To overcome a housing deficit that has been developing for years, Oregon needs to build roughly 29,500 additional homes year, primarily in the Willamette Valley and Portland area, the state’s chief economist informed lawmakers on Monday.
The first annual housing needs analysis report from the state’s Office of Economic Analysis was just released, and it included homebuilding goals that the state and local towns must accomplish. It is the outcome of a comprehensive 2023 law that aimed to grant the state additional authority to establish housing targets and make local governments responsible for achieving them.
The 29,522 total is still far more than the number of homes built in recent years, but it is less than Gov. Tina Kotek’s target of 36,000 homes annually. According to the most current month’s statistics, builders pulled slightly over 20,000 residential permits in 2022, less than 18,000 in 2023, and just over 13,000 by November 2024.
As more Oregonians struggle to locate reasonably priced houses to buy or rent, building is lagging. According to Chief Economist Carl Riccadonna, the three macroeconomic factors that determine housing affordability are interest rates, household income, and the actual cost of a property or rental.
“When we look at this nationally, housing affordability is as bad as it has been since double-digit mortgage rates were prevalent in the 1980s,” he said.
Five aspects that contribute to housing demands are included in the state’s analysis:
1.Years of underproduction
When developers obtained licenses for almost 31,000 homes in 2005, building permits reached a peak before falling precipitously during the 2008 recession and housing crisis. Although homebuilding gradually increased as the state emerged from the recession and then declined due to the COVID outbreak, it hasn’t reached 1990s levels. In 2009, about 7,000 homes were constructed statewide.
At the same time, Oregon’s population increased by about 11% between 2010 and 2020, surpassing the growth of all but ten other states and earning the state an additional congressional seat. Oregon’s population has grown by over 400,000 since 2010, yet local municipalities haven’t constructed enough homes to accommodate the increase.
According to the estimate, Oregon will need to build 50,300 homes statewide over the next 20 years to make up for those years of underproduction, with around two-thirds of those homes being priced at a level that is affordable for families making less than 60% of the local median income.
2. Rehousing homeless people
22,875 Oregonians were listed as homeless or residing in shelters in the 2024 Point in Time count, a federal count of the number of homeless people on a specific day in January. Because it excludes those without houses who are sleeping with friends, in motels, or in other less noticeable locations, homeless advocates characterize that metric as providing an incomplete picture of homelessness.
According to the housing requirements research, within the next 20 years, Oregon will require an additional 45,637 dwellings for homeless individuals.
3. Population growth
Almost half of the projected requirement for 242,081 homes across all income levels over the next 20 years will come from newcomers to Oregon.
4. Demographic change
As baby boomers age and adults wait longer than previous generations to get married or establish babies, more people are living alone or with a partner. As a result, households will be smaller, requiring more homes to accommodate the same number of people.
According to state researchers, 139,185 dwellings are required to make up for this.
5. Making up for homes lost as short-term rentals or vacation homes
Short-term rentals and second homes don’t contribute to the supply of permanent housing, which is a problem that is especially severe in tourist destinations like the seashore. According to the calculations, in order to make up for the losses from short-term rentals and second homes, Oregon will need to construct an additional 17,300 dwellings.
Goals for the number of dwellings each city should create annually and over the next 20 years are also included in the analysis. For example, the little community of Mitchell, which lies adjacent to the Painted Hills area of the John Day Fossil Beds, is only scheduled to construct 22 homes over the next 20 years, and only one home this year. In only one year, 2,851 new homes are anticipated to be built in Portland, and over 57,000 more in the next 20 years.
— Oregon Capital Chronicle’s Julia Shumway
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