The Affordable Housing Thread

[urbanlife]

Originally Posted by cab

Developers are saying proposed affordable housing mandate isn't feasible.
Two developers say they've been stopped cold by inclusionary housing proposal headed toward city council
Some developers have already stopped buying property within city limits because of a mandatory affordable housing proposal headed toward the Portland City Council.
http://pamplinmedia.com/but/239-news...-isnt-feasible

If this weeds out the developers that are just wanting to build high end apartments in Portland, then I say that is a good thing. If a developer wants to make money, they should be required to include affordable housing. The city also needs to change the rules to make it easier for developers to do 3-4 unit developments, which is a much better way to increase density to a neighborhood without having to build large buildings that take away the character of neighborhoods.

Personally I have been hoping that all this over building of high end apartments leads to a capsizing that causes a number of developers to lose a lot of money over their greed.

[MarkDaMan]

Originally Posted by cab

Developers are saying proposed affordable housing mandate isn't feasible.
Two developers say they've been stopped cold by inclusionary housing proposal headed toward city council
Some developers have already stopped buying property within city limits because of a mandatory affordable housing proposal headed toward the Portland City Council.
http://pamplinmedia.com/but/239-news...-isnt-feasible

No more Vic Remmers teardowns? Such a shame...

I'm not sure if I'm missing something here? (emphasis mine)

Remmers:

Originally Posted by Business Tribune

According to Remmers, the proposal would only work if people start taking dramatic price reduction on most of their land, or if the city adds a new incentive (see sidebar), but for now, he’s going to opt out of the city limits

Vanessa Stugeon of TMT:

Originally Posted by Business Tribune

“Honestly, I doubt we’ll see projects of that size happen, I think project completion is just going to all but halt,” Sturgeon said. “Land values have already gone way down ... we’re starting to see appraisers mark land value down to zero because of it.”

I think Sturgeon knows that TMT has traditionally been an office, strip mall and office park developer until they needed apartments to secure the PAW financing. It's ridiculous to believe they're all of a sudden going to be building a lot of suburban apartments.

To be honest, and this is purely speculation on my part, I don't know that Sturgeon's TMT could pull off another high profile building until they sell or recoup their investment in PAW. After Tom's death the family split into two camps and have greatly weakened the company Tom built.

[maccoinnich]

Originally Posted by urbanlife

Personally I have been hoping that all this over building of high end apartments leads to a capsizing that causes a number of developers to lose a lot of money over their greed.

Have you been in many newly built apartments? What exactly makes them "high end", other than being new? The average craftsman house in SE Portland has far more luxuries than the average apartment unit.

Originally Posted by MarkDaMan

No more Vic Remmers teardowns? Such a shame...

I got mocked on Twitter by Chloe Eudaly for pointing this out, but by volume the largest part of Remmers' business is multifamily housing. His company (VWR Development) is building apartments all over Portland, ranging in size for 20 to 100+ units.

[urbanlife]

Originally Posted by maccoinnich

Have you been in many newly built apartments? What exactly makes them "high end", other than being new? The average craftsman house in SE Portland has far more luxuries than the average apartment unit.



I got mocked on Twitter by Chloe Eudaly for pointing this out, but by volume the largest part of Remmers' business is multifamily housing. His company (VWR Development) is building apartments all over Portland, ranging in size for 20 to 100+ units.

High end as in new, nice appliances, and coming with a high rental pricetag. Obviously most of these apartments don't actually do much to justify their high priced rents other than being in a hot market that has been over building high priced apartments while ignoring the bulk of the renters in Portland.

[zilfondel]

Originally Posted by urbanlife

High end as in new, nice appliances, and coming with a high rental pricetag. Obviously most of these apartments don't actually do much to justify their high priced rents other than being in a hot market that has been over building high priced apartments while ignoring the bulk of the renters in Portland.

...which is why those units won't stay expensive forever. Lacking amenities or square footage compared to larger, actual luxury units. At this point, i suppose having a roof over your head is considered "luxury" considering the alternative... living in a tent on the springwater.

[2oh1]

Originally Posted by maccoinnich

Have you been in many newly built apartments? What exactly makes them "high end", other than being new?

They're being built with hardwood floors instead of carpet, tile instead of linoleum, with higher end appliances... and older buildings are being converted up to higher end as well. Everybody is chasing the luxury end of the market.

[maccoinnich]

If you think that a substantial number of market rate apartments are being built with real hardwood floors then I have a very reliable used car to sell you. The appliances being installed aren't exactly Sub-Zero / Wolf either.

