comes to housing.

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            • Pete November 21, 2013 at 4:32 pm

              True in Keynesian academics - however with housing, supply and demand are no longer sole drivers... mortgage rates and tax deductions are. Back in the mid-90's real estate became less a vehicle for living and working and raising families and more a vehicle for safe retirement investments (hence development/popularity of vehicles like REITs and TICs). Developers no longer supply housing to meet non-discretionary demand like they did during the post-war baby boom... in fact many of those boomers took advantage of grown children moving out, changes in tax law allowing up to $500K in cap gains to go untaxed, and radically lower interest rates to use the gains from their first-home sales to move to lower-cost places (like Portland) and buy upscale or multiple properties. Housing is now the largest government lever for job stimulation, and as we saw in 2008 one of the most important tools for hiding its own debt. Take away deductions for interest, insurance, and property tax and you'd (eventually) see demand return as a driver (hint: I'd probably sell off a rental house or two, as would many others, so supply would first become the biggest hammer).

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        • davemess November 19, 2013 at 4:03 pm

          Chris, didn't you have to pay some of that back? I thought some it was structured as a loan.

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          • Chris I November 20, 2013 at 9:27 am

            That was the earlier program, which was more of a tax credit loan. As the market continued to tank they came out with a $8k credit for new home buyers that did not require repayment.

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      • Joseph E November 19, 2013 at 5:19 pm

        I agree with you that the price of housing is heavily distorted by government subsidize and regulation. But these still work in the supply/demand equation: subsidizes for homeownership and low property taxes for long-time owners increase demand for residential real estate. Regulations that discourage renting and make it hard to build rentals are limiting supply. I would recommend changing the regulations, like zoning, which limit supply of rentals. I also support getting rid of the subsidies for owners, but I think that is less important, if there were enough supply of rentals.

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        • spare_wheel November 19, 2013 at 7:09 pm

          And distortions of price information (via subsidies or fraud) distort supply and demand equilibria.

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      • Mark Wheeler November 19, 2013 at 5:56 pm

        Realty associations do not have any monopolies. That is absurd. Redfin is in Oregon, but I don't know what that false example was meant to show. Your comment about appraisers & lenders is untrue as well.

        Also, many landlords are hard working small business owners who are not getting wealthy through rental business.

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        • spare_wheel November 19, 2013 at 6:34 pm

          Listing services are opaque monopolies run by Realtors® for Realtors®. I believe this is akin to having the sell side at a Wall Street Bank run equity exchanges.

          As I am certain you are aware, Redfin was blocked from OR for many years due to a law that makes it illegal for a real estate licensee to rebate commissions to consumers. This anti-consumer law was specifically designed by Realtors® to insulate Realtors® from competition.

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      • Mike November 20, 2013 at 9:13 pm

        So, you don't believe in home ownership? I know my wife and I benefit from the mortgage tax deduction and we are by no means wealthy. I would rather be paying towards ownership than paying a landlord( who probable has a mortgage) so I don't understand your anger. A

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    • takeaspin22 November 20, 2013 at 9:05 am

      Joseph,

      I really appreciate your thoughtful comments on housing and hope you continue to post them on future stories. Thanks.

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    • spare_wheel November 20, 2013 at 10:11 am

      Increased single unit construction is not the only solution to constrained housing supply. Relaxing laws and zoning statutes that constrain the supply of multiunit housing can also increase supply. And since cheaper rents cause housing prices to decline this becomes a win-win for everyone (mean reversion of price-rent disparity).

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      • Paul in the 'couve November 20, 2013 at 10:42 am

        I agree with you this more or less. I am not sure how tight the correlation would be between lower rents and lower prices for single family homes. I suspect that would be a very long term phenomena (like 3 to 5 year range) and would depend on other aspects of the market. Is there research to support a strong linkage?

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  • davemess November 19, 2013 at 12:43 pm

    I'm curious where these folks live? One can buy a house in Portland (granted you have good credit) on an income of less than $30k/year (with a little savings).

    This somewhat strikes me as rationale for continued investment in already heavily invested in areas in the city. Shouldn't we maybe be focusing more on improving lower income areas (you could almost do the reverse and get high income folks to move in there, creating the desired diversity)?

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    • Cora Potter November 19, 2013 at 1:48 pm

      Dave - we need both. We need investment in (family sized) affordable housing in high opportunity areas (Alameda-Beaumont, Inner SE, Grant Park area etc.) and we need investment in complete communities in areas that lack access.

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    • Lillian November 19, 2013 at 3:28 pm

      Well, as a millennial with great credit, no debt, and good savings habits, I still earn less than half of $30K annually and I have four part-time jobs. That's just the way it goes, unfortunately, for many of us college grads born in the 1980s.

