Portland Housing Affordability in 2020: More Homes Needed
Housing affordability is a big question facing presidential candidates as well as local decision-makers here in Portland, including those who are looking to buy or sell a home in the metro area. While some worry that the coronavirus or COVID 19 situation will crash the Portland real estate market, our current prediction is that it will not. Demand is still too high and our low inventory is about to get even lower. While we will see a major drop in overall real estate transactions, our real estate market will continue forward. For all the reasons why this is the case, or for the latest updates, check out our most current Portland real estate market news section.
Taking a look at the bigger picture, the supply of single-family homes on the market this spring is tight. Then again, the National Association of Realtors considers the Portland housing market affordable for those earning the median income. The following chart shows the affordability rate over the last decade in Portland.
Other rates indicate that affordable housing might not be so easy to come by, even for those able to afford the median house payment.
- The inventory rate is down. According to the most recent RMLS report, February Portland real estate inventory is low at 1.9 months. In fact, the inventory rate has only been above 3 months one time in the past three years, and the rate at which the market would be balanced between buyers and sellers is 6 months.
- Rate of new construction is also down. For every 10 new households in Oregon since 2010, only seven new units of housing have been built, according to the Portland Tribune. In the Portland metro area, 79,500 new housing units have been built over the past decade, but over 100,000 new units were needed to keep up with population growth.
- Homelessness is up. As home prices and rents have increased, homelessness in Portland has doubled over the past four years. Others may simply avoid moving here in the first place, leaving many employment vacancies in the healthcare, construction and manufacturing fields.
Potential Portland Affordability Solutions
It’s not all bad news, however. The same housing supply/demand problem we have here in Oregon is happening in all areas across the US where the population is growing and the economy is strong. The key difference here is that policy makers are being proactive in solving the problem. According to the Wall Street Journal, “Oregon is emerging as a testing ground for a new approach to solving the nationwide shortage of affordable housing.”
Here are some of the potential solutions, both intentional and unintentional, that are already in the works:
- Investments in affordable housing: In 2018, Portland voters approved a $652.8 million affordable housing bond measure to create affordable housing for approximately 12,000 people in the greater Portland region. And agreements are in the works to allow private developers to build affordable housing at a lower cost than public-sector projects.
- Living in the ‘burbs. Housing costs are high in Portland and some surrounding communities, but not all. Sperling’s Best Places calculates a “Cost of Living Index”, where 100 is the US average. Portland rates a 130.8 overall, and 181.5 for the housing cost of living. However, surrounding communities have significantly lower rates, both overall and for housing specifically.
- The “Silver Tsunami”. A Zillow study last year found that, as baby boomers in Portland retire and downsize, 11% will be selling their home in the next few years. That represents a significant chunk of housing that will come on the market.
- Building other housing types. Portland has effectively eliminated single-family zoning in the city, allowing duplexes, triplexes and even four-plexes, as well as a varity of Accessory Dwelling Units, to be built on city lots. Not only does this create new housing for young professionals and retirees, ADUs give single-family homeowners another income stream, making living in those homes more affordable.
- Condos are cool. Not all homes have gone up in value in Portland over the last 3 years. In fact, the condo market in Portland is cool right now, and potential buyers can have their pick of a variety of units.
Ready to make the leap to purchase a home or condo in Oregon? Let our top Portland’s buyers’ agents be your guide to affordable living in Portland – or anywhere in the metro area.April 20, 2020