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Oregon's Crater Lake

Oregon Bans Single-Family Zoning!

market research Aug 27, 2019

A recent event in Oregon could be the start of multifamily unit migration into single-family neighborhoods. This year Oregon has passed on a law allowing duplexes, triplexes, and other multifamily housing in neighborhoods previously zoned for single-family homes. So what is this bill and what does it mean for the future of investors?

What's the New Bill?

Oregon Governor, Kate Brown recently signed four bills essentially "ending" single-family zoning in a statewide effort to combat housing shortages. The bill will be limited to cities with a population of more than 10,000.

"Smaller cities between 10,000 and 25,000 people will have to allow duplexes in zones that were previously set aside just for single-family homes. Larger cities have to start allowing “middle housing” such as duplexes, triplexes, fourplexes, townhouses, and cottage clusters." OregonLive

Larger cities have until 2022 to update their codes to allow middle housing. Paul Bilotta, community development director for the city of Corvallis, said he "doesn’t expect to see rules for implementing the law established until the end of 2020."

Places like Corvallis, where there is an increasingly large population of students and retirees who are priced out of homeownership due to price increases in recent years are central to the new plans. The idea is that with these new changes, a large market of potential owners will have options available to them wherever they wish to live. This opens the doors to investors, providing more flexibility on when and where they're able to bring together multifamily units to meet the demand of this rental market.

National Trend?

The majority of opposition argues that this shift is going to change the landscape of how typical neighborhoods grow. They argue that as single-family neighborhoods become denser, the value will begin to decrease as curb appeal goes down and a lack of parking becomes an issue.

So can this be something we see elsewhere? It's important to note that similar efforts have been attempted recently in other states as well. "In late 2018, Minneapolis became the first major U.S. city to do so. Cities and state lawmakers are looking for solutions to address housing affordability and housing shortage woes across the country." Realtor Magazine

It'll be interesting to see how the new bills play out over the next year or two. One thing is certain, we're going to have to pay attention so that once this hits our investment markets—we'll be ready to capitalize on the new opportunity.

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