Despite urban living perks, many pay to live outside the city

by: PHOTO BY CHASE ALLGOOD - Washington County soon will start planning for more homes in Area 93, whiched used to be in Multnomah County.As home sales have begun to recover with the improving economy, a familiar pattern is emerging — the highest prices are still being paid for homes in the suburbs, including portions of unincorporated Washington County, Lake Oswego and West Linn.

The fact that people are paying a premium to live outside of Portland is contrary to claims repeatedly made by urban planners since the Great Recession started to wane. They argue that people no longer want to live in the suburbs but are moving to cities, where transportation costs are less. The goal, they say, is to live in so-called 20-minute neighborhoods where jobs, shopping and recreational opportunities are just a short walk away.

“What we’re finding is, people still want to be able to choose where they live, including in the suburbs,” says Dave Nielsen, chief executive officer of the Home Builders Association of Metro Portland.

Monthly reports issued by the Regional Multiple Listing Service back him up. They show that home sale prices in some suburban areas of the Portland metro area are significantly higher than in the urban core.

In July, this included the RMLS tract known as North Washington County, which stretches from west of Banks to Sauvie Island. The median sales price there was $397,000, compared to $281,000 in North Portland.

It also included West Portland, which includes the Raleigh Hills area. The median sales price there was $384,000, compared to $237,300 in Southeast Portland.

And it included the Lake Oswego and West Linn area, where the median sales price was $458,300. That compares to $299,800 in Northeast Portland.

Clark County going up

Perhaps surprisingly, home prices also were higher in two areas of Clark County than in most of Portland. They are the Ridgefield and La Center area, where the price was $351,300, and the Camas and Washougal area, where the price was $325,000. They are included in the RMLS’s Southwest Washington reports.

Significantly, sales prices in those suburban areas have historically been higher than in urban Portland, according to the RMLS reports. That means they did not lose their appeal when the real estate market crashed in 2007 and 2008.

Prices are not so high in other suburban areas, however, especially in east Multnomah County, where most homes are selling for less than in Portland.

The RMLS reports are not intended to be a poll on where people want to live. They track reported homes sales but do not include any information on rentals. But the price people are willing to pay for homes is an indication of the value they put on those locations. They are essentially voting with their pocketbooks.

Interest in new higher-end homes outside of urban Portland also is increasing, according to the Home Builders Association of Metro Portland. The organization’s 2013 NW Natural Street of Dreams just wrapped up its one-month run. It featured nine large homes along one street in unincorporated Clackamas County just outside of West Linn.

“That was the largest number of homes we’ve had in six years. And attendance was up 40 percent over last year,” Nielsen says.

According to Nielsen, the success of this year’s show is proof that, overall, homebuilding is on the rebound. He says the number of permits issued so far this year is about 45 percent of a typical year, a marked improvement over the 25 percent level at the bottom of the recession.

“We’ve got a long ways to go to return to normal, but it’s getting better,” he says.

In another sign the housing market is recovering, the association is planning its 2014 show along an unfinished cul-de-sac in a luxury subdivision in Happy Valley. Home building slowed down so much there during the recession that it was frequently cited as an example of why people don’t want to live in the suburbs. Now home building is picking up in Happy Valley again, too.

Tracking the trends

The RMLS first began compiling sales data and issuing monthly reports in the 1990s. The organization divides the Portland metro area into 15 districts based on the distribution zones of The Oregonian newspaper back then. They have never been changed and might not make the most sense now. For example, Beaverton and Aloha are included in a single district, even though their residential development patterns are different. And there are significant price differences between portions of inner and outer Northeast and Southeast Portland.

Nevertheless, the RMLS reports are perhaps the most reliable and accessible way to track Portland metro-area home sales over the past three decades. And they have consistently shown the appeal of certain suburban areas.

There are many factors to explain the price differences. Homes tend to be bigger and sit on larger lots in the suburbs. And many are newer because urban Portland began running out of suitable lots a long time ago. For many years, the vast majority of new single-family homes have been built in the suburbs.

Many expensive condominiums were built or being built in urban Portland when the recession started. Some units were priced higher than most suburban homes. There apparently were not enough of them to match the sales figures generated in the suburbs, however.

And then there are factors not related to the housing stock, like schools. A recent audit by Portland Public Schools revealed that its students do worse than those in other large school districts. That confirms the feelings of many parents who believe suburban school districts are better.

Changing demographics

From 2006 to 2011, the number of children younger than 19 fell in Multnomah County but rose in Washington County, according to a recent analysis of economic trends in the Portland area conducted by Christian Kaylor, a workforce analyst with the Oregon Employment Department. Kaylor says that reflects the perceived superiority of the school districts there.

There are some suggestions in the most recent RMLS report that home prices in Portland could close the gap on their suburban counterparts. In July, the year-to-date average price increases were higher than in the most expensive suburban areas. Average home prices increased 9.2 percent in North Portland, 13.5 percent in Northeast Portland and 14.7 percent in Southeast Portland. In comparison, they increased 5.6 percent in Northwest Washington County, 8.5 percent in West Portland and 13.3 percent in Lake Oswego and West Linn.

It remains to be seen whether those differences can be sustained as the economy recovers, however. Even if they are, the differences in sales prices is still substantial and will be further influenced by new homes that come on the market. At least for now, most of them are still being built in the suburbs.

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