City of Portland Falling 66% Short of Permit Goals in 2024
Building Permits Granted in 2024 Fall in Portland Metro
HFO is now reporting a summary of the percentage changes in permit activity for Portland MSA 5+ units and the City of Portland for the years 2014-2024 based on the preliminary data available from the U.S. Census Bureau.
PORTLAND MSA MULTIFAMILY (5+ UNITS) PERMITS ISSUED
Portland MSA (5+ Units)
City of Portland: -66%*
Multnomah County (including Portland and Gresham): -66%*
Clackamas County: -10%*
Washington County: -64%*
Clark County: -13%*
CITY OF PORTLAND MULTIFAMILY PERMITS
Within the City of Portland city limits (5+ units), the data indicates a similar trend with a notable percentage decrease in permit activity over the same period.
ALL HOUSING UNITS – CITY OF PORTLAND
Permits for all housing units (1 unit or more) inside the city limits of Portland dropped by 47.43% from 3,089 to 1,624*
*U.S. Census Bureau data annualized based on permits reported through November 2024.
Overall, there is a significant decline in permit activity across most areas, particularly in the City of Portland and Multnomah County.
State of Oregon Falling behind on Housing Permit Goals.
According to the first annual Oregon Housing Needs Analysis by the Oregon Office of Economic Analysis, the State of Oregon is experiencing a severe housing shortage that requires the construction of about 29,500 new homes every year from 2024-2044.* A 2023 law required the housing needs study, which attempts to increase the state’s power to set housing targets and hold communities responsible for building them.
In delivering the results to lawmakers on Monday, January 27, the Oregon chief economist Carl Riccadonna pointed out that although the 29,522 number is less than Governor Tina Kotek’s executive order setting a goal of 36,000 homes, it far exceeds current permit or construction rates.
Oregon housing permits dropped from more than 20,000 in 2022 to less than 18,000 in 2023 and about 13,000 through November 2024. Nationally, housing affordability is at its lowest level since the 1980s, according to Riccadonna, who attributed the affordability crisis to three major macroeconomic factors:
- Household income
- Interest rates
- Home/rent prices.
The study identified five major factors contributing to Oregon’s housing needs:
(1) Years of underproduction
(2) Homelessness
(3) Population growth
(4) Demographic changes (smaller households)
(5) Short-term rentals and vacation homes
City-specific goals are also included in the study.
*HFO Director of Market Intelligence Aaron Kirk Douglas notes an interesting discrepancy here, according to a separate report by the Oregon Housing & Community Services (OCHS). The OCHS “State of the State’s Housing” report, released in November 2024, says, “Oregon must add 500,000 housing units over the next two decades to begin addressing supply issues” (p. 8). This number is 25,000 per year—4,522 per year lower than the economic offices’ estimate of 29,500. The discrepancy between the 25,000 number and the economist’s 29,522 number appears to be 90,440 units over the 20 years from 2024-2044. Economist Carl Riccadonna explains that “the Oregon Housing Needs Analysis (OHNA) report was produced in conjunction with OCHS, so we are all on the same page in terms of methodology.” OCHS assistant director of Research Megan Bolton indicated that the November 2024 report (“State of the State Housing”) utilized a few statistics from the draft Oregon Housing Needs Analysis reports” and it was prepared before the January hearing. Thus, there are apparently 90,000+ more units that are needed now than initially estimated in November. Based on these changing numbers, it would appear the housing crisis is even more dire than initially forecast.
**In August 2024, the City of Portland adopted Portland’s first Housing Production Strategy, calling for the construction of 6,000 units per year. This report states: “At a basic level, Portland has an estimated overall development capacity for 236,977 housing units, which is sufficient to meet the estimated demand of 120,560 units. However, the City of Portland’s needs analysis goes further to address specific housing types. Portland needs to support the development of 120,560 new units of housing by 2045—an average of 5,200 units per year. Additionally, to align with Governor Kotek’s statewide housing production strategy, the City should ‘catch-up’ the units from underproduction and for households experiencing homelessness and build 55,000 units by 2032, roughly 6,000 units per year.” In 2024, the City of Portland’s housing permits issued dropped by 47.43% from 3,089 to 1,624. Not all permits that are issued will always result in construction due to financing difficulties, costs of construction, and related issues.