Creative Class

In the current housing crisis, two sort of counter-intuitive things puzzle me:

In my close-in Portland, Oregon neighborhood there are several older houses being entirely gutted and renovated by new owners, five within two blocks of me. All for mid to high six figures I’m sure (on top of high six-figure purchase prices), plus some smaller five-figure remodels or additions. Many of the owners are younger (30s+) creative class professionals. So if there’s a fiscal crisis, where are people getting the money? And why are they doing this if the value of houses is expected to plummet?

Second, in the last couple of years there have been a half dozen new home and garden type magazines launched here, from the wonderful Portland Spaces, to the blah Ultimate Northwest, to the over-the-top Luxe Northwest, to the down-to-earth Oregon Home. They’re all part of local or national chains. But why would advertising vehicles for high end accessories be a good idea now?

It could be that these are both just poor timing, residual effects of the housing bubble – although Portland didn’t bubble like Las Vegas. Or is there something deeper going on? Is this happening elsewhere?

An article in today’s Portland Tribune talks about the effect on home values of various businesses – local movies, high end grocers, and bookstores raised values. Day spas and record/CD stores lowered them. What it reinforces here is that the close-in creative class neighborhoods that attract these stores then benefit from the store’s presence. I’d guess the same would hold true in other cities (and wonder what’s wrong with CD shops?)

This reminded me of an article in the latest Portland Spaces magazine about the difference in home value appreciation between close-in neighborhoods and further out suburbs. I had looked at their website and not found it – but the Trib article inspired me to call Portland Spaces editor, who referred me to a study Joe Cortright did for CEO’s for Cities last Spring. It showed that in Portland, housing prices had increased three percent in close-in neighborhoods, while declining five percent in distant suburbs. The same thing held true in other cities studied.

Cortright analyzed the effects on gas prices in this, but I think the more fundamental thing is the growing move back into cities is recreating small neighborhoods and supporting home values.