Oregon has the nation’s most restrictive land-use regulatory system. Every square inch of Oregon has been zoned by government planners, with the result that development of any type is prohibited on most private land. In addition, 60% of Oregon’s total land mass is owned by the government, so there are relatively few parts of the state where real estate markets can function effectively. The result is a government-enforced cartel of landowners who own buildable land. The consequence of any cartel is to drive up the price of the regulated good to above-market levels. The high cost of land in Oregon is one reason why the price of housing is relatively high in Oregon’s largest cities.
The Portland City Council has decided to allocate $20 million to solve a perceived crisis with “homelessness” and another $67 million to subsidize “affordable housing.”
As usual with Portland spending, these numbers were pulled out of thin air; they have no connection to an actual strategy. If the Council had done some thinking, it might have realized that Portland’s housing crisis is the result of many factors, including ongoing government policies that are making things worse.
First and foremost is excessive government regulation. Any private investor trying to build more housing faces a gauntlet of barriers, including planning requirements, inspections, density mandates, parking restrictions, environmental overlays, and punitive fees. Many of these interventions serve no purpose other than to ensure that top-down mandates of planners replace market preferences. All of them impose delays and add costs to construction.
To make matters worse, Metro is recommending that no new land be added to the regional Urban Growth Boundary. When this recommendation is finalized next month, it will ensure that the already-high price of buildable land continues to increase.
Government is not the sole cause of the housing crisis; poor decision-making also causes many individuals to become homeless. But deliberately creating a shortage of buildable land through government regulation guarantees that the affordable housing crisis will get worse.