Skip to main content
On March 7, Commissioner Nick Fish led the Portland City Council in its unanimous vote to block a development project.
It was the first time in 12 years the City Council had completely overturned an approval from Design Commission, an all-volunteer panel that signs off on big projects.
Related: Economists Say a Portland City Council Rejection of New Housing Sends Dangerous Signals
Fish, who is up for reelection, sided with a chorus of Portlanders who argue that the city need not foster private-sector development to address the city's rent increases. (For some of the neighbors, that's a self-serving argument in favor of views from their own condos.)
And yesterday, in the midst of Council deliberations about extending a tax break to private developers in exchange for affordable housing, Fish took a moment to double down on the argument against fostering private-sector development—that building high-end apartments doesn't help those most impacted by Portland's rent increase.
"There is a view that is getting some traction in the media," says Fish. "I call it 'trickle down housing,' and the idea is that … if we continue to have 95 percent or more of our housing at the luxury level, that we will over time be a benefit to those people shut out of the market."
Fish told the Oregonian that in his remarks, which were flagged on Twitter by the O's housing reporter Elliot Njus, he wasn't specifically referring to coverage of his vote to block the Fremont Place Apartments, the 17-story, 275-unit building.
Regardless of his precise inspiration, Fish made the wider case for why that vote against private-sector development wasn't important, even as economists and business leaders express alarm. (One architect told WW that developers are weighing canceling local projects.)
Related: Economists Say a Portland City Council Rejection of New Housing Sends Dangerous Signals
"If you take the logic of what some economists have said," Fish said. "what they're really saying is the person who can't find a luxury apartments to live in, is going to go out to 158th and Powell and displace someone who is a low-income unit run by Joe Weston. That is so preposterous on its face, that it is not worthy of our discussion."
Fish, a consummate public speaker, is erecting a bit of a straw man here.
WW hasn't found anyone who argues that the Portland resident who is seeking to live in the most expensive housing (say, the Pearl, where the Fremont Place Apartment might be built if Council doesn't continue block the project) would next choose to move to the least expensive neighborhoods (the sections of East Portland commonly called the Numbers) if that person couldn't find any apartment.
Instead, economists argue that shrinking high-end supply creates a domino effect.
Economist Joe Cortright puts it bluntly.
"In my opinion, Commissioner Fish is just wrong about how housing markets like Portland's work," Cortright emails. "All the parts of the the housing market are connected. If there isn't enough supply at the top end of the market, those people don't go away, they bid for other housing. Folks that would have gone to Fremont Place bid up other Pearl and NW Portland units, and probably bid up stuff on the close-in East Side as well, that pushes down vacancies and pushes up rents there. People that would have been in Sunnyside or Hosford or Sellwood or Kenton move further out. Eventually, that even shows up in the rents on older apartments in outer Southeast."
"That's exactly what happened between 2010 and 2015, when the number of new apartments completed fell dramatically because of the recession, while at the same time, more and more people moved here," Cortright adds.
"That's why Commissioner Fish heard all about rent increases and no-fault evictions."
When WW asked Cortright to respond to Fish's criticism of economists, he responded with a detailed case. We've excerpted it below, for those readers looking to understand economists' arguments about supply and demand.
Most notably, Cortright estimates that according to one economic study, Fish will need come up with 130 units of affordable housing to make up for the economic impact of blocking 275 units of housing on less well-off Portlanders.
Here's the rest of Cortright's email:
The past five years wasn't some random epidemic of greed; it was because we had a shortage of new housing, and in the face of rising demand, higher income people outbid lower income people for a slowly growing housing stock. We've lived through history that simply proves [Fish] wrong.
Also: Virtually everyone agrees that more market rate housing reduces rent increases and reduces displacement. Don't take my word for it: Even the most liberal academics agree. Miriam Zuk and Karen Chapple run the Urban Displacement Project at the University of California, Berkeley: Their estimates show that adding two market rate apartments have about the same effect on displacement rates as building one unit of public housing. See discussion here:
http://cityobservatory.org/the-end-of-the-housing-supply-debate-maybe/
Based on that estimate, to make up for the displacement effect of NOT building Fremont Place, Commissioner Fish is going to have to come up with something like 130 units of affordable housing. Those are currently running in the range of $300K (and up), so that's like $40 million worth of affordable housing you would have to build to offset the displacement from not building Fremont Place.
Rent increases in Portland have dropped from double digits a year and a half ago to negative today. The reason that has happened is because so much more market rate housing has become available in the past 12 months. And that's producing vacancies all over town, and not just in high income properties, but in the existing older apartment housing stock.
http://cityobservatory.org/signs-of-the-times/
In fact, the process of filtering in the housing market is how nearly all affordable housing gets built. Most housing gets built, at least initially, for middle and upper income households. As it ages, it becomes less desirable, and the original tenants move on, and the newer tenants typically are lower in the income spectrum.
http://cityobservatory.org/how-luxury-housing-becomes-affordable/
In effect, the housing market works like a game of musical chairs: If there aren't enough chairs, then some people get pushed out. In musical chairs, it's the slow. In housing, it's the poor. For a non-technical explanation of house this works, see this great infographic from Sightline Institute.
But this process of filtering doesn't happen when you block the construction of new housing. If there aren't enough new chairs added to the game, rich people end up in smaller, older chairs (houses) and the poor face shortages, rising rents and eviction. That's why in some places the 1950s era ranch home is the affordable housing stock in a metro area, and why in other places (like the Bay Area and LA), tiny, aging ranch houses can command $1 million or more.
http://cityobservatory.org/back-at-the-ranch/
If you care at all about affordability, you have to build all kinds of housing, including for upper income households. If you don't, the ones who will pay the price will be the ones that Commissioner Fish says he cares about.