The rapid spread of out-of-reach home prices in Portland

by Michael Andersen — graphics by Mike Sellinger and Courtney Ferris

At $400,000, 59 percent of Portlanders are excluded from homeownership. Many houses in these areas are now well over $400,000. Image: Mike Sellinger. 2016 data is through August.

Every month, Portland’s most beloved neighborhoods are moving further beyond the reach of typical homebuyers.

Property tax records show the alarming spread, over the last four years, of homes valued at $400,000 or more — enough to make them unaffordable to 59 percent of Portlanders, according to the latest Census estimates.

As the map makes obvious, the wave of price increases isn’t simply tied to construction or demolition. It’s hitting new houses and old ones, in neighborhoods that are adding homes and in neighborhoods where adding homes isn’t allowed.

What does this look like on the street? Well, here’s what it looks like in my own neighborhood:

This house is 1,700 square feet on SE 75th Avenue in Montavilla. Last year, it sold for $247,500 — a $1,200 monthly mortgage payment. After the really nice remodel you see here, it’s going for $549,000. Profitable for the flipper, but the only thing this project did for the city was replace one middle-class family with one rich one.

But the really odd thing is that on this lot, replacing one middle-class family with one rich one is just about the only thing a landowner is legally allowed to do.

When a city gets more desirable but isn’t allowed to add more places for people to sleep, this is what happens: the old homes don’t stay affordable. They just get priced up and up and up.

It seems a little strange, but one of the things we need to do as a city is to prevent that remodel and get more of our city’s capital invested in projects that prevent displacement rather than enabling it.

The residential infill project that goes before Portland City Council Nov. 9 and 16 is an opportunity to make this happen. It’s a chance for the city to strike an anti-McMansion compromise and shrink the maximum size of new homes (which would reduce demolitions) while also legalizing duplexes, triplexes and backyard cottages (which would mean that the demolitions that do happen would result in more small homes instead of huge expensive ones).

Instead of new single-dwelling homes being allowed to look like this:

This is legal under today’s rules. Renderings by Courtney Ferris.

They’d be allowed to look like this:

Or this:

Or this:

Or this:

Nobody is talking about requiring new homes to look like this. The overwhelming majority of residential homes would still have lots of space and yards of their own. But by making it once again legal to build these small homes in residential areas, Portland would make this an option for people who want something in between an apartment building and a freestanding house … which means fewer people would be competing for apartments and for freestanding homes.

There’s another possibility here. The city might decide to shrink the size of new homes but not make small multiplexes legal.

If that were to happen, it wouldn’t stop developers and landlords from finding ways to make a profit. It would mean that the only way they could make a profit is by replacing poor folks with middle-income folks and middle-income folks with rich folks.

We’ve already seen what that would look like … in more and more and more Portland neighborhoods.

Correction 11/4: An earlier version of this post slightly overstated the approximate number of Portland households that can’t afford a $400,000 home. It’s 59 percent, not 63 percent.

Portland for Everyone supports abundant, diverse, affordable housing. This blog is a reported effort to explore ways to achieve those goals. You can learn how to influence the residential infill project here.