By Richard Leonetti
Taxpayers Foundation of Oregon
The large drop in auto production holds a lesson for the housing crisis. In 2021 North American auto production was down as much as 9% from 2019 due to supply chain problems and some temporary shutdowns of facilities, including GM and Ford. (Auto Production Idles, 1/21/22) The result has been higher prices and long waits for new cars. The lack of new cars has had an even bigger impact on used car prices which are up 37% over the past year.
Affordable housing in Oregon and Portland has similar supply constrictions.The Urban Growth Boundary (UGB) has prohibited more land for houses causing land inside the UGB to be scarce and more costly. This forces apartments to be built higher, costing more per unit. Sky high system development fees, park fees, building permit fees, topped off with very high property taxes add more costs.
The City, Metro and State are throwing 100’s of million dollars to subsidize and build low cost housing. Instead, the money should be used to lower the pile-on of fees, reduce some property taxes and open up cheaper land. This would take the price pressure off existing homes while creating hundreds of construction jobs and new homes. Just like the used auto market, “used”, that is resale of existing homes, prices would come down together with the new, lower-priced homes being built.
Cheaper land, lower fees and taxes paid by existing subsidies, will create more new affordable houses with good paying construction jobs and resale home prices more affordable too.