The Business Tribune (Portland) reported that increasing housing costs are caused by a housing shortage. Meanwhile, local government agencies are spending millions on homeless services. Is there another way to tackle this problem? 

Read on…

Business Tribune – Report: Housing costs stifle economic optimism 

Jim Redden
Sunday, February 23, 2020

Excerpts:

Middle-class concerned as wages stagnate, Portland Business Alliance-commissioned poll also finds 

A decade after the end of the Great Recession, the regional economy is booming, with rising wages and record-low unemployment. And yet, one in four voters in the region say they are worse off now than two years ago, according to a recent poll. How can that be? 

A large part of the answer is increasing housing costs caused by an ongoing shortage of homes, according to economist John Tapogna, founder of the Portland-based ECONorthwest consulting firm. According to Tapogna, the region needed 103,000 new housing units built over the past decade to keep pace with population growth. But only 79,500 were built, with just 2,500 more expected to be completed by 2022.

“The result is upward pressure on housing costs, creating an affordable housing crisis and contributing to increasing homelessness,” Tapogna said. 

As a result, 46% of all renter households in the region are now cost-burdened, which means they are paying more than 30% of their monthly income on rent. The same is true for 25% of owner-occupied households. 

Each of the eight position papers included specific proposals for new policies and actions. For example, the Housing/Homelessness agenda prioritizes jumpstarting housing development of all types and adopting policies to reduce the number of people experiencing homelessness throughout Oregon. 

The city and Multnomah County are now spending $70 million per year on homeless services. Portland voters approved a $258.4 affordable housing measure at the November 2016 election. Metro voters approved a $652.8 million affordable housing measure at the November 2018. 

The Metro Council is considering a measure to raise up to $300 million per year for additional homeless services for the May 19 primary election. The 2020 Oregon Legislature also is considering increasing funding for homeless services and affordable housing by hundreds of millions of dollars. 

However, some proposed solutions are controversial. The 2019 Oregon Legislature passed a bill allowing duplexes on most single-family lots in all but the smallest cities. The Portland City Council is considering a Residential Infill Plan that would increase that number to four and possibly eight. Some neighborhood activists and preservationists are pushing back, saying it would encourage the demolition of existing homes without guaranteeing many people could afford the new ones. 

By the numbers

• Minus 23%: Below U.S. average of new homes vs. new households. 
• 23,500: Regional housing unit shortage since 2010. 
• 46%: Cost-burdened, renter-occupied households 
• 25%: Cost-burdened, owner-occupied households 

Source: Value of Jobs Coalition, including Portland Business Alliance, Greater Portland, Port of Portland, Oregon Business Council, Oregon Business & Industry 

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Comments:

“Yes, a shortage of residential units is causing an increase in housing costs.  And, so is land speculation – holding developable land out of production in anticipation of windfall gains from rising land prices upon resale.  We need a means to address both problems simultaneously.  It’s no secret: 19th Century political economist Henry George started the land tax movement which has in many locations both dampened rising land prices and spurred investment in housing and commercial buildings.

Professor Patrick Condon, chair in Landscape and Livable Environments at the University of British Columbia, wrote a recent piece strongly advocating for the adoption of a land value tax in B.C..

“Here in Vancouver, we see how land is increasingly forcing housing out of reach of wage earners and sapping the economic strength of the city.  Productive, well-educated, creative wage earners can no longer afford to live here.  For Vancouver to survive as anything other than a tourist resort we need to tax land to cut off fuel that feeds the fires of land speculation and use the proceeds to create secure housing for wage earners with ordinary incomes.”

Here in Oregon, voters passed the measure to provide homeless services; Portland City Council adopted the Residential Infill Project changing the zoning code to allow small scale multifamily housing.  The next step should dampen residential land price inflation by adopting a land value tax.”