How Portland Is a Lot Like Texas

One theme I always hammer is that you have to look at proposed policy solutions in the context of the area where you want to apply them.

A great example of this is Portland’s Urban Growth Boundary (UGB). The UGB, a policy that limits suburban development outside of a line drawn around the Portland region, is widely admired and perhaps even seen a type of holy grail policy in terms of preventing sprawl.

Obviously restricting development outside the UGB raised demand for land inside of it and thus housing prices. Portland’s median home price multiple – that is, the median home price divided by the median household income – is 4.8. The average household in Portland would need to spend 4.8 times its annual income to buy a house there.  This compares with 2.9 in Kansas City, 3.0 in Columbus, and 3.9 in Austin.

So Portland is less affordable than many similar sized housing markets around the US.

But despite this, Portland remains the most affordable major West Coast metro area.  That’s because housing prices in other major coastal cities are even higher, including Seattle (5.2), Los Angeles (8.0), San Diego (8.3), the Bay Area (9.2), and Vancouver (10.6).

So even while its home prices have risen, Portland remains the cheapest major city to live apart from Sacramento (4.7).  That is, even with the UGB Portland has a big cost advantage over its regional competition. In short, it’s cheap.

In this way, the attraction of Portland is a lot like Texas. Its draw is more a cost arbitrage play for people leaving San Francisco than an upgrade to superior urbanism from the interior. As it happens, California refugees make up the bulk of the net migrants into Portland.

The Texas comparison is relevant on the tax front too. Portland is one of the rare places you have the potential for double border tax arbitrage. Washington state has no income tax and Oregon has no sales tax. While only a limited number of people can take advantage of both (you have to both live and work in Washington to avoid the income tax), being able to zero out one or more major tax categories is a win.

This is not to say that Portland is a lousy place to live. It’s fantastic as near as I can tell. The point is that Portland was able to put in place policies to create good enough urbanism to lure a certain number of San Franciscans without compromising its competitive position because it was in a high cost neighborhood.

The story would be very different for a place like Oklahoma City or Columbus. These cities are in low cost regions, and if they undertook policies that raised their housing prices, they’d rapidly find themselves the most expensive market in their area.

Cloning Portland’s UGB is simply not a viable policy for most interior cities, even if they had the political alignment to make it happen.

There are many policies that can be broadly implemented across cities. The general principle is to first understand why a policy worked in the original context, then ask whether it is applicable to the target context, and if so how to implement it most successfully.

from The Urbanophile
http://www.urbanophile.com/2015/11/18/how-portland-is-a-lot-like-texas/