Tuesday, April 13, 2021

Piece on Building Industry Problems Whiffs on Land

Yesterday Salem Reporter published a piece on home-building in and around Salem, "Salem needs more housing. But the building industry has its own problems."

Its observations about the supply of labor and lumber were interesting. Hopefully they were accurate. When it turned to the supply of land, it was not accurate and presented the claims of builders as if they were a factual description the land supply and associated regulations.

They wrote:

Builders in the Salem area also say that there is a lack of suitable land to build new housing. The Oregon Legislature and local governments have sought to encourage denser “infill” development in existing neighborhoods. But builders say there are limits to the approach.

“I think it has some validity,” said Ryan Bloedel, co-owner of Bloedel Custom Homes. “But it’s not a solution to the larger problem, in my opinion.”

He said it’s more difficult to get an economy of scale with smaller infill development than open lots. The biggest issue the industry faces is a lack of lots, he said.

Oregon’s unique land-use laws require communities to designate where housing can be built. In Salem, most of that remaining buildable land is expensive.

The city of Salem’s most recent housing needs analysis shows that most of the vacant and buildable lands are in west and south Salem, which tend to have more hills. About 70% of the city’s land zoned for a home is on a slope, according to the analysis. About half the land designated for housing complexes such as apartments is on a slope.

At a minimum there are several claims here that really required a closer look with a both-sides balancing. Even better would have been not just to present competing interpretations and claims in a neutral way, but to try to determine what was true or closest to true.

Surplus, rather than hills, is the theme

The HNA says we have too much land zoned for single detached housing, and not enough for multi-family housing. Its focus is not on the "slope" of land. Inside, the analysis of the HNA discounts sloped land and assigns a deduction in developable capacity for the slopes. So its analysis accounts for hills.

Salem Reporter does not represent the HNA fairly, and uncritically accepts the spin offered by builders.

More generally, the piece does not examine the implied commitment to exclusionary, lawn-and-driveway zoning and development.

Criticism of the land supply hinges on a big assumption. There might not be enough land for homes if all the homes, the only homes, are single-detached housing on big lots. The company name of one of the people quote is significant. "Custom" housing is increasingly luxury housing, and the article should be more explicit about that.

The piece also doesn't factor in our autoism, the ways the big homes on big lots totally depends on cars and roads and gas, and whether we can in the future afford far-flung housing with longer commutes.

Even if some individuals can afford that kind of house, whole communities can no longer uncritically accept this as a norm. If we want to prioritize housing for everybody who wants it, we are are nearly certain have to make smaller homes and attached homes the norms rather than the big single houses of the 20th century.

The piece should at least be more explicit about the particular configuration of housing it purports to analyze, and not make the mistake of universalizing it.

There remains an opportunity to look at these factors of labor, lumber, and land in the context of Our Salem and a Climate Action Plan, as we look to the future, and not a retrospective look back at 20th century norms. The factors of labor, lumber, and land are very real constraints, and there is certainly more to say about them. But as they are presented here, the positions are ideologically motivated and not necessarily true or most accurate. The problem the builders have with land supply might just be their own problem, and not a problem the rest of us need to try to solve.


Anonymous said...

If you think the article is incorrect on a shortage of buildable land & lots, try to go buy a building lot. They simply aren't there. Look at Salem's land use applications for subdivisions over the last few years. There is very little activity taking place, especially in light of housing demand. While the HNA accurately shows a surplus of single-family land on paper, the reality is that for the most part, needed infrastructure (water, in particular) isn't available and the costs of providing infrastructure and developing the site are so prohibitive that these lands aren't being developed. Sloped land, higher elevation land and onerous city requirements and processes present such high costs that very little development is happening, and that's entirely different than the HNA discounting developable capacity due to slopes.

Salem Breakfast on Bikes said...

What you say may be true! But then that's a different body of evidence and analysis that should be in an article.

There still, of course, is the question whether land on the edges of the city should be inexpensive to develop. The position here is that interior lots and land should be easier and cheaper to develop and redevelop, easier than it currently is, and that it is appropriate for lots and land on the edges to be more difficult and expensive to develop, since the municipal and environmental costs of servicing them with infrastructure are higher.

If the land market is not clearing, if there is empty land and willing buyers, but not sellers, then there may be additional elements in a market failure that need to be addressed.

Altogether this is likely an argument for a land value tax - for more structural change, not merely adjusting details on the current regulatory and tax scheme.

Mike said...

I have seen many HNAs that discuss the lack of housing but always show how single family housing vastly outnumbers any other kind. Then they go on to write how there’s a land shortage to support more single family housing at nearly the same percentage. This comes after the reports (frequently written by EcoNorthwest) write pages upon pages about the need to build more diverse housing and more infill.

Of course developers want large greenfield lots to slap up 100+ houses. It’s cheaper and easier. And many cities have no problem approving that development. If they do approve multi-family, it’s also on large greenfield lots, because they’re too afraid to put any multi-family housing in with single family houses. The planning commissions and city councils approve the HNA/BLI reports and then wonder why housing is still unaffordable. At the very least, a large development should have every type of housing built within it. But that upsets the developer’s “slap them up fast and cheap” system.

The League of Oregon Cities is also trying to undermine HB 2001 because they can’t get past the single family/suburban development mindset.

Susann Kaltwasser said...

Back in 1995 when the City of Salem last did a big re-zoning of land for multifamily housing, the homebuilders complained that there was not enough buildable land and that was causing prices of houses to rise. They argued that we needed to expand the Urban Growth Boundary to the east of Cordon Road, because it was flat and thus they could keep the price of houses down and more affordable. The City re-zoned over 200 acres for multifamily housing and did not expand the UGB.

Low and behold, thousands of houses and apartments were built. So, it was a dubious argument then and so I wonder if it is now.

Yes, prices have gone up, but so have the costs for materials and labor. Inflation has accounted for a lot of the cost too. We bought our house in 2010 and since then in the dollar had an average inflation rate of 1.78% per year, producing a cumulative price increase of 21.47%. So, the house would see an increase of $81,593.63 over 11 years.

But our house is estimated to be worth more than that in today's market. I assume that difference is due to the increased demand. Those are the factors I'd like to hear more about. Is it real estate fees? Or are Builder's wanting more profit? Or are property owners expecting a higher profit?

Another thing that we need to be aware of is that hoe ownership is down. That means more housing is in the hands of people looking to make a profit. Rich get richer. I'm not sure our local government can fix the fact that people are not making as much money as they used to. Income inequality is real. But helping to ease the problems of the builders and not helping to ease the problems of the citizens who need housing should be part of the discussion.

Another thing about where to put multifamily housing, back in 1995 it was suggested that West Salem and South Salem get an equal distribution of land rezoned. However, the decision was to put it north and east. It was not so much due to hills, or costs, but NYMBYism. Let's not let that happen this time.