Oregon Housing Reform Heats Up as Portland Permits Plunge and Rents Hold Steady
Headlines:
- As Portland Metro’s multifamily permits plunge and rents hold, legislative housing reform heats up.
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Forbes magazine article on Portland’s Proposed Housing Fee Waivers 6/5/25
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WSJ: Flat Rents and Affordability Metrics: Indications of a Mixed Opportunity Landscape for Investors. Despite a slight decrease in average rents, Portland remains affordable for many compared to their income.
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Announcement of 1,000 units of Workforce Housing in Albany
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And HFO’s latest chart of Portland MSA’s permit trends.
City of Portland Permits Forecast: 648 for 2025, -21% from 2024.
With permits annualized from available data through February 2025, the City of Portland is running 21% below its 2024 permit levels, with a forecast of 648 units compared to 820 in 2024.
The Portland-Hillsboro-Vancouver metro area, with data posted through March 2025, is running at 1,752 units annually. This is a 35% decrease from 2024.
(*Source: U.S. Census Bureau/HUD State of the City Data Systems)
Permits in Multnomah County on track to drop an additional 28% in 2025.
Portland Real Estate Overview – Wall Street Journal 6/5/25
Housing Market Trends
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In April 2025, the median sale price for single-family homes in greater Portland was $550,000, surpassing the national median of $420,000.
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Closed sales increased by 4.7% in the first four months of 2025, approaching pre-pandemic levels.
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Portland had 3.1 months of housing inventory in April 2025, lower than the national average of 4.4 months.
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Apartment rents are rising as vacancy rates fall.
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Downtown Portland’s real estate market is facing challenges, with condo sales down 12.4% and median prices down 7.6% from January to May.
City Dynamics
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Portland’s Metropolitan Statistical Area (MSA) encompasses downtown and parts of Multnomah, Washington, and Clackamas Counties.
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The city grapples with high homelessness rates, the second-highest top marginal income tax rate in the U.S., and public service challenges.
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Population dynamics reveal a decline within the city, but growth in the metro area, driven by factors such as taxes and schools.
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Residents are migrating to suburban areas for lower crime rates and better amenities.
Resident Perspectives
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Disparate views exist on Portland, with some perceiving it as deteriorating and others finding it charming.
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Recent buyers from cities like Los Angeles and San Francisco note comparable social issues but more affordable real estate in Portland.
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Newcomers appreciate Portland’s unique offerings, including its walkability, public transportation, culture, and outdoor activities.
Source: https://www.wsj.com/real-estate/luxury-homes/portland-oregon-housing-market-cabecb9c [Subscription required]
The Latest on Oregon’s Housing Proposals and Programs
Gov. Tina Kotek’s Budget Proposal:
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Gov. Tina Kotek is advocating for an $800 million budget to address housing and homelessness.
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House Bill 3644 focuses on a statewide shelter program, with over $217 million allocated, including eligibility criteria and data reporting requirements. A work session is scheduled for 6/10/25.
Factory Housing Initiative:
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House Bill 3145 aims to promote factory-produced housing for low-income households by investing $50 million in pilot projects.
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Previous investments of $20 million have been made in modular factories.
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This initiative includes an additional funding request of over $600,000 from the state’s general fund.
Regulatory Changes:
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Senate Bill 974 aims to expedite the building of single-family and multi-family housing developments within the urban growth boundary by streamlining regulations.
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The bill seeks to reduce the building timeline to under one year from the current 2-3 years.
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Pending Gov. Kotek’s approval, this bill has passed both legislative chambers.
Revolving Loan Fund:
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Senate Bill 684 proposes the establishment of a state fund to offer low-interest loans to builders for projects incorporating lower-income rental units.
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This fund, a one-time “construction revolving loan fund,” would not rely on federal funds, with a funding request ranging between $20M and $50M.
Senior Housing Initiatives:
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Oregon addresses the rise in homeless seniors with House Bill 3589, allocating around $24 million to incentivize housing for older adults and individuals with disabilities, drawn from the State Senior Property Tax Deferral Fund. A work session is scheduled for 6/10/25.
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Another bill, House Bill 3506, suggests using approximately $3 million from the same fund for home modifications for seniors. A work session is scheduled for 6/10/25.
Portland Housing Fee Waivers (Forbes Magazine) 6/5/25
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Oregon Governor Tina Kotek and Portland Mayor Keith Wilson established a Multifamily Housing Development Workgroup in March 2024 to address housing costs in Portland.
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In May 2024, Portland proposed waiving system development charges (also known as impact fees) for three years, or until 5,000 new housing units are completed, whichever comes first. System development charges are fees on new developments to offset the impacts on city services and infrastructure, such as water systems that are stressed by additional housing. These charges can add up to 6% of total development costs in Portland, which significantly impacts the financial feasibility of new housing projects.
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In 2024, Portland only permitted 820 multifamily housing units, compared to 2,142 units in 2023.
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Portland’s housing plan aims for 120,000 new housing units by 2045, with a calculated need for 106,571 additional units when factoring in projected household growth and replacement needs.
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The city’s permitting and housing data are not always transparent or easy to track, making it difficult to assess progress and the true impact of fee waivers.
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Removing system development charges may help enable more housing production, but it alone may not be sufficient to achieve the targeted growth.
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In the past year, average rents in Portland decreased by about 0.5% according to Apartments.com. The average rent for a 1-bedroom apartment is around $1,500 per month.
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Area Median Income (AMI) for 2025 is $86,870 for a single person who, using the 30% rule, can afford a 1-bedroom of $2,100. According to Apartments.com, 48% of apartments in Portland are priced between $1,000 and $1,500, making them affordable for those earning approximately $45,000 per year.
1,000 Units Planned for Workforce Housing in Albany
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The proposed East Albany Town Center development project is planned east of Interstate 5 on approximately 30 acres of mostly vacant land south of Highway 20.
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Development Details: The project aims to create approximately 1,000 units of workforce housing, including single-family homes, townhomes, and apartments up to six stories high, situated above ground-floor commercial spaces. Additionally, it plans to include 50,000 square feet of commercial space and accessible services.
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Sponsorship and Funding: Affordable Housing Oregon and Nichols & Irish are involved in sponsoring the project, aiming to offer affordable housing without subsidies. The city council has applied for a state grant to support the initiative.
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The project requires the annexation of several properties that the developers have acquired. The annexation process will follow standard procedures, including public hearings before the Planning Commission and the City Council. A development agreement between the developers and the city will finalize project details. There is no specific timeline for project completion.
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