[2oh1]

Originally Posted by maccoinnich

If you think that a substantial number of market rate apartments are being built with real hardwood floors then I have a very reliable used car to sell you. The appliances being installed aren't exactly Sub-Zero / Wolf either.

Oooooooooh, ya got me! I didn't realize an apartment doesn't qualify as luxury if it doesn't come with Sub-Zero or Wolf appliances. Noted. Here, in the real world, new buildings are going up with hardwoods instead of carpet, granite counters instead of laminate, tile instead of linoleum, stainless steel appliances, etc, as everybody chases the luxury end of the housing market.

Are the hardwoods real? I don't know or care. I know that $1600 to $2200 a month rent for a 1 bedroom apartment is real and that's the real bottom line. If you'd like to contact all of the leasing folks and correct them in regard to whether or not their hardwood floors are actual hardwood, by all means, have at it.

Apartments, both new and old, are becoming considerably more high end as they chase the luxury end of the market.

The theory is supposed to be that when new apartments are built, older apartments become more affordable as they become less desirable. In a stagnant market, that theory probably holds true... but here in Portland, prices at older buildings have climbed even as newer buildings are built, and not just because of how tight the market is. Older buildings are going more high end as they try to compete with the luxury buildings.

Sometimes, the older buildings are gutted in one fell swoop, such as the Chandler which became 10th Avenue Lofts, The Sovereign which is being gutted as we speak and will probably rent for triple what it used to, or Portland Center towers, two of which became condos and a third became apartments - apartments which 10 years ago rented for as little as $600 but today start at $1650.

Other times, the older buildings are renovated upscale on a unit by unit basis, such as what's happening at The Essex House, Southpark Square, Museum Place and others.

My hope is that the luxury end of the market will go bust soon (if it hasn't started to already?) and developers will begin to cater to the rest of Portland's housing needs. But they won't until it's profitable for them to do so.

[maccoinnich]

I'm going to return to my earlier point: luxury apartments, by any definition of the word luxury, are few and far between in Portland. Many apartments are expensive, yes, but the words "expensive" and "luxury" don't mean the same thing (no matter what the leasing agent puts in the Craigslist ad). The finishes listed above are a pretty small portion of the construction budget, and going to a lower finish level would not suddenly make new construction project pencil at lower rent rates.

And the reason prices are going up existing apartments is just simple math. Between 2010 and 2015, 48,533 new people moved Portland. In that same time period, Portland issued building permits for 13,533 units (completions would be lower). Unless those new units were housing an average of 3.5 people, which is doubtful, then competition for the existing housing stock got a lot fiercer.

[urbanlife]

Originally Posted by zilfondel

...which is why those units won't stay expensive forever. Lacking amenities or square footage compared to larger, actual luxury units. At this point, i suppose having a roof over your head is considered "luxury" considering the alternative... living in a tent on the springwater.

Originally Posted by maccoinnich

If you think that a substantial number of market rate apartments are being built with real hardwood floors then I have a very reliable used car to sell you. The appliances being installed aren't exactly Sub-Zero / Wolf either.

I probably should have defined that a bit better, for me, when I say "high end," I am talking more along the lines of rents that they are being listed at. These new buildings are trying to go after rents that I saw in Brooklyn that required people to make a minimum of $90K to barely afford the rental requirements. Obviously in Brooklyn, that isn't high end, that is just normal, but it is high end for Portland.

Obviously there is a difference between high end and luxury, which while these buildings are new, most of them have small square footage apartments, low grade new appliances, and just cheaper rental materials. They are not being built to any luxury standard that should justify that type of rents.

If the Cosmopolitan had rentals, then that would have been a luxury building that warranted high rents. Most of the new buildings going up in Portland should all be sitting in the $800-2000 rents with the bulk of them being between $1000-1400.

It will be interesting to see what happens because at some point, people are not gonna want to pay this much for rents in buildings that aren't luxury, just over priced. In theory, those developers that are charging too much will have to bring the prices down to more realistic levels, but it will be interesting to see how much resistance they give to this. We are already seeing this happen with the Yard with them basically running a hotel out of the building, something that should be illegal to do for a developer.

[eric cantona]

Originally Posted by urbanlife

Most of the new buildings going up in Portland should all be sitting in the $800-2000 rents with the bulk of them being between $1000-1400.

"should"? based on what information? the market decides the value, always has. when the market has too little product prices go up, and vice versa. the reality is that Portlanders are living in a place that many people see as desirable. that's really the bottom line here. you're tilting at windmills by pining for some bygone value.