      ...I don't forsee being able to own a house anytime soon.

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    • Esther November 19, 2013 at 4:09 pm

      The median home price for a 1 bedroom home is $209,000 in Portland. ($300k is average, so let's not even get into single earner families) Sure, you could get a house cheaper -but it probably needs costly repairs or maintenance at the time that you buy it. And let's assume this is a home, not a condo with HOA fees.

      Current interest rate for a mortgage through Advantis Credit Union is 4.32%. for a 30 year fixed mortgage, the payment would be $836 monthly with 20% down. Assume she also has to pay around $50 for homeowner's insurance and $200 a month property taxes. ($2400 annual seems pretty reasonable/average for a small home in Mult Co)

      After taxes, this person probably makes ~ $1879 a month. To save 20% down + closing (around $45k) she would have had to save 20% of her income for the last 10 years (!) assuming she started out making 30k.
      $50+ for homeowner's insurance.

      After taxes, this person probably makes ~ $1879 a month. So that Insurance + mortgage + taxes ($1086) would be over 50% of her after-tax income.

      Please tell me how this market is affordable for the young earner again?

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      • davemess November 20, 2013 at 8:14 am

        Because she shouldn't be buying a $209k (and definitely not $300k) house. There are still livable, decent houses in outer SE and East Portland, many for under or nearing $100k. FHA loans also only require 3% down (with more discounts if you work in certain professions or are a veteran), which would only be $3000. This will likely roll any taxes and insurance into a payment nearing $900 or so per month. I think this close to doable, but would probably require some additional income from a renting roommate (because who wants to live in a 2-3 bedroom house alone anyways).
        So, even if a person rents out a room for $300, which is below or near market rate (even for worse neighborhoods), that leaves the payment at around $600, which is much less than they would be paying for a studio or 1 bedroom in a trendy neighborhood.

        So yes I think it's doable. I lived this entire scenario two years ago, and don't have to deal with the hassles of rent increases ever again.

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        • LILA November 20, 2013 at 8:34 pm

          If you pay less than 20% down, you end up paying significant mortgage insurance. Be sure to figure that into your monthly calculations.

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          • Brian November 21, 2013 at 8:18 am

            Neither of my loans (or any of my refi's) required insurance with 10% down.

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          • davemess November 21, 2013 at 1:51 pm

            I did (and do) and that would also be rolled into my ~$900 month figure.

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        • Dan V November 22, 2013 at 7:29 am

          And the supply of $100K homes is vaporizing as they get turned into lot-filling McMansions out in East Portland. And THOSE are NOT going for $100K...

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      • Brian November 20, 2013 at 10:04 am

        It's not, but it's not a requirement to live here either. As a teacher there are certain cities in the U.S. I cannot afford to live in. I chose Portland many years ago because it was the best city I could to afford to live comfortably, and had a full time job offer. I didn't move to a city that was beyond my means. If Portland was too expensive at the time, I would have stayed in the midwest and saved money to move to Portland at a later time since home ownership is important to me.
        I have bought two homes in Portland and put down 10% for both purchases.
        A friend of mine just bought a nice house in East Portland using a government program. Is it the same as living on SE 22nd and Lincoln? Of course not, but that is something he will probably be able to do eventually with some sweat equity and time in his current home.

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    • gutterbunnybikes November 19, 2013 at 5:02 pm

      And what you describe is the beginning phases of gentrification in Portland. Usually starts when an area is in distress, then the immigrants and young artistic types start moving in attracted by structures with good bones (which is why gentrification will have a hard time happening east of the 205- structurally the houses are inferior and lack the old Portland charm the west of 205 has) , and they have the patience and knowledge to DIY rehab the houses. As they start families in these houses the neighborhood schools get better as they open cool, hip cafes, restaurants, galleries and shops near by. This gets the attention of the middle class and the investors/developers at the same time. They both start buying up the properties and the neighborhood gentrification really gets going.

      I moved here in 92 and lived in NW when I first got here and as NW gentrified, I ended up moving to Alberta in 95/96 each time I was a renter one of the hip "art school drop out" types that often traded DIY improvements for rent breaks. And I moved from Alberta to SE once I got more economically sound.

      And this same pattern has existed before my time here with Sellwood, and the same pattern happened with Mississippi (when I lived off Alberta I had a good friend that lived on Miss and Shaver and we'd drink beer and watch "Cops" on the corner below her apartment or entertainment.)

