(August 1, 2015) – Traditional "Large Lot Zoning" is "Greener" than "Smart Growth" within Urban Growth Boundaries . . . Copyright 2009 – 2015 . . . Tom Lane . . . Photographing California, Arizona, Nevada, New Mexico, Colorado, Utah, Oregon, and Seattle, Washington.
(December 14, 2011 Tom Lane) Bend, Oregon shown above, looking west from Pilot Butte towards the Cascade Mountains. In the Western USA, unlike New England, many small “college-retirement-outdoors” towns, particularly in Arizona and Oregon, have faced foreclosures, stagnant wages, high unemployment, property crimes, meth manufacture, illegal pot plantations, and a high turnover of disgruntled residents.
This is primarily due the topic repeatedly addressed here, i.e. urban growth boundaries, impact fees, big box store bans, Democrat Bill Clinton sending manufacturing jobs overseas with free trade agreements, and significant restrictions on forestry, mining, natural gas pipelines, and even on agriculture and hobby farms, in the state of Oregon.
In addition, as the housing market collapsed, middle class jobs dissapeared in geographically isolated college-retirement towns, such as Flagstaff, Arizona; Bend, Eugene, Medford, and Ashland, Oregon. Due to their spatial isolation, lifelong residents who lose their jobs tend to “hold and hope” that conditions will improve, yet end up applying for unemployment and food stamps.
Great News from Fiserv Case Shiller on Annual Housing Appreciation
The latest data from Fiserv Case Shiller, reported at this link from “Business Insider,” shows that national home prices are expected to grow at an annualized rate of 3.2% between 2011 and Q2 2016.
Business Insider used Fiserv’s data and lists the best housing markets for the next five years. They found that every metropolitan area will see appreciation, except Miami.
Western US College, Retirement, and Outdoors Towns Make the Top 15
Flagstaff, Bend, Medford (and Ashland), Eugene, and Santa Fe, NM – all college towns struggling with poverty – made the top 15 for appreciation rates from 2011-2016 –
1. Bend, Oregon – 11.9% (from 2011-2016)
2. Medford, Oregon – 11.7% (Note: Ashland, Oregon is 12 miles SE of Medford, in the same MSA.)
3. Madera, California – 10.4%
4. Napa, California – 10.3%
5. Flagstaff, Arizona – 10.2%
6. Carson City, Nevada – 10%
7. Panama City, Florida – 7%
8. Bremerton, Washington – 9.7%
9. Ocala, Florida – 9.4%
10. Lakeland, Florida – 9.2%
11. Santa Fe, New Mexico 9.1%
12. Eugene, Oregon 8.8%
13. Bakersfield, California 8.4%
14. Mobile, Alabama 8.2%
15. Punta Gorda, Florida 8.1%
Baby Boomers will Buy these Foreclosures in Small College Towns
Recent studies indicate that baby boomers are increasingly retiring in small towns, with outdoor amenities. Certainly, Bend, Flagstaff, Sedona, and Ashland are very popular among retirees from Portland, Phoenix, Seattle, San Francisco, and Los Angeles.
Hopefully, baby boomers on the West Coast will start buying foreclosures at cheap prices in these towns. Indeed, someone from Seattle, Washington could sell their house for $600,000 to a rich Microsoft employee, and go buy three homes in Bend, and rent two of them to College Students, skiers, and mountain bikers. You can look at “Craigs List – Bend” and note that this happens frequently.
Central Oregon Real Estate WordPress blogger and Bend Realtor Jim Coon discusses baby boomers on his blog, quoting –
“There are still a TON of baby boomers who aren’t getting any younger. They are retiring – no matter what the economy is doing. They want a place to go that offers a more simple life – smaller, quieter, no freeways, outdoor activities – etc. What better place than Bend, Oregon? . . . There are people with money out there who figure if they don’t make their move now they may be too old to care before they find their way to that “simpler life.”
Jim is absolutely correct. They are retiring – no matter what the economy is doing. And, they certainly want a place that’s quieter and with less driving. I have several posts with photos of beautiful Bend, Oregon and you can view an index of these posts by clicking here.
Why did the Housing Market Collapse So Much in Flagstaff-Sedona, Bend, Eugene, Medford, and Ashland?
One factor is common to all five of these markets – Urban Growth Boundaries. Note that college towns Durango and Fort Collins, Colorado are not on this list, since they don’t have urban growth boundaries and didn’t see a housing boom. Indeed, most Colorado cities do not have UGB’s, since they are not required by state law.
