Voter†Approved Annexations in an Urban Growth Boundary Regime: The Impacts on Housing Values, Density, and Economic Equity

Oregon is known for its strict Urban Growth Boundary (UGB) policies. While UGBs are designed to accommodate land supply for 20 years of growth, land within UGBs must be annexed into city limits before it can be developed at urban densities and serviced. In Oregon, cities use a variety of municipal annexation and voter†approved annexation policies (VAAPs), providing an opportunity to study how different annexation policies affect land and housing markets, and affect urban density. Previous research on annexation has not considered how annexation policy influences housing values. This paper examines how VAAPs impact land growth, housing development, and density at the city level. It also examines how VAAPs impact housing values. Based on city†level and tax†lot†level statistical analyses from 107 cities outside Portland Metro area, the results suggest that VAAPs negatively impact the availability of developable land within city limits. VAAPs also positively impact residential density and housing value. Lastly, VAAPs inequitably affect housing value between relatively high†value housing and relatively low†value housing, posing economic equity impacts for lower value housing. These findings provide important lessons for Oregon and other states. While VAAPs may increase residential density in cities, the policies may exacerbate affordability problems.