Oregon’s Economic Outlook Brightens [9/1/26]
September 1, 2026
Aaron Kirk Douglas

Oregon’s Economic Outlook Brightens [9/1/26]

Oregon’s economic outlook brightens: recession risk falls, revenue forecast rises

State economists delivered genuinely good news Aug. 26 in their quarterly forecast to lawmakers. Recession risk for Oregon fell to 18%, down from 22% in the May forecast. This drop was according to Chief Economist Carl Riccadonna and Senior Economist Michael Kennedy of the Oregon Office of Economic Analysis.

The state’s General Fund revenue forecast for the current 2025-27 biennium rose $55 million to $35.7 billion. Additionally, the outlook for the following 2027-29 biennium was $538 million higher than the May forecast.

Much of the improvement traces to personal income tax withholding, revised sharply upward from 4.5% to 6.0% projected growth for 2026. This is a sign that Oregon wages and employment are outperforming expectations. Oregon’s economy also closed most of the gap that had separated it from the national growth rate. In the first quarter of 2026, Oregon’s GDP grew 2.4% against 2.7% nationally. This was a much narrower spread than in 2025.

Layoff notices under the WARN Act have fallen to a six-month average of 261, down sharply from the spikes seen in 2020 and again in 2025. The state’s own baseline scenario, carrying a 64% probability, calls for continued moderate growth, not a downturn. Oregon’s unemployment rate, 5.2% in July, remains above the 4.1% national rate. However, that gap has not closed.

Why it matters: After more than a year of coverage dominated by tariffs, layoffs, and a widening gap with the national economy, this is real evidence the picture is stabilizing rather than deteriorating. Falling recession risk, a nine-figure revenue upgrade, and stronger wage growth all support underwriting Oregon rent growth and investment with more confidence than the darker narrative allowed. Even with unemployment still elevated, the outlook is brighter.

Portland-area multifamily values stop falling, HFO report finds

The midyear report from HFO Investment Real Estate, released Aug. 25, says the market has stopped repricing downward. Buyers and sellers are selectively finding each other again. Portland-metro multifamily valuations are projected to gain 0.4% in 2026 after holding flat in 2025, according to CoStar’s pricing index (CoStar data is available to subscribers). Renters absorbed about 3,500 units across the metro in the past 12 months, edging out the 3,425 units delivered. Asking rents were down 0.4% year over year, and vacancy fell to 7%, down from a 7.9% peak. Downtown Portland’s vacancy dropped to 7.8% from 8.2% in 2025. This is still above the 2020 peak of 15.8% but moving the right direction.

Construction has thinned out enough to matter. Only 2,550 units were under construction across the metro area in the second quarter. In fact, 16 of 25 Portland-area submarkets had zero units under construction, according to HFO co-founder and partner Greg Frick. Vancouver, Washington, is also seeing vacancy fall despite a bigger supply pipeline than Portland. HFO’s report attributes this trend to tax advantages and employer growth pulling renters across the river. First-half transaction volume was $478.6 million. The total is on pace to land below last year’s $1.3 billion. The two largest trades of the quarter were Ladd Tower, a 332-unit tower on the SW Park Blocks that sold for $63.3 million, and the 225-unit Parkside Apartment Homes in Gresham, which sold for $40.84 million.

Why it matters: A 0.4% valuation gain is modest on its own, but two straight years of decline ending is the real signal. With 16 of 25 submarkets carrying zero units under construction, buyers have a rare window to acquire ahead of the next supply cycle rather than during it. Owners finally have room to push renewals based on occupancy gains.

Another wrongful-death suit hits Central City Concern over welfare checks

A $3 million lawsuit filed against Multnomah County and Central City Concern alleges staff failed to check on a resident at the Shoreline transitional housing complex, whose body reportedly went undiscovered for about 11 days. It is one of seven pending suits alleging bodies left undiscovered in CCC’s transitional units. Plaintiffs’ attorneys cite 34 similar undetected deaths across the 2,400 public housing units CCC operates in the county. Both Multnomah County and CCC declined to comment.

Why it matters: These suits turn on documentation, not just the underlying tragedy. Owners with supportive, transitional, or single-room-occupancy housing in their portfolios should confirm their management company has a written welfare-check policy with a real audit trail, not just a stated practice.

Two Washington County employers commit more than $2 billion combined

Lam Research broke ground on a $620 million research and development lab in Tualatin, part of $1.5 billion the company plans to invest in Washington County over 15 years. The investment is expected to create 400 jobs. In addition, Genentech is moving ahead with a $750 million expansion, doubling its Hillsboro campus and adding 250 manufacturing jobs. Commercial operations are targeted for 2031. Both land and Oregon have lost nearly 8,500 manufacturing jobs over the past year, including about 2,500 Intel layoffs last summer.

Why it matters: These are long-horizon commitments, not quick hiring events. They support underwriting Washington County rent growth on a multiyear basis, and sites near Tualatin and Hillsboro with entitlement flexibility are worth a fresh look.

Portland apartments keep shrinking while rent per square foot climbs

New Portland apartments built from 2016 to 2025 averaged 665 square feet, down 47 square feet over the decade, per Yardi Matrix data. The average Portland apartment now rents for $1,810 a month, about 1.5% higher than a decade ago after adjusting for inflation, for 7% less space. Portland ranks 99th of 100 U.S. cities studied for apartment size. This is moving against a national trend toward slightly larger new units.

Why it matters: Rent per square foot is quietly becoming the more relevant pricing metric for renewals and new leases alike. Shrinking unit sizes reflect land and construction cost pressure more than a shift in what renters want.

Tigard surveys residents as Washington County cities push back on faster approvals

The City of Tigard is updating its state-required housing plan and surveying residents on housing preferences, as required of Oregon cities over 10,000 residents. The city is among several in Washington County raising concerns about state legislation meant to speed approvals. Specifically, cities are concerned about a more restrictive appeals process and a faster deadline for engineering plans. They say the provisions prioritize speed over community input.

Why it matters: If local pushback softens the state mandate, entitlement timelines in cities like Tigard could stay longer than the law intended. Underwrite approval risk on a city-by-city basis, not just off the statewide rule.

National News

National apartment supply is set to bottom out in 2027

Yardi Matrix’s third-quarter forecast projects that new U.S. apartment supply will reach its lowest point in 2027 at about 444,000 units, then expand only marginally through 2031. That compares with 697,099 units delivered in 2023. The recently passed 21st Century ROAD to Housing law is cited as adding supply-side incentives for multi-family investment.

Why it matters: A national supply trough in 2027 supports rent growth and asset values as new competition eases, a theme that lines up with what Portland’s own numbers are showing right now.

Long-term rates remain the headwind, even with the Fed on hold

Oregon’s latest state economic forecast expects the Federal Reserve to hold its benchmark rate until June 2027. The 30-year U.S. Treasury yield recently approached 5.31%, the highest since 2002. State economists note that market yields have not declined in line with the Fed’s earlier cuts.

Why it matters: Long-term rates staying elevated is the more important signal than the Fed funds rate itself for anyone pricing acquisition debt or a refinance over the next 18 months.

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

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