How will Portland’s Residential Infill Project affect existing home values?
City of Portland proposed a big change called “Residential Infill Project” to the current zoning laws by allowing more housing units to fit into the existing land including ADUs and triplexes. The proposed change also limits building sizes substantially. The new law also increases the front setback from 10 feet to 15 feet. This will have a limiting impact on the building size but also the backyard size. So how will this new proposed zoning law impact existing home values if passed? Let’s discuss some chain reactions that could happen as a result and talk about what they could mean.
If you look at the map, affected areas in yellow represent the areas where the new zoning law is being applied to. Most of it will be in SE, NE Portland with some areas in N and SW Portland as most of those areas are already more dense urban neighborhoods. The new law can impact housing values in those areas as well as other nearby areas in Portland outside of the yellow layer.
The Residential Infill Project will allow up to two ADUs per house. There can be one detached ADU, often a converted garage, and another ADU inside the house, which is usually the finished basement or lower area with its own entry door. The point of this ADU law is obviously to allow more rental units within the city. ADUs are often more affordable rental options as compared to an apartment or leased houses or condos. So I believe this portion of the law is to accommodate renters. It could help homeowners if they have the budget to construct an ADU for rental income. There may also be financing options as well. Either way, it will bring more people into the neighborhood. Notice the parking option is no longer a requirement for an ADU so more cars will be parked on streets. Busier streets is a negative for home values but the ADU potential is a great value that could rather increase the existing home value.
The limit for new houses will be substantially smaller. First, the 30ft height limit will be measured from the lowest point of the building, not from the highest. Also, take a look at a typical R5 zoned land with 5,000sf in an urban neighborhood. Current code allows up to 6,750sf of combined living square footage whereas the new law only allows 2,500sf excluding the basement and the attic. However, most houses sitting on 5,000sf lots do not go over 2,500sf without the basement. A typical Old Portland architecture on a 5,000sf lot can have a 1,000sf of basement, 1200sf of first floor living space, and another 1200sf of upper level living space. This won’t create much impact.
Duplexes can be Anywhere and Triplexes on Corner Lots
This will probably bring the most changes. The new law allows duplexes can be built on non-corner lots. Duplexes can also have another detached ADU. Developers will start building more duplexes and add an ADU. As an investment standpoint, this will create the most incentive in rental income. Triplexes can now be built on corner lots. While these multi-family housing options create opportunities for investors and renters, how will it affect existing owners of single family detached homes in the neighborhood? First, there will be a lot more people in the neighborhood. Let’s imagine the extreme with each residential intersection potentially filled with all triplexes with duplexes everywhere. Will it increase or decrease your home value if you owned a single family house in the neighborhood? The answer is looking into the supply and demand of your housing option in the future when such scenario happens.
Portland is expecting to grow by more than 100,000 households by 2035. Not 100,000 in population but 100,000 households. It can be as many as 200,000 people living in 100,000 households. That’s a lot of people. By 2035, our version of Portland will be completely different. Portland will be a big city and urban neighborhoods will be so dense, it will being a lot of growth in commercial real estate in most places. No one knows the 100,000 households will happen or not but let’s assume it does. Your detached single family home will be worth significantly more in a dense neighborhood where all the residents wish they lived there and have a backyard. If this infill monstrosity happened at its full capacity now with current demand and population, it will ruin neighborhoods and only decrease your home value because your neighborhood is not a very desirable and peaceful as a residential neighborhood. So it depends and the point of this new law is to prepare for the future growth. We can’t stop the growth. People have a right to interstate travel, which is a Constitutional right and growth will continue to happen.
Improving Building Design
The new zoning law also focuses on improving building designs to make neighborhood look better. It limits height of “skinny houses” on narrow lots, and require attached houses on lots 25 ft wide or narrower. It also require exterior design elements for homes built on a divided flag lot and also limits its size.
A lot of Portland residents are very concerned that this new zoning law will bring too many people into the neighborhoods and blame the city. It’s more likely that be the city realizes that the people are coming anyway so that they are preparing for steps to accommodate everyone without decreasing existing home values. It’s a scary thought but our city may grow too big for a lot of people in the future. If you are an affected resident, you can testify your thoughts to the Planning and Sustainability Commission here.