Holding down home prices demands concerted action

In Oregon, urban growth boundaries are supposed to be updated on a regular basis in order to accommodate growth projected over the following 20 years. But McMinnville’s current urban growth boundary — its first and only — dates back to 1981. 

That’s one of several reasons the price of buildable lots and new homes has been soaring into the stratosphere in recent years, driving rents skyward along the way. So we applaud Planning Director Heather Richards for deciding to once again seek approval of a desperately needed UGB expansion.

That will require getting past, first, determined slow-growth and no-growth advocates, and, second, incredibly bureaucratic and legalistic processes seeming to serve opposition ends at every turn. So it won’t be easy.

However, several other factors are at work as well. And to the extent we can, we need to address those.

One of the least tractable seems to be rapidly expanding square footage, even in the face of increasingly shrinking family size.

Seventy years ago, the average American home accommodated 4.2 people in just 900 square feet, or 214 per person. Today, it averages just 2.5 people in almost 2,700 square feet, or more than 1,000 per person.

Can our society continue to supply each American with more space than a family of four required back in the post-war boom of 1950? No.

Nationally, the average home price cost about $47,000 in 1980, $79,000 in 1990 and $120,000 in 2000. But in the last 20 years, it has soared to a staggering $320,000, and Richards said it now stands at just under $400,000 in McMinnville.

If we could persuade more Americans to settle for less, particularly first-time buyers who seem to want it all from the outset, we would go a long way toward solving our housing crisis. Home dwellers certainly don’t expect a thousand square feet in urban centers like New York City, so perhaps there is hope.

In McMinnville and some of its neighboring communities, anecdotal evidence strongly suggests Portlanders are fueling a major share of the demand.

Home prices are even worse in Portland and its immediate suburbs than they are here. So families willing to accept a taxing commute are finding they can get more for their housing dollar in communities like Carlton, Lafayette and McMinnville.

When out-of-towners with higher incomes and greater tolerance for $400,000 price points enter the market, the squeeze is on. And with Portland seeming destined to expand its urban footprint indefinitely, there’s probably not much we can do about it. 

We can exercise at least some control over lot sizes, which have been expanding together with home sizes and home prices. Used to residential lots of a quarter acre, if not a half, many of us have a hard time watching two-story, $400,000 homes constructed on lots barely capable of accommodating them.

However, the alternative is even less desirable. If you carve what little buildable land we have into more generous lots, you quickly turn $400,000 houses into $500,000 houses.

Other options include incorporating more duplexes, tri-plexes, four-plexes and apartment buildings into the mix. Neighbors often object, but it’s an absolute necessity if we are to hold housing prices to anything approaching affordability.

Houses running $400,000 don’t fit most people’s definition of affordability in these parts. However, they do for people looking to move up from a $300,000 house, freeing that one for someone looking to move up from a $200,000 house.

You might scoff, but that sort of ripple effect has the ability to help people of all income levels. If you hold new prices down — by expanding the urban growth boundary, increasing residential density and other steps — you go a long way toward solving the problem.

There will be pain. But no pain, no gain.