Housing affordability and the impact of recent legislation in Oregon€¦ · Hood River Clackamas...

Housing affordability and the impact of recent legislation in Oregon

Michael Wilkerson, Ph.D.January 16, 2020

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Units

in 0

00s

U.S. Housing Starts, Annual and Trailing 10 Year Average

Multifamily Single Family 10 Year MA

Housing production decreasing since 2016

Source: U.S. Census Bureau and HUD

The last ten years has seen the fewest housing units built in U.S. since the 1960’s

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19

Oregon 3 County PDX

State of Oregon Total Residential Building Permits

59% of statewide permits in the 3 County Portland Metro in 2019

On pace for 19,200 units in 2019

Source: HUD

Permitting dropped 5% in 2019 statewide

60%

70%

80%

90%

100%

110%

120%

130%

140%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Construction Industry Employment Oregon (Index 2000=100)

Annual Growth

201720182019

OR9%6%3%

+6% from peak

Construction employment growth slowing in Oregon

Oregon producing fewest number of housing units per population growth in NW

0.40

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0.90

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U.S. Housing Starts to Household Formation(5 year moving average)

1.1 is the long run ratio of housing starts per household formed nationally

Underproduction from 2011 to

2018

Source: U.S. Census Bureau and HUD

Housing production has not matched household formation

Source: U.S. Census, Moody’s Analytics, ECONorthwest Calculations

0.89 Housing Starts per Household Formed 2000 to 2016

Since 2010 less than 7 units built for every new 10 households

8

Jackson

0.6

Harney

Deschutes

2.7

Curry

Coos

3.4

Douglas

0.1

Malheur

Lake

Lane

1.8

Josephine

3.5

Klamath

Gilliam

Hood

River

1.7

Clackamas

2

Clatsop

1.4 Columbia

2.3

Washington

4.3

Wasco

10.8

Wallowa

Union

Polk

2.1

Multnomah

4.3

Tillamook

2.5

Sherman

16.2

Umatilla

0.6

Yamhill

3.8

Morrow

11.7

Marion

4.5

Grant

Crook

Baker

Benton

Wheeler

7.9Lincoln

0.5Linn

6.9

Jefferson

1.9

Source: U.S. Census ACS 1-year estimates, LODES

Oregon Jobs to Housing Units Ratio

0.1 - 0.5

0.6 - 2.5

2.6 - 5.0

5.1 - 10.0

10.1 - 16.2

No growth in primary jobs from 2010 to 2015

2010 - 2015

Jackson

Harney

Deschutes

Curry

CoosDouglas

Malheur

Lake

Lane

JosephineKlamath

Gilliam

Hood

River

Clackamas

Clatsop

Columbia

Washington

Wasco

Wallowa

Union

Polk

Multnomah

Tillamook

Sherman

Umatilla

Yamhill

Morrow

Marion

Grant

Crook

Baker

Benton

WheelerLincoln

Linn

Jefferson



0.1 - 0.5

0.6 - 2.5

2.6 - 5.0

5.1 - 10.0

10.1 - 16.2


2010 - 2015

Jackson

Harney

Deschutes

Curry

CoosDouglas

Malheur

Lake

Lane

JosephineKlamath

Gilliam

Hood

River

Clackamas

Clatsop

Columbia

Washington

Wasco

Wallowa

Union

Polk

Multnomah

Tillamook

Sherman

Umatilla

Yamhill

Morrow

Marion

Grant

Crook

Baker

Benton

WheelerLincoln

Linn

Jefferson



0.1 - 0.5

0.6 - 2.5

2.6 - 5.0

5.1 - 10.0

10.1 - 16.2


2010 - 2015

Jobs per Housing Unit

2010: 0.892015: 0.95

From 2010 to 2015: 2.95

3 Jobs Created Statewide for Every Housing Unit 2010 to 2015

9$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Aver

age

Mon

thly

Ren

t

City of Portland -- Average 1 bedroom unit affordability

100% of MFI

60% of MFI

101% 89%

Sources: Costar, HUD

Average rent

Housing is not affordable, but worst of crisis is behind us

Affordability of 1 bedroom units as a percent of MFI

Medford = 90%Bend= 101%Eugene= 102%

Affordability is improving except in

Eugene

Rent Strongest Predictor of Metro Homelessness Rate

Source: ECONorthwest calculated using data from HUD Point-In-Time, U.S. Census Bureau ACS, and ZIllow

Portland has 12th highest rate of homelessness

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

-20

-15

-10

-5

0

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10

15

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25

PercentChangefromYearAgo

S&P/Case-ShillerWA-SeattleHomePriceIndex

S&P/Case-ShillerU.S.NationalHomePriceIndex

S&P/Case-ShillerOR-PortlandHomePriceIndex

ShadedareasindicateU.S.recessions Source:S&PDowJonesIndicesLLC fred.stlouisfed.org

Aug. 2019

U.S 5.7% 3.2%

Seattle 9.5% 0.7%

Aug. 2018

Portland 5.4% 2.6%

Are we forming another housing bubble?

Source: Zillow Economic Research

Housing market value back on trend?

