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Portland-area Land Prices Rise 500% in 15 Years

PORTLAND- In a recently completed study, a research team at Portland State University’s Center for Urban Studies has determined that the price for vacant residential land in the Portland metropolitan region rose 500% between 1990 and 2005. The study was conducted by researcher John L. Hall and Dr. Gerard C.S. Mildner, Director of Center for Real Estate at Portland State.

This research was commissioned by the Portland Metro Home Builders Association and utilized land sales data from Zell & Associates, a local appraisal firm, Metro’s Regional Land Information System, and county tax assessors.

For raw residential land, the study found that the median price of land rose 12.6% per year between 1990-2005, for a cumulative change of 494%. The researchers found the median sales price for an acre of land in 2005 was $187,000. The average sales price for land was $339,000 per acre, reflecting the high value of parcels with good location.

Using a different data source that excluded parcels with major development barriers, the researchers found that the median sales price for residential land rose by 18.0% per year between 1994 and 2005, for a cumulative change of 517%. They found the median sales price for a buildable acre was $293,000 in 2005 and the average sales price was $320,000.

The price trends were similar among the four largest counties in the region, using data from either source. Washington County had the highest land prices, with a median price of $419,000 for a developable acre, followed by $318,000 for Multnomah County, $213,000 for Clackamas County, and $185,000 for Clark County, Washington.

The research team also found that land price increases exceeded increases in regional price trends for single family homes. Between 1990-2005, home prices rose 7% per year in the Portland metro area. Using the assumption that house is built on a quarter acre of land (including streets and setbacks), the researchers found that land rose as a percentage of average home price from 10.1% in 1990 to 26.8% in 2004.

“As Metro and other local jurisdictions review their future choices in planning we are hopeful this data can be used as a resource to better inform the policy makers of a trend in land values over the last 15 years.” commented Jim McCauley, Vice President of Government Affairs with the Home Builders Association of Metropolitan Portland.

This study documented the rapid increase in land prices in the 1990 to 2005 period in the Portland region. The Portland State team did not attempt to document the causes of the increase in land prices. These factors include: rising population pressures, lower interest rates, rising incomes, as well as supply constraints imposed by local and regional governments.

Oregon is known as a state with a unique system of regional planning that requires urban growth boundaries imposed surrounding all urban areas of the state, and a number of analysts have argued that these constraints have impacted land prices and housing prices in the region. This report does not take a stand on these issues. However, the data series developed in this report should help improve understanding of these issues.

For additional information, contact:

Dr. Gerard C.S. Mildner

Director, Center for Real Estate

School of Urban Studies and Planning

Portland State University

PO Box 751

Portland, Oregon 97207-0751

503-725-5175 tel

503-725-8770 fax

mildnerg@pdx.edu

Jim McCauley

Vice President of Government Affairs

Home Builders Association of Metropolitan Portland

15555 SW Bangy Rd., Ste. 301

Lake Oswego, OR 97062

503-684-1880

jimmc@hbapdx.org