I would like to respond to the article that appeared in the Dec. 15 Mail Tribune titled, “Priced Out.” As a Realtor, I am acutely aware of the housing crisis that exists here in the Rogue Valley and indeed throughout the state. The article highlighted the plight of several tenants who have faced significant increases in their rent amounts over short periods of time.
It is not just renters being hit with price increases, it is home buyers also. In the last five years, according to the most recent housing statistics released by the Rogue Valley Association of Realtors, the median price of a home in Jackson County has risen 49 percent. White City saw a rise of 97.1 percent, Central Point 72.7 percent and West Medford an astonishing 103.9 percent.
This is not to downplay the issue of high rents and affordable housing for our most disadvantaged residents, it merely illustrates that it is not isolated to one group. Indeed, with over 1,200 Realtors in the Rogue Valley and more than 16,000 across the state, many of our members are renters.
We also understand that the crisis is around limited supply and heightened demand as a result of the 2007-08 housing catastrophe that saw new construction come to a complete halt, creating a massive lag in supply that has never bounced back. When legislation is focused only on balancing one part of the housing market (rentals) it has the long-term effect of exacerbating the problem.
Take the Portland market for example. The city regulated how much rent could be increased in any given year, and then went further to require that a renter who has to be relocated for any reason must receive compensation and relocation fees from the landlord. As a result, many investors/landlords have simply decided to get out of the housing market and have sold the real estate rather than deal with the onerous regulatory requirements imposed on them. Often that housing is not reintroduced to the rental pool, having a detrimental effect on supply.
Mariposa Townhomes is an example of a reasonable landlord who took the initiative to make improvements to the property in order to ensure that the rentals’ conditions were improved, viable and livable well into the future. There is a cost associated with that. It seems only reasonable that a landlord or property owner would want to make periodic improvements to their property. When rents are capped by government-imposed rent control and the market no longer controls prices, you will see less capital investment for maintenance and improvement as well as an overall decrease in supply.
Realtors support responsible housing policies that include increased supply of all kinds of residential real estate to the market. The city of Ashland recently released its provisional recommendations for cottages that can be built on existing lots within the city. The city of Medford has looked into the tiny house option and there are many other examples of attempts to work on the supply side of the problem.
But the fact remains that the best method to reduce housing costs is to increase the housing supply. Unfortunately, those looking to build houses or apartments face enormous regulatory challenges in doing so.
A client I work with is in the process of developing 14 units in the city of Phoenix which will ultimately enter the rental pool. The costs to purchase the land, pay permits/fees, own the land through construction, pay the system development charges and then cover the actual build costs makes the estimated per-unit cost of building a staggering $177,000. At that rate, these units would have to be rented for no less than $1,300 a month for the project to be worth the investment. Those numbers push this project out of the realm of being considered “affordable housing.”
If we really want to provide a long-term fix to housing affordability issues, we have to commit to more supply, expediting the planning process, streamlining application times and creating financial incentives for allocating certain units as affordable. This sort of progressive approach would not only work, but would be supported by many.
As always, Realtors seek to be a part of the solution and not the problem. Trying to regulate our way out of this problem will only ensure the problem persists.
— Colin Mullane is the principal broker at Full Circle Real Estate in Ashland. He is a board member for the Rogue Valley Association of Realtors, a past president of the Oregon Association of Realtors, and currently serves as a regional vice president for the National Association of Realtors.