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Outline of Remarks on SB 187

by kathryn hickok
February 6, 2007
Tax and Budget

John A. Charles, Jr.

  • The primary effect of Oregon’s land-use regulatory system (especially the use of UGBs and rural downzoning) is to create various real estate cartels. By making buildable land scarce where it would otherwise be plentiful, land-use regulation drives up land prices far above market value.

  • The planning emphasis on higher-density, mixed-use developments adds additional costs; such projects are much more expensive.
  • The problems caused by real estate cartels cannot be solved by SB 187. Local governments are almost always dominated by homeowners whose land is over-valued. They have no incentive to add land supply that would have the effect of bursting the real estate bubble.
  • It’s counter-productive to focus on “affordable housing” as a special (subsidized) type of housing. We should seek to make all housing as affordable as possible by allowing markets to work in land supply, building design, infrastructure, and labor. Our current system makes all four of these inputs vastly more expensive then is necessary.
  • According to a Brookings Institution study of the 50 largest metropolitan regions, “The weight of the evidence suggests that places with stricter land use regulations differ systematically from those where they are less strict. The evidence is clearest (because it has been sought most zealously) about housing prices, which are higher in strictly regulated places.”
  • Brookings found that those cities with the least amount of zoning – Dallas, San Antonio and Houston – had the cheapest rents and the lowest home prices of all cities. Not only that, the three Texas regions had lower concentrations of poverty, higher home ownership rates, and larger concentrations of college graduates than cities with strict growth controls such as urban growth boundaries.
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