Originally Posted by urbanlife

It will be interesting to see what happens because at some point, people are not gonna want to pay this much for rents in buildings that aren't luxury, just over priced.

when people stop paying what they're asking the market will self-correct. developers and landlords hold a lot of the cards, sure, but they can only rent to a willing populace. nothing is "over-priced" as long as enough people are willing to pay for it. don't expect rents to drop any time soon...

[urbanlife]

Originally Posted by eric cantona

"should"? based on what information? the market decides the value, always has. when the market has too little product prices go up, and vice versa. the reality is that Portlanders are living in a place that many people see as desirable. that's really the bottom line here. you're tilting at windmills by pining for some bygone value.



when people stop paying what they're asking the market will self-correct. developers and landlords hold a lot of the cards, sure, but they can only rent to a willing populace. nothing is "over-priced" as long as enough people are willing to pay for it. don't expect rents to drop any time soon...

Yes and no, the market doesn't always decide the value, since people gotta live somewhere. The problem comes into play when you look at the income levels and how much jobs in Portland pay, that is where the information comes from on where rents should be at for here.

Lets look at it this way, let's say you have 100 people, 20 of them can afford a $3000/mo apartment, 50 of them can afford $2000/mo and the rest can only afford $1000/mo. So a developer comes along and builds a building that has 100 units, but decides to charge $2700 a month for all the units. Obviously the 20 people are happy because it saves them money, but everyone else is forced to put more of their income towards rent, and those that can only do $1000 are even more screwed. Yet if the market dictated the value, there would be apartments for $1000, $2000, and $3000 because that is what the market is able to afford. Instead what happens is you get people that have to live somewhere who sacrifice more of their income towards housing just so a developer can fleece the market. For prices to change would require more people to move out of Portland than moving in because they refuse to pay that rent.

This isn't about any bygone era, this is just the fact that most Portlanders are forced to spend more on housing than they should be, so it doesn't matter if developers are building enough units for those that are moving here if they are not building for all income levels. Not everyone in Portland makes $100K+ a year, that is just a fact.

For people to stop paying high rents would mean people would need to either move away from Portland with no new people moving here to replace them or people becoming homeless in order to not pay high rents. If you are making $50K a year, the idea of becoming homeless just because the rents are too high is just dumb, but someone making that much might also not wish to move away either. Therefore you have developers fleecing the market, not apartments going at market value.

I have seen this happen before and the worst case scenario is that Portland becomes a playground for the rich and trust fund kids while all that that made Portland what it is is forced to move away to some other place. I am not saying that is fair or unfair or right or wrong, I am just saying that is the path the city is currently heading in.

[CaliNative]

We have a failure of the market, where demand for affordable housing far exceeds supply. Why? Possible reasons:

1. Zoning restrictions that mandate minimum sq. ft. in homes/apartments. Affordable "micro-apartments" and "micro-houses" are blocked. Non-traditional and cheap housing like garage apartments, "granny flats" and refurbished shipping containers repurposed for housing are also not allowed.

2. NIMBYs that don't want affordable housing (and lower income people, often black and Latino) in their neighborhoods. NIMBYs also block homeless shelters in their neighborhoods.

3. Labor costs and supply costs rising rapidly, raising price of construction.

4. Influx of new people (through immigration etc.) outstrips supply.

5. "Gentrification" and redevelopment, removing supply of older and cheaper housing, such as single room occupancy (SRO) buildings, and preventing "rooming houses" altogether.

6. Government no longer builds housing projects, for the most part.

7. Banks are reluctant to lend for projects offering affordable housing, preferring upscale projects. This leads to a glut at the high end, and a shortage at the low end of prices. This may be partially self correcting, as the price of the glutted high end units comes down to attract buyers.

Probably a combination of the above.

[maccoinnich]

Memo to the Planning and Sustainability Commission. I've copied and pasted the introduction (emphasis mine):

This memo is a response to major issues raised at the October 25, 2016 PSC public hearing and includes possible PSC actions for consideration at the November 8 PSC work session.

Summary of Findings

• An Inclusionary Housing (IH) program can be an important and effective tool to meet some of Portland’s need for affordable housing. Policy 5.35 of the new Comprehensive Plan calls for the use of IH as a way to use the production of market rate housing to produce affordable housing.
• To be effective, an IH program cannot impact the financial feasibility of development to a level where new development does not take place. Both the production of affordable housing through IH and meeting city development goals depend on new development.
• The variables that can be adjusted to manage the IH program’s impact on financial feasibility are the inclusion rate and the incentive package. The inclusion rates in the proposed zoning code are 20% of all residential units be affordable to households at 80% MFI (“20/80”) or 10% of all units at 60% MFI (“10/60”).
• The 10/60 program in the Central City with a full tax exemption is feasible and should move forward as proposed.
• The 20/80 programs, both in and outside the Central City, and the 10/60 program outside the Central City will have a significant negative impact on development feasibility and adjustments to the inclusion rates are necessary.

