Busy home market exacerbated slump
Friday, December 07, 2007
BY RICHARD CARSON, former director of Clark County's Community Development DepartmentThe Columbian's business editor, Julia Anderson, in her Dec. 2 column, asked a question about the Clark County real estate market. She put forward the proposition that "a psychological standoff continues in Clark County between buyers who think house prices should be dropping on weaker sales and sellers who are convinced their homes are not overvalued." Her question was: "Have we got it straight?" My answer is, "Not exactly." I agree that the Portland-Vancouver metropolitan area housing market has done better than most housing markets in the nation. However, there is no denying that (1) it is a buyers' market, (2) housing starts and sales are significantly down, and (3) the homes-for-sale inventory is at a record high.
There is also no doubt that there may be worse to come. The great sucking sound of the mortgage industry debacle and the resulting slump in construction may pull America into deeper and more treacherous economic waters. But what I find more interesting is not the macro-economics of the downturn, but the micro-economics. According to the 2000 U.S. Census, Clark County was the fastest growing county in Washington and the Portland-Vancouver metropolitan area. Clark County even passed Clackamas County in total population. However, all of the housing indicators point to the fact that the downturn in the housing market is now worse in Clark County than it is on the other side of the river in Oregon. And my question to The Columbian and others is, "Why is this so?"
A key difference
The answer from the environmental community might be that it is because state-mandated land use planning is taken more seriously in Oregon than in Washington, and more seriously in Portland than in Clark County. It also has been around longer in Oregon than in Washington, by about 25 years. I am an urban planner by experience and I don't find that to be a compelling argument. Increased land use and environmental regulations increase the price of a home, period. In my experience, the basic urban planning requirements are almost identical in Oregon and Washington. Both states mandate the use of urban growth boundaries, housing density targets and growth regulated by population projections. The only significant difference is that voter initiatives are respected more seriously on this side of the river. Be it taxation limits, property rights or light rail, when the voters speak, then the local governments here listen and act accordingly. That is not always the case across the river.
The historical fact is that a home in Clark County has always been cheaper to build and sell than on the Oregon side of the river. When you combined a cheaper house with pluses like better schools and, quite frankly, better government, then it resulted in Oregonians leaving the Portland area and coming here in droves. So what happened? The only answer I can come to is that the Clark County market became so super-heated that the downturn became even more dramatic. People were buying and "flipping" houses to such an extent that some local home builders here required buyers to live in the home for a period of time before they could sell.
I do agree with Anderson that we are better off in the Portland-Vancouver metropolitan area than other parts of the country are. In the past, it seemed that the Portland-Vancouver metropolitan area was the first into a recession and the last out. This time we may be lucky. We may be last in and first out. And that would be refreshing.
Richard Carson is the former director of Clark County's Community Development Department, He currently is a senior associate with Citygate Associates and directs their new Pacific Northwest office. E-mail:
www.richcarson.org
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