What happens if we ban “luxury” housing?

Some people think that the answer to more affordable housing is to simply stop building any more luxury housing, reasoning that if developers are forced to stop creating it, they’ll build more housing that people can afford.

There’s a big flaw with that theory though: people move to Bend because they want to live in Bend, not because of the availability of luxury housing.

Say someone wealthy can spend a million dollars on a house.  They’ll go buy something in Tetherow or on Awbrey Butte and all’s well.  But say they no longer have that option, and still want to move to  Bend.  At that point, they may well decide to simply buy that 500K home somewhere else.  If this happens enough, the price of what were formerly 500K homes starts to rise as competition for them increases, and so on down the ladder.

Restricting the supply of housing of any type is not really the answer to Bend’s housing woes.

This is explained in further detail in Professor Sanford Ikeda’s How the Housing Market Works.

What happens when we try and stop growth?

A lot of people are suspicious of change: “Bend’s fine the way it is, we should stop growing”.

The problem with that reasoning, though, is that you cannot keep people from wanting to move here.

In a situation where demand is rising, and supply is constant, prices will rise, which will have the effect that you start pricing people out at the lower and middle ends of the wealth spectrum.

Put another way, if someone has 10 million dollars to spend on a house, they’ll be able to move to Bend no matter what.  Gradually, as more and more people with money continue to move to Bend, the prices will rise to the point where someone hoping to move here and work as a police officer will not be able to compete, and will be squeezed out.

This will take a while, as there are plenty of teachers and police officers and others who own houses here already and won’t be priced out anytime soon, but over time, it will become more and more difficult for anyone else to move here.

I don’t want to live, nor raise my children in a town full of wealthy people served by “commoners” who must commute in from someplace far away in order to be able to afford a place to live.  I don’t think it’s healthy for anyone.

Affordable, desirable, no growth: pick two

Life is a series of tradeoffs, and one of the important ones for cities is what’s known as a “trilemma”.  A city can have two of the following, but not all three:

  • Affordable – it’s a place everyone can afford to live.
  • Desirable – it’s a place people want to live, and a place people are trying to move to.
  • No growth – it’s a town that is not adding housing, and tries to avoid “changing the character of its neighborhoods”.

For instance, at one extreme, you have resort towns like Vail, Colorado: it’s a very nice place – many people would love to live there, or at least have a house there.  Since it’s at the bottom of a deep valley without much land, it has very little land for growth, so it fits “no growth”.  This means it is not affordable: the average house price, according to Zillow, is $835,000.

At another end of things, you have a city like Detroit that has plenty of room for growth, and is affordable with an average home value of $38,100.  The reason: not many people want to live there, and indeed, the population continues to decline.

Where the United States has not been doing a good job lately are cities where people 1) want to live 2) can afford to live and 3) therefore allow lots of housing to be built.  The best examples are probably cities like Houston, which Forbes ranked as the fastest growing city in the US in 2015.  Sprawl – which many of us are not fans of – plays a role in keeping places like Houston affordable, but another big factor is a relatively light regulatory touch: Houston does not have a zoning code like most cities in the US do: How Houston Regulates Land Use.

I’m not sure we should – or could, given the mountains to the west – emulate Houston’s sprawl, but the freedom to build where there’s a market for it would certainly help Bend add housing, and contain costs.  It’s also critical to remember that the freedom to build includes efficient uses of land like building up and in, not just out.

Fixing Bend’s housing crisis

Welcome to Bend YIMBY, a group dedicated to fixing Bend’s housing crisis.

The problem:

  • There is a rental vacancy rate near 1% – even if you have the money, a good job and good references, it can be tough to find a place to live.
  • The prices are going up to the point where people like teachers, police and firefighters are getting priced out.

Here are some topics we’ll be covering:

If you’d like to learn more and talk with others interested in Bend’s housing crisis, we have a Facebook group: https://www.facebook.com/groups/BendYIMBY