Our Region is far From Over: There is no "Next Portland"

February 12, 2018
Authors: Josh Lehner, Oregon Office of Economic Analysis
Publishers: HFO Apartment Investor Newsletter

The Portland metro area is in a state of transition. The apartment boom and neighborhood changes in the urban core are highly visible. Residents see and feel the shift. However, the economic changes run even deeper. Over the past decade, Portland’s high-wage job growth, household income gains, and rising levels of educational attainment have been transformational. Portland has pulled away from its former economic peers. Even so, Portland has yet to catch the nation’s upper tier. Such gains are undoubtedly good but come with some societal growing pains. Regions and economies are always evolving. But for some, Portland is now unrecognizable from its past. Thus, efforts exist to find the nation’s “Next Portland” – the newest up-and-coming metro area. But Portland’s growth and appeal are far from finished. The future remains bright. None of the most commonly cited Next Portland contenders compare even reasonably well to the real thing—each lacks an important ingredient or two. 

Wage Growth and Educational Attainment Increases 
New Census data reveals the Portland region’s astonishing growth since 2007. Among the nation’s 100 largest metros, Portland ranks 5th best in both high-wage job growth and educational attainment increases. Today, 40% of Portland’s working-age population holds a college degree. Portland’s six percentage-point increase over the decade is over twice the typical gain. 

Income Gains and Lower Poverty Rate 
Importantly, economic growth has translated into income gains and improved well-being in recent years. This has not always been the case. The region’s poverty rate is now lower than before the Great Recession. Though large racial disparities remain, whites and communities of color have both seen improvements. Additionally, median household income is now nearly 9% higher than before the Great Recession, after adjustment for inflation. The typical large metro has not recovered its losses. These gains place Portland’s rising income as the 4th best since 2007. Portland now has the 19th highest median household income among the large metros. In 2007, Portland ranked 32nd highest. 

Regional and Statewide Economic Strengths 
The region’s high quality of life and strong economic foundation drive some of this growth. Portland excels at apparel and design, food and beverage, and semiconductors. Oregon’s strengths also include renewable energy, wood products, and unmanned aerial vehicles. The region likewise boasts old-school assets in terms of its geographic location and infrastructure for air, rail, and water. 

 

Portland’s Status as Talent Magnet 
However, Portland’s most important strength is its ability to attract and retain talent. Only a few metros see such strong migration rates among young college graduates. Portland stands with the Bay Area, Denver, Raleigh, Seattle, and Washington D.C. These metros tend to have higher levels of educational attainment, higher incomes and a major research university. Portland has kept pace and it has made up a little ground. Portland now ranks 16th highest for the share of working-age residents with a college degree. In 2007 Portland ranked 27th highest. In recent years there has also been a clear shift toward scientific, technical, and medical degrees. 
Affordability has stopped getting worse 

Unfortunately, a strong regional economy and high quality of life comes at the cost of housing. The demand to live in the area outstrips supply. Like other growing regions, Portland has built fewer homes than necessary in the past decade—worsening the problem. 

Improving incomes in recent years have helped somewhat. As apartment construction catches up and rents more slowly increase, additional improvement in housing availability is likely. Ownership remains a huge challenge. There is still the issue of displacement of lower-income households toward the suburbs. Such households have not yet left the Portland region in substantial numbers as has occurred in other high-cost metros. 

Why There’s Really Nothing Like Portland 
As Portland transitions, some look to find the nation’s “Next Portland.” Typically hard-to-define concepts like cultural cachet or the strength of the local hipster scene determine the contenders. While subjective measures matter when choosing where to live, they remain in the eye of the beholder. Across standard socio-economic measures, all of the most commonly cited Next Portland contenders fail in at least one important way. In order to truly be the Next Portland, each will have to overcome these deficits. 

Our Closest Contenders 
Boise and Salt Lake City come the closest to matching Portland’s economic and population growth. These metros also have relatively young populations. However, internal dynamics drive much of Salt Lake City’s demographics. Boise attracts young families, but few root-setting individuals. Boise also lags considerably on high-wage job growth. Both have average or below average rates of educational attainment for a large metro area. 

Conversely, Portland, Maine and Pittsburgh look a lot like Portland, Oregon in terms of educational attainment. Both see net out-migration among people in their root-setting years. Their age profiles, along with Asheville, NC, resemble a retirement community. That said, young migrants are now moving to Asheville in greater numbers. But art, design, and entertainment occupations in Asheville are half of that seen in the real Portland. All of the Next Portland contenders have a smaller share of such jobs than Portland, except for Missoula, MT. 

The most important thing contenders share with the real Portland is poor housing affordability. Costs are already high compared with local incomes. The exceptions are Pittsburgh, and possibly Boise. For most areas, housing is likely a major hurdle to becoming the Next Portland. 

Portland Still Far From Being “So Yesterday” 
“Old Portland” may be dead, as Willamette Week diagnosed, but it is clear the region is far from over. Portland’s high quality of life and strong regional economy remain—for now. Efforts must be made to ensure their continued success. That said, Portland is transitioning. These changes run deeper than the built environment. The region’s advantage and outlook largely rests on its ability to attract young, skilled households. Historically this has been no problem. However, affordability issues can eventually stall growth, and increase displacement. The region’s biggest long-run challenge is its ability to ensure an adequate housing supply. This includes options within existing neighborhoods, those close to transit, and new suburban developments. 

Josh Lehner is the State of Oregon Senior Economist. He can be reached at (503) 378-4052 or via e-mail at joshua.lehner@oregon.gov.