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The mega development on the edge of the Portland metro area is proving popular with millenials, Silicon Forest workers.

PMG PHOTO: JAIME VALDEZ - Recently completed townhomes at Reeds Crossing in South Hillsboro, a farm-to-gable community that is selling well as people flee big city cores for places with green space and room to work from home. The drive from Southwest Tualatin Valley Highway to the new housing development Reed's Crossing still goes through sparse land, where the perfect new asphalt roads meet untouched dirt at the curb. But a hundred yards in, a cluster of new homes has popped up since January. These buildings at this farm-to-gable South Hillsboro development are more than the usual putty-grey snout-houses of suburbia. There's a variety of colors and styles, as well as formats, from four-bedroom McMansions to two-bedroom townhomes.

Reed's Crossing is a master-planned community. The developer, Newland Communities, has other, much larger, communities around the country, such as the one in Tehaleh community in Bonney Lake, Washington. Finding a parcel this large, 456 acres, near Portland, was a rare opportunity. Reed's Crossing is part of the South Hillsboro Master Plan, which includes two other housing developments, Butternut Creek and West Rosedale Park. The master plan calls for parks, three schools, and within two years, a town center with shops and businesses to give it a more neighborhood, less strip mall vibe.

It's one of the peculiarities of the COVID-19 mega recession that at Reed's Crossing, judging by sales, one would hardly know this is a country of food pantries, grinding gig work and long hold times for unemployment benefits.

Suburb from scratch

Newland does the planning, permitting and infrastructure. Then it recruits homebuilders who buy lots and design and build new homes. Some are spec homes that they think the public will always want. Some are customized but based on basic floor plans. Newland markets the whole development, but the five homebuilders working there also have unique branding and markets aimed at their particular customer bases.

Newland intentionally spreads the homebuilders out within Reed's Crossing so that there is a nice mixture of different home styles. A typical three-bedroom, two-bathroom recently sold for $528,500.

Eric Peterson, vice president of operations at Newland, says sales have been volatile in 2020. January and February were record-setting, then came COVID.

"We were riding high, thinking this is going to be a great summer, let's see it happen. And then COVID hit, and demand just absolutely vanished for about 60 days when we were in full lockdown."

They pivoted to virtual tours and social media marketing (apparently, Instagram is a great place to find a house), and buyers started to come back in May. Even during the slump, web traffic was higher than ever, as people continued to check out Reed's Crossing online.

Social justice activity

"With people working from home, children learning from home, gyms being closed and people needing space for fitness within their home," says Allyse Paetsch, marketing manager at Newland. "Here in Portland, we have a lot of social justice activity happening downtown and high prices to live downtown. And since COVID, a lot of the major employers have said, 'You know, you can work from home indefinitely if the infrastructure is there, for your safety. If that works best for your family, you might as well do that.' So, the cost versus benefit of living downtown just isn't there for people anymore."

PMG PHOTO: JAIME VALDEZ - The interior of a home built by Ichijo USA, a Japanese homebuilder better known in Washington. Key features include tall ceilings, good insulation, and walk in closets the size of a Tokyo salarymans home. Peterson said move-in time for a spec house is usually 30 days, but lately, it's been 45 days. That means someone in California could see a home on their phone and a month later be sipping pinot on the patio and taking sunset selfies within in a month.

Reed's Crossing is in the first phase of 819 lots, broken into three sub-phases. He expects all of the lots, which come with the infrastructure built-in, to be sold by the end of 2020. Building a house usually takes about nine months. He expects the project to complete three or four hundred units per year and finish in eight years. "It's all driven by buyer demand," said Peterson.

Since April 1, they have sold 101 homes, or 17 a month. "That's strong demand. We're surprised by that."

Sales usually slow down in Fall because parents don't want to change school districts, but they have not seen that this year through September. Paetsch says Newland is on pace to reach its annual target of selling just over 200 homes at Reed's Crossing.

"Builders are hungry for those lots — especially the larger builders who do a lot of production each year. We're able to provide them a pipeline of not just lots of this year, but the next eight years," she said.

PMG: JOSEPH GALLIVAN - Developers replaced native grasses, because they looked like tall weeds, with traditional lawn at Reeds Crossing in South Hillsboro, a farm-to-gable community that is selling well as people flee big city cores for places with green space and room to work from home.

Dog tubes

Newland tracks buyers by zip code, and Anderson said, "The exodus out of the West Coast cities is a real demand driver for us. But there's no doubt in the last six months, we've seen a lot of demand in the downtown core." Whether it's the boarding up, the burning, or just the boredom of a quiet central business district, people are fleeing downtown. He adds that many potential buyers are ready to move quickly (coming from rentals) and are Millennials.

