Laurel, Home Buyer in Portland, OR

What effect does zoning have on adjacent property values?

Asked by Laurel, Portland, OR Sat Jul 19, 2008

I'm looking at a west side close-in property zoned R5. It's in a residential neighborhood close to Beaverton Hillsdale highway, with a mix of houses built from the 1940s through the present. It's a kind of mixed nice/slightly ratty neighborhood.

All the properties across the street are zoned R2.5, but they all have single houses on the lots, which appear to be 5000 square feet (and could therefore hold two houses). The lot behind the property is zoned R5 but it is a 10,000 square foot lot (so it could be divided).

Given the zoning, it looks like the neighborhood could be much more dense in the future. What does this mean for the value of the property, if it's a nice property now on a quiet street, but could be filled in? (even if there are no current plans to do so).

The house I'm considering is not on a dividable lot. Should this house be discounted given that the neighborhood could be a lot more congested in the future? If so, by how much?

Help the community by answering this question:


Take a load of this one:

My husband and I bought 9 yrs ago in a residential area with some light industrial up the road a way. The lot directly across from our house was zoned R1 and had 2 homes on it. A few yrs ago one home was torn down quickly due to a legal matter.

Apparently in 2008 (without any signage or door to door consultation that anyone can remember) the lot got zoned by the OCP to "I3"...On the current map and the Chase River Neibourhood Assoc. map it still says R1.

Regional Recycling now wishes to bulid a 10,000 sq foot bottle depot on 2.5 acres of land with 27 parking spaces literally a streets' width away from my home. It is important to note that none of theresidents areagainst recycling, far from it, we are opposed to the ZONING... I bet they will let Mr. Shorting of Regional Recycling destroy this area, even though ALL of the residents have written letters.

Interested in this story?

Check it out at the Public Hearing
May 1
80 Commercial St in Nanaimo BC

So, I guess I'm saying in Nanaimo if you want to live here it doesnt matter if you do your research or have proof to back up your claims. The OCP rules and neibourhoods can be destroyed.
0 votes Thank Flag Link Wed Apr 30, 2014
Congratulations! It is a good thing that you are looking at the current zoning, and its great to do a little due diligence on upcoming plans the citiy may have for rezoning and development and any pending applications for such. terms of property value, you may just be OVERTHINKING THIS.

Due diligence on the immediate or near term changes is great, but if it is a home you like, you can see yourself living in 5-10 years min, and you can get it for a reasonable market price and terms...go for it.

Pricing and appraisals are always based on the CURRENT market value....a snapshot of the most recent (6 mos) activity for similar size, age, zone, location properties.....period......The banks lend on the current market value, the appraisers appraise on the current market value.....and insureres too...
.you dont pay for future value, and you dont discount for the future either....

The rest is speculation and in all speculation there are both potentials ups or downs.

Do you want the house? Do you like it? have you spent a lot of time looking at properties, and this is your best choice?

best wishes

Gloria Matthews
0 votes Thank Flag Link Mon Jul 21, 2008
Laurel, you did not mention if you were on a corner because you might be able to split a corner into a duplex. The City of Portland wants higher zoning but just because your lot is not zoned that way it does at this time not make it worth more or less. If they rebuilt row homes across the street it might change the value but in most cases it is not worth it to the builder to tear a single family house down to build 2 since the price of a decent house will be to high for 2 empty lots to build row homes. The homes must be not livable and able to finance if they will tear them down since it will cost $10,000-$20,000 to tear them down. If you like it buy it but it but you will get no discount I don't think because the future is uncertain.. Good Luck
Tom Inglesby, Broker
RE/MAX Equity Group Inc.
0 votes Thank Flag Link Mon Jul 21, 2008
As in any neighborhood where zoning allows for more density you run a risk of having potential growth as time moves forward. However, it appears that is not really the immediate concern in this case in the neighborhood you're describing as all are detached single family at present.

What a good question: But the answer is so vast there is no way to give you assurances that are absolute. A detached single family home-owner in the midst of high density units will have more pressure to reduce price in the future because of its location--unless you are the one property hinging or bridging a gap someone needs for their expansion. Then you hold the trump card in many cases. There are exceptions of coarse, in the case of eminant domain,- but that too doesn't seem the probability here by your description. If you are thinking of buying for long-term-living in the property you'll have to consider all the possibilities. You can check with the county/city (depending on location) to see if there are any applications on file for dividing lots in that area or for large expansion or development of any kind. Also, are there signs of construction of new units already started? These investigations will help you see any trend starting. However, even if the zoning allows division of the property, the placement of the existing structure may well prevent or greatly complicate the division. There would potentially need to be destruction of one to build two- or total restructuring of the one to create two. Someone buying NOW while its all still single family will benefit in the future if they sit on someone elses gold mine. You may well benefit from resale yourself if you are the one to develop the property later. So there isn't too much danger in huge losses unless you buy it at a price that is unreasonable right now. But to use these scenerios to negotiate the price you'll offer may be too far out in the future for sellers to consider worth considering. Your offer price should be based on good comps of recently solds in the neighborhood rather than potential long-range density. Unless I'm totally misunderstanding your question, this is a reasonabally realistic answer. but none of the experts can guarantee limited future development. The best way to set your mind at ease will be your investigations with the city and county entities. If you don't yet have a realtor representing your best interests and helping you through the process, please consider checking out my web site and/or give me a call. All my contact information is listed there. Best to you!!
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0 votes Thank Flag Link Mon Jul 21, 2008
Marie has a GREAT point, ask the city planning committee what they anticipate in the future. Would your home Single Family be more in value than multifamily, if multi family chech the deed restrictions what those values will be. SUGGESTION spend more time in your investigation prior to purchase You might want to talk with other builders in the area get their pulse. . If you work positively in concert with a real estate agent I am assured solutions to all of your questions could be resolved.
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0 votes Thank Flag Link Sat Jul 19, 2008
no one has a crystal ball, but ask yourself if you would like to view the back of a shopping center or fastfood joint, billboards or a bar, the noise of traffic and all that litter that blows into your yard
0 votes Thank Flag Link Sat Jul 19, 2008
It is very important to the value but it will be hard to discount based upon what might happen in the future. There are plenty of homes in mixed areas that you could use as comparables. These mixed areas in general are fine as long as you realize what can happen and take that into consideration in your purchase.

I am surprised the home you are buying is not zoned for partition. Maybe you should speak to the city about the home/lot you are looking at and see what might be possible.

Good question but not really leverage for a discounted offer if it is priced correctly.

Best wishes in your pursuits!


Dirk Knudsen
Re\max Hall of Fame
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0 votes Thank Flag Link Sat Jul 19, 2008
It is doubtful that the sellers will consider "discounting" the house just because the lot cannot be divided. You say that it is a residential property in a residential neighborhood with no plans on the books to increase density by building multi-family units. So the house is worth what fair market value will support today.
In the future, should plans be made to rezone that area for multi-family dwellings, it is possible that a developer could want that property. Will that make it worth more? Possibly; but that is only conjecture.
Have you asked your agent what their opinion is?
0 votes Thank Flag Link Sat Jul 19, 2008
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