      I still regret not buying the house on 7th and Sumner (just down the block from Santa's Dismiss and a couple blocks from the newly opened Alberta street cafe, where I often sat in a booth next to Police Chief Moose for breakfast) landlord offered to sell it to me for 18 k, I could have likely talked him down a few grand too, but I laughed and moved instead.

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      • davemess November 20, 2013 at 8:17 am

        I get that, but at the end of the day gentrification isn't only bad, it does improve many neighborhoods that were previously neglected. I agree there is not an easy solution and many things need to be considered and balanced, but making close in neighborhoods more livable isn't a complete lost cause (esp. when so many on here are constantly railing that people shouldn't live in suburbs and should live close in to where they work (which I agree with)).

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    • Greg November 24, 2013 at 4:43 pm

      The city of Portland disagrees - http://www.portlandoregon.gov/phb/62983

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  • TonyH November 19, 2013 at 1:55 pm

    I've lived in an area where housing became extremely expensive. Several developments were "forced" to include "low income housing". Sounded great! However: Affordability is very relative. A home that is "only" $250K is a comparative steal when the area's median home price is, say, $600K. However, the $250k is still out of reach for many people. Also, several communities had to quickly put in legal safeguards to prevent people from buying the newly built low income housing, and then flipping it for actual market value.

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    • was carless November 19, 2013 at 2:20 pm

      Affordable housing needs to be rental to prevent people from buying & flipping. Also, many poor people do not stay poor forever. Rather, many go through a "poor" phase in your life, and climb into a higher income bracket. Ie, every college student.

      Which is why, incidentally, subsidized housing typically bans college students.

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  • benschon November 19, 2013 at 2:04 pm

    That graphic seems wrong. News reports median rents in Portland around $950/month. Right? Or this, http://www.kiddermathews.com/downloads/research/apartment-market-research-portland-2013-2q.pdf

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    • Michael Andersen (News Editor) November 20, 2013 at 8:31 am

      Good catch. I think the numbers gathered by real estate companies are based on a top-down survey of rents in professionally managed buildings, while the Census is based on a general bottom-up survey of Portlanders' personal housing situations. Also, the Census is a median figure and the Kidder Matthews seems to be a mean.

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  • will p November 19, 2013 at 2:19 pm

    I just read ORS 197.309 and paragraph 2(a) appears to grant Oregon municipalities the leeway to implement land use regulation to achieve affordability, density, and other desired goals. The only restriction I could see was restriction of municipality to set sale price or designate class of purchaser of land or building unit.

    Is it HLA's position that municipalities must be granted authority to limit sales price or to restrict class of purchaser in order to achieve diversity goals?

    And perhaps rhetorically, am I the only one that sees a problem with allowing the city to have that type of discretion over real estate sales?

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  • Hart Noecker November 19, 2013 at 3:26 pm

    Gentrification is not some unforeseen byproduct of increasing density or improving the livability of our streets. Cycles of divestment and gentrification are intentional, deliberate schemes formulated to generate the most profit possible for banks, developers, and private investors. The recipe is simple: build something new and rent it at top dollar, let people move in, let the neighborhood fall into ruin over the course of a generation or two, then cite ‘safety’, ‘crime’, ‘delapidation’ as reasons for radical redevelopment once the property value tanks, raze it all and build brand new shiny buildings for current waves of residents after you’ve priced out the existing community. Now jack the rent back up higher then ever, success! This is the way city hall and its real estate accomplices view neighborhoods – not as places to live, but as places to profit.

    http://rebelmetropolis.org/rebels-resisters-and-the-condominium-revolt/

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    • Nick Falbo November 19, 2013 at 4:24 pm

      Thankfully, most of Portland's gentrification is not the result of the "Raze it all" philosophy. Portland's gentrification along SE Hawthorne and NE Alberta was very infill focused. Yes, some houses were razed for condos, apartments and retail, but the vast majority of single family homes remain. Perhaps a more Portland specific approach was "renovate it all."

      Some could argue that preserving those single family homes rather than densifying them has only added to the increase in housing costs in those areas.

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  • gutterbunnybikes November 19, 2013 at 4:37 pm

    I don't see the problem as so much as a real estate or market problem. Mostly as a result of two problems.

    1) I see it more as a problem mostly with out of control college costs and the associated debt, and currently I wonder if (other than a very few specializations) if people are really any better economically with a college education than without one. The debt and interest payments for many occupations doesn't really put one over the top any anymore.

    2) And the lack wage increases that match or surpass the rate of inflation for the lower and middle classes for the least 40 years or so.

    The real estate prices aren't all that out of line when compared with inflation over the long haul.

    Though it will be interesting to see how it all plays out considering were at the beginning of the great urban rush. I can easily see it where many of the inner city parts of cities are for the rich, while the suburbs become the poorer parts of town as the infrastructure and cheap over priced suburban balloon framed houses start to fall apart.