In Arizona, Coconino County has three urban growth boundaries in cooperation with Flagstaff. In Sedona, I am not sure if there is a boundary per se, however, the City is surrounded by national forest, although it could expand to the South and Southwest (but residents there are anti-growth).
In Oregon, Ashland, Medford, Eugene, and Bend all have very tight urban growth boundaries. Oregon and Washington require them for every city, and many California cities (and counties) have established them (click here to see my post on Sonoma County, Sebastopol, and Guerneville, California). These cities are in wine country, and note that Napa is also on this list, and Napa also has an UGB.
Of course, an UGB limits the supply of developable land. And, it’s not practical for developers to build subdivisions on very large lots outside the UGB (i.e. typically 5 to 35 acre estates outside the boundary). Therefore, developers bank their land inside the boundary, until the last minute, when they sell it and make a killing.
Whereas in less regulated markets, such as Dallas, Houston, and much of the Southeastern U.S., land is not a scarce resource, due to the absence of UGB’s. As a result, there are fewer foreclosures, and there was no housing boom in 2007.
And, of course, many other factors drive up the cost of land. Impact fees, permit delays, environmental reviews, wetlands regulations, and other factors make it more expensive for developers to build housing. These factors vary from state to state, as they should under a Federalist system. The end result is that the buyer pays more for housing, due to the inflated land prices from all of these issues.
Please refer to the graphs by Randal O’Toole on Housing Prices in cities with and without UGB’s, by clicking this PDF link.
Why are these Markets Expected to “Recover” So Much?
This is a major caveat. The major reason these markets are expected to recover so much is because they crashed so much in the first place. Therefore, their percentage increase from 2011 to 2016 will be the greatest. So, in a sense, this information isn’t news to any of us who have been studied urban growth boundaries and urban planning for quite some time.
Here’s are some flat areas of pine trees near Flagstaff that could be developed into homes. However, it’s outside the urban growth boundary, probably within the national forest, and therefore off limits. Nevertheless, note that there are golf courses near Scottsdale and Carefree, Arizona built on national forest land. So, it’s always possible to apply for “land trusts.” And, Flagstaff could do this, given that they have the highest cost of living of the college-retirements towns listed here.
And, here’s another example of another UGB problem. This is looking south over Eugene, Oregon. Beyond the distant hills (elevation 1000 to 2000 feet), is both flat land in the Willamette Valley, and also rolling topography. All of this is perfect for development with one acre lots, yet it’s outside the UGB.
Buyer Beware! Even if these Cities Recover, the Boom and Bust Nature of the Housing Market Will Continue!
Even if foreclosures are purchased, and rich retirees move in and help reduce unemployment in the service sector, these towns are still at risk. UGB’s are ultimately expanded, allowing for more construction (this happens every 20 years in Oregon). However, as developable land is exhausted, then land prices suddenly increase. Then, you have another housing bubble, and another crash.
This has happened several times in the Bay Area in California, since they implemented UGB’s in many cities in the 1970’s. If you look at markets on Trulia.com without UGB’s such as Fort Collins, Colorado, you will see no housing boom back in 2007.
However, Bend, Oregon may be an exception. The City of Bend along with assistance from Bill Robie of the Central Oregon Association of Realtors, has recently tried to expand its UGB as much as possible, recognizing the need for housing affordability and stable housing markets. Unfortunately, the State of Oregon said no way, and the City is going through another year of special meetings to come up with another plan. You can read Bill Robie’s letter to the City of Bend at this link.
For whatever reason, the City removed it from its web site, which is inappropriate given that it’s a public document. However, I had previously saved it on my computer, as I do with all PDF’s.
The Long Term Solution
Frank Lloyd Wright, one of the greatest humanitarians and environentalists of this century, advocated for affordable housing on one acre lots with his Broadacre concept. Only through the implementation of a plan similar to Broadacre can we hope to stop the endless proliferation of high density, “smart growth” suburbs that are choked with car exhaust, crime, and stagnant wages. Wright believed that everyone should have one to five acres, and that everyone can spend a few hours a day growing their own food. He was also against the transportation of produce over thousands of miles, and thought it should be grown locally.
I have not written that much about Wright on this web site, and intend to write much more after I have a chance to read more of his philosophy, since he was much more than an architect. Tom Lane Dec. 14, 2011 More later.