There’s a shortage of affordable housing in and around Eugene.
If you’ve been keeping up to speed with our articles on Eugene’s housing market, this will not be news. The lower end of Eugene’s market is tight and getting tighter. (You can start with our third-quarter market report for Eugene or our Tips for Home Buyers in a Tight Market).
So what do we mean by “tight?” Eugene’s Register Guard recently put out an article on “Reaching the Affordability Ceiling” in Eugene where they quoted me at length. The article points out that the average sale price for a home in Lane County rose to $309,000 in 2018, compared to $200,900 just six years earlier. Through the third quarter of 2019, that number rose significantly to $322,800.
That’s high, but it’s not Silicon Valley level-high or even Central Oregon level-high. The median sale price for Bend, Oregon homes was a remarkable $439,900 in 2018. The crux of the matter is, though, that it’s incredibly difficult to actually find a home in Eugene for $309,000 or less.
As of publication, according to RMLS statistics Eugene has only 54 homes for sale for less than $300,000, translating into an inventory of just 0.8 months. More properties will hit the market in the spring, but that number probably won’t budge too much.
In early 2017, Eugene officially became the nation’s second most-constrained housing market, next to Seattle. That’s crazy to think about. Eugene is pretty cool (see our article on Why People Across the Country are Moving to Eugene) but it’s not that cool, right?
It turns out, actually, that regressive housing policy and deeply-entrenched political interests are the main culprits holding Eugene’s housing market hostage. That’s a bold proclamation, but we don’t make it lightly. Read on as we diagnosis some of the reasons for Eugene’s affordable housing crisis–and also some potential solutions.
Eugene’s Missing Middle: The Glaring Gap in Eugene’s Housing Market
Before we go into the nitty-gritty of what’s causing Eugene’s affordable housing crunch, we’d like to introduce you to one of LOHR Real Estate’s closest business partners, local architect and certified Passive House consultant Dylan Lamar. He’s made it his life’s work to help usher in a revolution of sustainable design and medium-density “missing middle” housing one project at a time.
That “missing middle” includes co-housing, backyard ADUs, quadplexes, and townhouse communities. Simply put, this kind of medium-density shared-lot and shared-wall housing promotes environmental sustainability, walkability, a sense of community, and affordability. That’s a win-win-win-win situation for our community, and a revolution that Eugene should be ready for.
But Eugene’s city councilors have made it clear that they’re not. Eugene has a longstanding reputation as a bastion of progressive values, and this makes its recent failures to remove barriers to missing middle housing all the more glaring.
Dylan recently published an excellent Op-Ed piece in the Register Guard covering the historical, cultural and political forces that are hindering innovative and necessary missing middle housing in Eugene. One of his most salient points is that Eugene’s relatively restrictive Urban Growth Boundary isn’t the main culprit in Eugene’s crazy-low housing inventory. Rather, restrictive zoning policies bear the brunt of the blame:
“To simply re-legalize traditional ‘missing-middle’ housing and allow townhouse lot sizes, for example, would help us safeguard home ownership opportunities. More moderate density would support neighborhood stores, improving walkability and support climate protection goals, both through less driving and the inherent efficiency of small-footprint, shared-wall housing.
“The urban growth boundary is often blamed for escalating housing costs. Yet the freely sprawling suburbs of California, where hour-long commutes are common, exhibit a high social and environmental cost — and housing is still expensive.”
The average price of new construction, as Dylan also points out in his article, is $449,000. Developers simply don’t have have an economic incentive to build affordable homes on the size of lots that current zoning restrictions mandate.
Those who have sought special use permits to build townhouse communities have faced an avalanche of opposition from a vocal minority of homeowners unwilling to face the music, and city councilors unwilling to risk alienating the most razzed-up members of their constituencies.
Several projects have been successful. The Friendly neighborhood‘s recent townhouse developments are one example, and they’ve already added a liveliness to the adjacent blocks, with new food carts and businesses popping up on a regular basis. But more often that not in recent years, developers have ultimately been deterred from pursuing innovative housing projects.
Is there any light at the end of the tunnel? We think there is, actually. Read on as we look at several possibilities.
Finding Models for the Sustainable Future of Eugene’s Housing Market
Before I say what I’m going to say, keep in mind that I’m in no way pointing to Bend as a shining model of affordable housing. We’ve written before on Bend’s own difficulties in that arena. But there’s little doubt in my mind that housing would be even harder to find in Bend if the city hadn’t taken proactive steps to encourage missing middle housing.
In December 2016, the City of Bend approved an ambitious Urban Growth Boundary Expansion Plan. What makes this plan unique is that it calls for a blend of both expansion and infill. Redevelopment and rezoning will cover about 70 percent of Bend’s projected housing needs. In other words, this is a plan aimed at reasonably combating sprawl and the myriad issues that accompany it.
ADUs, or Accessory Dwelling Units, have been a big part of the infill equation in Bend. As we reported last summer, Oregon Senate Bill SB-1051, which passed in 2017, mandated that Oregon towns and cities start removing barriers to ADU construction by July 2018.
Bend, though, actually beat the State to the punch in encouraging ADU construction. In 2016, Bend stopped requiring conditional use permits for ADUs and stopped asking would-be ADU builders to notify their neighbors prior to construction. The city also dropped system development charges and lowered the cost of permits from $2,600 to only $800, as the Bend Bulletin reported at the time.
Since then Bend homeowners have successfully filed more than 200 applications to build ADUs on their property. Bend aside, even Eugene’s much-maligned neighbor Springfield has been proactive with ADUs, waving Systems Development Charges or SDCs on accessory units through summer 2019.
Eugene, though, has been anything but proactive. We outlined the city’s policy failures in another article: Eugene Needs to Get its Act Together on ADUs. Between 2014 and 2017, Eugene issued an average of 2 permits for ADUs per year.
So why are ADUs such a big deal? For the time being, widespread ADU construction in Eugene could provide a supply of much-needed rental housing, as well as a source of income for homeowners looking to make the most of what is becoming a pricier and pricier investment.
But we don’t see any reason to stop there. We, along with Dylan, envision a future in which the outright ownership of ADUs will be a possibility. That future is still some ways away, but for now we’re partnering with Dylan’s company, Cultivate Place, to investigate potential first steps.
One of those first steps is an innovative pilot project, just announced in early November of 2019, which will provide three families with an opportunity to build their own self-contained 2 bed 1.5 bath units together on a lot within walking distance of downtown Springfield.
The project will require a significant time commitment and a willingness to learn a number of building skills from the licensed contractor who will be on board as a construction consultant. The rewards are simple, and we think quite compelling: affordable housing with cutting-edge design in a great location. Participation will require a buy-in of just $12,000 in earnest money. After construction, mortgage, insurance and taxes could total as little as $700 per month for each family.
There’s far more to the project than we can mention here, so visit the Backyard Barnraising home page for an introductory video and a link to all the juicy details. We, along with Dylan hope that this project will help serve as a template for further affordable housing solutions in Eugene.