[maccoinnich]

One of the few news stories from the election that I'm happy about.

Portland will embark on $258M worth of affordable housing

Up to 1,300 more units of affordable housing could be added to Portland's slim stock now that voters have soundly passed a $258.4 million bond measure aimed to do just that.

The latest numbers from yesterday's election, according to the Oregon Secretary of State, show that 62 percent of voters were in favor of Measure 26-179. The measure is designed to generate $258.4 million in general obligation bonds to create or acquire about 1,300 affordable housing units.

The city estimates it will cost the owner of a home assessed at $178,230 at about $75 a year. A home valued at $394,800 would pay around $190 more per year in property taxes.

...continues at the Portland Business Journal.

[BrG]

Originally Posted by urbanlife

Yes and no, the market doesn't always decide the value, since people gotta live somewhere. The problem comes into play when you look at the income levels and how much jobs in Portland pay, that is where the information comes from on where rents should be at for here.

Lets look at it this way, let's say you have 100 people, 20 of them can afford a $3000/mo apartment, 50 of them can afford $2000/mo and the rest can only afford $1000/mo. So a developer comes along and builds a building that has 100 units, but decides to charge $2700 a month for all the units. Obviously the 20 people are happy because it saves them money, but everyone else is forced to put more of their income towards rent, and those that can only do $1000 are even more screwed. Yet if the market dictated the value, there would be apartments for $1000, $2000, and $3000 because that is what the market is able to afford. Instead what happens is you get people that have to live somewhere who sacrifice more of their income towards housing just so a developer can fleece the market. For prices to change would require more people to move out of Portland than moving in because they refuse to pay that rent.

This isn't about any bygone era, this is just the fact that most Portlanders are forced to spend more on housing than they should be, so it doesn't matter if developers are building enough units for those that are moving here if they are not building for all income levels. Not everyone in Portland makes $100K+ a year, that is just a fact.

For people to stop paying high rents would mean people would need to either move away from Portland with no new people moving here to replace them or people becoming homeless in order to not pay high rents. If you are making $50K a year, the idea of becoming homeless just because the rents are too high is just dumb, but someone making that much might also not wish to move away either. Therefore you have developers fleecing the market, not apartments going at market value.

I have seen this happen before and the worst case scenario is that Portland becomes a playground for the rich and trust fund kids while all that that made Portland what it is is forced to move away to some other place. I am not saying that is fair or unfair or right or wrong, I am just saying that is the path the city is currently heading in.

Um, THIS is what would define the 'top' of the market. Refusal to pay. THEN the prices will come down.

As long as people keep renting units of any kind and they fill up... prices will be steady for what is offered, or go up. Even if they have to get roommates, etc. One only needs ot look at San Francisco to see what unbridled demand means.

Capitalism isn't anywhere near as nice as your version of 'the market' seems to be.

Sadly.

A footnote: Wood Partners Block 17 has been slow to fill. Very high rents for PDX. The top may be nearing. Finally.

[urbanlife]

Originally Posted by maccoinnich

One of the few news stories from the election that I'm happy about.



...continues at the Portland Business Journal.

On the local and state level, I was mostly happy with this election season, even for our neighbors to the north, they had some pretty good things happen in regards to transportation. Getting rid of Novick and Hales, plus this passing will hopefully mean good things for Portland in the future.

[2oh1]

Originally Posted by urbanlife

On the local and state level, I was mostly happy with this election season, even for our neighbors to the north, they had some pretty good things happen in regards to transportation. Getting rid of Novick and Hales, plus this passing will hopefully mean good things for Portland in the future.

I agree, on the local and state level. On the national level, I am saddened and stunned beyond any ability to express it. But on a local level... especially Steve Novick's departure. I'm pleased. I thought he'd be unbeatable due to the amount of money he had to pour into a campaign. He had a mountain of cash compared to Chloe. I voted for her, but I expected her to lose.

As for Wheeler... I wish we had a rule for city government that, if a mayoral candidate wins the job during the primaries, the new mayor would take office in August rather than January. Win the job... 2 months later, you're in office.

I'm done with Hales.

[maccoinnich]

Steve Novick was by far the most progressive member of the City Council, and I'll be sad to see him go. I wish Eudaly had challenged Fritz.

[2oh1]

Originally Posted by maccoinnich

I wish Eudaly had challenged Fritz.

I don't think she would have won though. I do wish we could find someone who could beat Fritz if she runs again.