PMG PHOTO: JAIME VALDEZ - Eric Peterson and Allyse Paetsch of developer Newland Communities explore the latest iteration of the Reeds Crossing map, showing how five home builders are being spread across the huge property. The "amenity package" makes them more attractive: the little extras of a planned community. After feedback from early residents, Newland tore out the native grasses (which looked like waist-high weeds) and replaced them with standard manicured lawn, because people said they wanted more grass to play on or sit on.

During the pandemic, dog walking is a popular activity — especially with many people cooped up at home. So, they are building more dog amenities: parks for small dogs, parks for big dogs, parks with "skills areas" (tubes and ladders) for dogs. Peterson says they tell their architects and the parks can be designed and built in a couple of months. The nearby area under the electric power lines is slated to become another corridor park, and it will have small booths where people can work on their laptops, protected from the rain and direct sun. That is what residents are asking for.

Getting out

Wearing a mask, as she does everywhere, Darlene Tschudy was walking her little dog Dash on the grass. In January, Tschudy moved from a small condo in Orenco Station and bought a three-bedroom cottage to live with her daughter, and the daughter's significant other, who is "trapped in Arizona, unable to fly," by the COVID-19 pandemic, but is moving here soon.

"The quality of the home was excellent, but I think the best thing is the open spaces, and the ability to walk, which has turned into a real blessing with COVID," Tschudy said. The pair walk a couple of miles a day, but mostly they stay inside to avoid the coronavirus.

Other times she drives to Noble Woods or the area around her church and enjoys nature sitting in her car if there are other people around. COVID-19 has changed everything, for now.

"You can enjoy the trees even if you can't get out," she says.

If the suburbs are to rise again, it will probably be in a place like Reed's Crossing. The COVID-19 pandemic may have just given them a jump start.

COURTESY: HOMEBUILDERS ASSOCIATION OF METROPOLITAN PORTLAND - Ezra Hammer sees homebuilding booming in the suburbs for a perfect storm of reasons.

Homebuilding bounces back

According to Ezra Hammer, VP of policy and government affairs with the Homebuilders Association of Metropolitan Portland, there are three buckets to consider when analyzing the housing market:

  1. Applications to build new homes.
  2. Building permits being "pulled" or approved.
  3. The sale of homes once they are built.

Number one is going well, after a pause for COVID.

"Builder optimism and consumer need for housing are still at pretty all-time highs," Hammer told the Business Tribune. "People are submitting applications at a pretty similar rate to pre-COVID."

Hammer saw a dip for 60 days after a state of emergency was declared in March, but that was primarily driven by the City of Portland and Clackamas County staff adjusting to working from home.

"Most smaller jurisdictions were able to move nimbly, actually because they see so few applications to begin with. They were able to put systems in place that allowed builders to submit applications pretty seamlessly, either via a remote dropbox system, or electronically via PDF and email."

Because they're larger, Clackamas County and the City of Portland moved more slowly than other jurisdictions. For example, the City of Portland had recently switched over to new software, Amanda, and didn't have enough licenses or laptops for remote work. (Once they did they understandably prioritized them for put the fire department and the police departments ahead of the Bureau of Development Services.)

The second, building permits being pulled, is where there have been significant dips.

"For the first several months during COVID, there was a 50% or so year-over-year decline, and multi-family housing was hit hardest."

Lenders were changing terms and getting skittish because of the global economic outlook, which was dire in the spring of 2020.

"The Portland metropolitan region has a significant deficit of housing. One estimate from the state put that at about 40,000 units of missing housing, based on the ratio of household formation to housing units that are built."

However, if the house isn't getting built, it's not there on the market when it's needed in nine months.

The third factor is new home sales.

Hammer says sales are off the charts because, "There's a high desire to move to the Portland metropolitan region. People are coming from another part of the country that was harder hit by COVID, and we're seeing a really dramatic transition to remote working."

People in big, expensive cities, such as New York, Los Angeles and San Francisco, are looking at cheaper cities with a high quality of life if they can keep their jobs and work from home.

Also, potential sellers were wary of selling their homes because they didn't want strangers in their house who might spread the virus. That has made homes even scarcer since March.

Hammer has heard anecdotal evidence that especially two-income households, who are both working from home, are preferring suburbs now where they can have space for two home offices and a yard for exercise.

Hammer says one way to tell if this is happening at scale is to watch places further out from Portland, such as Hood River and Astoria. If new housing developments pop up for people from the bigger cities who really value access to the outdoors at an affordable price, then the work from home economy will be a reality, not just a COVID-19 blip.

"Each family has its own unique housing needs. If you're not working remotely, or if you're younger and want to access amenities, the cities are going to continue to have an advantage."

Joseph Gallivan
Reporter, The Business Tribune
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