    Though the automobile is largely responsible for less class diversity in our communities in the past, it might very well be public transit that keeps it that way. As the city cores once again become the place of choice for the well off and the old suburbs of cities become the "ghettos".

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  • Steve B November 19, 2013 at 5:59 pm

    These recent BikePortland Q&A's have been super informative. I'm thankful we have leaders like Vivian and Justin who are thinking about Portland's long term affordable housing strategy.

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  • Terry D November 19, 2013 at 10:50 pm

    The question is how to encourage smaller infill in the neighborhoods that is owner occupied, does not require parking minimums, and can for geared to those active transportation millenials that do not need or want a large house but want yard space. I am thinking an eco-home overlay that allows co-ops/condos of energy efficient small homes on R5-R1 zoning while keeping the current housing stock. We might be able to get the costs way down, but we need to think creatively.

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    • Martin November 20, 2013 at 9:26 am

      I'm surprised no-one has mentioned Accessory Dwelling Units. They allow an owner of a house to build a second small home on their lot. Many of the permit fees are waived and the city is very supportive of these. This allows increased housing density and usually a low cost living space which can be rented. I would support an expansion of that program which allows 2 or three units to be built on a lot. Go on the ADU tour at pedalpalooza next year and see many examples already built.

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  • Dave November 20, 2013 at 7:43 am

    Answer two questions for me: What could be wrong with hyper-taxing the profits from short term "flipping" of properties which really does directly drive housing costs up, and how does this fairy tale fantasy called the "free market" prevent the terrible energy-extravagent cycle of people moving farther and farther away from their work to afford housing thus forcing long car commutes. Seems to me that capitalism and property rights are direct causes of climate change by this.

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    • Alex Reed November 20, 2013 at 8:07 am

      There is a case to be made for heavily taxing purely speculative flipping (buying a house as an "investment," doing no work to it, and then re-selling it for --flipper hopes -- more in a year or two). Taxes narrowly targeted at this behavior could help keep bubbles from heating up.

      But, you have to be careful not to tax productive flipping out of existence at the same time. For example, buying a fixer-upper and turning it into a "move-in ready" house, then selling that house, is what I would call productive flipping. This is helpful for some other people who want to buy a house but don't want a fixer-upper. It adds inherent value to a property and is not dependent on constantly rising real estate prices.

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      • Chris I November 20, 2013 at 9:39 am

        Perhaps a graduated scale, where any gains from the sale of property within the first year is taxed as a capital gain (15%). This rate would lower to 10% the next year, 5% the next, and 0% after that. This would do a lot to discourage speculative real estate purchases and flipping.

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  • Stretchy November 20, 2013 at 8:25 am

    "I want to live in a neighborhood that ... therefore other people should pay for me to live in a neighborhood that... "

    Here is an idea. If these folks so desperately want to live next to poor people, they should pay for it themselves.

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  • Lisa November 21, 2013 at 11:24 am

    "People tend to stay poor if they are surrounded by poverty." This is very much disputed in the literature.

    Sticking poor people in the midst of riches does doesn't alleviate poverty if social, political, and economic power are stacked against folks. And in a city like Portland that still hasn't dealt with its history and legacy of racial disparity, it's not likely to do anything good. Living in master's house never made anyone master.

    Or we could try an experiment. We could make people from the trailer park on K-worth and people in McMansions in the hills to do home swaps. Maybe for a year? And then see whether it helped the communities involved.

    I wonder if people newly located in their trailers would run to put their kids in private schools, double up on car alarms, get bigger dogs, be more kind, etc.

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    • davemess November 21, 2013 at 1:54 pm

      "And in a city like Portland that still hasn't dealt with its history and legacy of racial disparity, it's not likely to do anything good."

      Lisa, doesn't that kind of assume that poorer people are all non-white. I definitely don't think that's the case in Portland.

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    • Mossby Pomegranate November 21, 2013 at 7:34 pm

      Wow nice generalization. Only poor people are kind?

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  • Jay November 22, 2013 at 9:21 pm

    Inclusionary zoning is a bad idea in Oregon. The land use planning system already provides answers. There is significant development capacity in the City of Portland, where rents are highest. And zoning already allows for apartments in just about every neighborhood. Little to no parking requirements allow for more affordable housing, as do the higher densities, which allow for more affordable construction. Newer construction is never going to be as cheap as older buildings, but increasing the housing supply is one way to keep rents from exploding. Not being able to afford the neighborhood you want to live in means that you might want to consider another neighborhood. Problem solved.

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