Oregon Conversion Costs Drop and Clark County Fees Climb [9/22/26]
September 22, 2026
Aaron Kirk Douglas

Oregon Conversion Costs Drop and Clark County Fees Climb [9/22/26]

Oregon Court Removes a Cost Barrier to Building Conversions

The Oregon Court of Appeals ruled this month that the state labor bureau was wrong to require prevailing, union-scale wages on affordable housing projects that convert existing buildings rather than build from the ground up2. The case centered on a Salem developer’s conversion of a century-old church into 17 affordable apartments. This project absorbed a cost increase of roughly 13% under the bureau’s now-overturned interpretation.

Why it matters: The decision clears a path for more office, church, and vacant commercial conversions to affordable housing across Oregon, a state with high office vacancy and a deep housing shortfall. Meanwhile, developers eyeing adaptive reuse now have more certainty on costs.

Clark County Raises Fees on New Development

The Clark County Council voted this month to raise land use and wetland and habitat review fees by 6% to 7%. In addition, they added a new 2.5% technology fee on top, effective Jan. 1, 20273.

Why it matters: The increase adds a direct cost to permitting new apartment projects in Clark County. Developers and investors should factor the higher fees into 2027 underwriting, especially for sites requiring wetland or habitat review.


Eugene Breaks Ground on 1,000-Bed Student Housing Project

Landmark Properties and CrossHarbor Capital started construction this month on The Mark Eugene, a five-story, 272-unit project on the site of the former PeaceHealth Sacred Heart Medical Center near the University of Oregon1. The project will deliver just over 1,000 beds for the 2028-2029 academic year. A planned second phase is expected to bring the total build-out to 2,275 beds.

Why it matters: A major institutional developer is still committing capital to Eugene’s student housing market even as construction slows nationally. As a result, owners of existing off-campus housing should plan for new competition once the project opens in 2028.

National and Federal Signals

Multifamily Construction Keeps Slowing Nationally

Starts on buildings with five or more units fell 15.5% year over year in August, landing at a seasonally adjusted annual rate of 344,000 units. Meanwhile, completions dropped 35.7%4. An analyst with Continental Properties said further declines are possible in the months ahead. They pointed to underwriting challenges tied to moderated rent growth and interest rates near 5%.

Why it matters: A shrinking national construction pipeline points toward tighter future supply, which should support rent growth and occupancy for existing Pacific Northwest owners over the medium term. Furthermore, it is an early signal of a supply-driven recovery beginning to take shape for 2027 and beyond.

Vacation Homes Remain a Small Share of Oregon and Washington Housing

A new analysis of Census Bureau data found vacation homes made up 3.3% of the U.S. housing stock in 2024, down from a 2018 peak of 4.0%5. Oregon ranked 28th among states, with vacation homes accounting for 3.0% of its housing stock. Washington ranked 33rd at 2.5%. Both are below the national average.

Why it matters: Neither state carries an outsized share of housing tied up in vacation use compared with resort-heavy states like Maine and Vermont. For regional investors, it is a reminder that the housing shortage traces mainly to underbuilding and demand growth. It does not trace primarily to competition from second homes.

Sources

  1. The Register-Guard, “Property takes shape on old Sacred Heart site in Eugene,” Sept. 20, 2026. (link not publicly available; article is behind a subscriber paywall)
  2. Lebanon Local / Oregon Journalism Project, “Appeals Court overturns BOLI requirement for union wages on projects that convert buildings to affordable housing,” Sept. 18, 2026.
  3. The Columbian, “Clark County approves development fee increases,” Sept. 16, 2026.
  4. Multifamily Dive, “Multifamily starts plummeted nearly 16% in August,” Sept. 17, 2026.
  5. SellMyTimeshareNow, “U.S. Cities and States With the Most Vacation Homes,” Sept. 2026. (original report link not publicly confirmed; widely syndicated via regional news outlets)

#MultifamilyMarketwatch(R)  #OregonRealEstate  #ClarkCountyWA  #ApartmentInvesting  #HousingPolicy

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HFO Investment Real Estate is the largest multifamily-only brokerage in the Pacific Northwest. The company has 12 brokers focused exclusively on apartment investment sales in Oregon and Washington. Call (503) 241-5541.

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