Why Does Land-Use Regulation (Still) Matter in Oregon?

Last month it was reported that land-use regulations were crushing a new entrepreneurial venture in Oregon: goat yoga. If you aren’t already a yoga devotee and familiar with the pastime, goat yoga involves rolling out your yoga mat at a family farm and then letting baby goats jump on your back while in “downward dog” or “plank” position. And before you start to worry, the practice is allegedly good for both baby goats and humans.

Unfortunately, Oregon’s land-use regulations wouldn’t allow the country’s goat yoga pioneer, Ms. Lainey Morse, to practice activities on agricultural land that didn’t promote the “sale of a [farm] commodity.” In other words, since you don’t buy the baby goats when you’re done with class, local zoning means Ms. Morse and her clients are out of luck.

Although goat yoga may not be high on every Oregonian’s to-do list, land-use regulations do impact citizen lives in more pernicious and less-funny ways.

One of the more ubiquitous ways land-use regulations harm non-yogis is by inflating housing costs. My studies indicate that the relationship between land-use regulations and home prices is highly statistically significant, or unlikely to occur based on random chance alone. In 44 states, new land-use regulation is correlated with increasing home prices.

Existing research supports this view. For example, Harvard Economist Edward Glaeser finds “zoning and other land-use controls play the dominant role in making housing expensive” and a study by Salim Furth found residents of high-cost coastal areas would pay 20 percent less in homeownership costs if they adopted regulation typical of the rest of the country.

But increasing home prices is just one of many unsavory impacts of regulation. Academic evidence indicates that when restrictive regulation is present, racial and economic segregation increase significantly and geographic mobility and economic growth decline. Another issue is that heavy land-use regulations infringe on basic freedom and individual liberty: land-use regulations hamper individual property owner’s ability to use their property in useful ways that don’t impact other property owner’s ability to do the same.

In spite of the relationship between land-use regulations and undesirable outcomes like segregation and housing shortages, the quantity of zoning and land-use regulations continues to grow. In fact, the quantity of annual land-use regulations more than doubled in the United States between 1980 and 2010 alone, as measured by related appellate court cases. Oregon, a state famous for its conservation-minded land-use regulation, added more land-use regulations (adjusted per capita) between the years of 2000 and 2010 than 43 other states.     

This helps to explain why Portland’s Mayor Ted Wheeler recently filed an ordinance to extend the “Housing State of Emergency” declared by Portland’s City Council for an additional 18 months. Thanks to Portland’s heavy land-use regulations, like its urban growth boundary, the Portland housing market was under-built by approximately 23,000 units of housing between 2006 and 2015. 

Because current Oregon law requires each city establish urban growth boundaries of their own, housing supply shortages are magnified throughout the state. Not surprisingly, home prices in Oregon continue rising. Zillow forecasts Oregon home prices are likely to climb another 3.7 percent over the coming year.

And although Oregon has made past efforts to scale back development regulation, the total burden of land-use regulation is still heavy and restrictive. As long as it is, regulation will continue to negatively impact Oregonians’ ability to innovate, work, and live affordably—and even to practice goat yoga.