124.2

90.8

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1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Household Consumer & Mortgage Debt As a % of Disposable Household Income

Source: Federal Reserve, CUNA

Consumer debt relative to income continues to drop

Price to Income ratio by county in 2018

2019 Home Affordability20% down paymentMedian Family Income = $89,700

Maximum affordable price at 100% MFI= $383,000

Home affordability in 2019 with 20% down payment

I-5

I-5

I-205

26

217

I-84PORTLAND

WILSONVILLE

BEAVERTONGRESHAM

HILLSBORO

LAKEOSWEGO

Single Family Affordability, 2000

Less Affordable

More Affordable

Percent of Income Spent on Housing

Insufficient Transactions

< 20.0%

20.1% - 25.0%

25.1% - 30.0%

30.1% - 40.0%

40.1% - 50.0%

> 50%


MFI = $53,700

I-5

I-5

I-205

26

217

I-84PORTLAND

WILSONVILLE

BEAVERTONGRESHAM

HILLSBORO

LAKEOSWEGO


Less Affordable

More Affordable



< 20.0%

20.1% - 25.0%

25.1% - 30.0%

30.1% - 40.0%

40.1% - 50.0%

> 50%

MFI = $63,800


I-5

I-5

I-205

26

217

I-84PORTLAND

WILSONVILLE

BEAVERTONGRESHAM

HILLSBORO

LAKEOSWEGO


Less Affordable

More Affordable



< 20.0%

20.1% - 25.0%

25.1% - 30.0%

30.1% - 40.0%

40.1% - 50.0%

> 50%

MFI = $72,000


2019 Home Affordability20% down paymentMedian Family Income = $89,700

Maximum affordable price at 100% MFI= $383,000


What share of sales in Portland are affordable?

Sources: RLIS, Clark County Assessor

79%

53%

74%

31%36%

41%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

3 County Portland Metro

State of Oregon

Share of single family permits

Source: HUD

Housing production has dramatically shifted to multifamily statewide

0

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Market Rate Apartment Units Under Construction4 County Portland MSA

Metro Total

City of Portland

Rest of Metro

Apartment production peaked in early 2018

One Bedroom Apartments in City of PortlandAnnual Rent Change (building level data)

As construction slows rents beginning to increase at high end

2010 2015 2019

Final / Delivered

Issued permits

June 2016 peak

Source: City of Portland, Portland Maps

Permitting has also peaked -- decrease in construction will continue

45 17

$900M $490

Portland BDS has triggered business continuity plan

New apartment rent as a percent of AMI – City of Portland

Have new apartments ever provided workforce housing?

2012 2018

Move-up NC Share of Sales Move-up NC Share of Sales

Source: AEI Housing Market Indicators

Each dot represents a County in Oregon

Equal number of

entry-level and move-up

New construction shifted from entry-level to move-up buyers

2012

2018


Change in new construction location in Portland –2012 to 2018

Entry Move-up

Entry Move-up

Entry Move-up

Entry Move-up


Bend

Eugene Salem

Medford

New construction predominantly priced for move-up buyers statewide

Recent Statewide LegislationHB 2001 and HB 2003

Why HB 2003?

“As a brief reminder, this bill is designed to improve our implementation of Goal 10, our statewide housing goal, so that we live up to its intent. Implementation of this goal requires that we “provide for the housing needs of citizens of the state,” and “...encourage the availability of adequate numbers of needed housing units at price ranges and rent levels which are commensurate with the financial capabilities of Oregon households and allow for flexibility of housing location, type and density.”

House Bill 2003 would help our state reach its housing supply needs as envisioned by our land use system, while providing local jurisdictions the resources they need to accommodate future growth.”

-Tina Kotek, Testimony in Support of House Bill 2003, April 2, 2019

What is a Regional Housing Needs Allocation…. Under development

Develop RHNA

Methodology

Implement CA RHNA

Methodology

Create Oregon

Approach

Develop a RHNA methodology to identify the total number of housing units (by housing type and level of affordability) needed to meet each city’s and region’s demand.

HB2003 Section 1(3)

Conduct a regional housing needs analysis for each region, inventory existing housing and estimate the housing shortage for each city and Metro.

HB2003 Sections 1(4) and 1(5)

• How does it compare to existing assessments of need in terms of cost and cost effectiveness, reliability and accuracy, repeatability, and predictability

• Are the region boundaries ‘appropriate’?

• Determine allocation from region down to cities and UGBs

HB2003 Sections 2

DLCD create report with

recommendations on how to proceed

Housing Production Strategies

HB 2001: Why was it needed and how will it help?

618

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Units

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2 to 4 unit building permits -- State of Oregon

1980 to 2018 State Average3 County PDX Metro produced 60% of units statewide by only 30% of duplex to quad units

Source: HUD

2 to 4 unit production represent 3% of state total in 2018

Why are small unit developments called the missing middle?

What does middle housing look like?

2,410

506

0

500

1,000

1,500

2,000

2,500

3,000

Multifmaily MiddleHousing

20 Y

ear F

orec

ast U

nits

Rosa Parks Station Area Forecast Units

Why do we need missing middle housing?

Source: Johnson Economics, City of Portland BPS

City of Portland – Residential Infill Project

How many units could HB 2001 produce?

Source: ECONorthwest

Where are we most likely to see HB 2001

• HB 2001 (1,200 to 2,500 units a year in PDX metro)

• ADU production (average of 250 a year in City of Portland)

• City of Portland and Metro affordable housing bonds

• More $$$ is needed at all levels of government for subsidized housing

• Preservation of naturally occurring affordable housing

• HB 2003

• Public infrastructure investments

• UGB expansion areas

• Density around opportunity (transit, employment, outcomes)

No silver bullet, need coordinated policies to increase production

PortlandEugene Seattle Boise

[email protected]

http://econw.com

Housing affordability and the impact of recent legislation in Oregon€¦ · Hood River Clackamas...

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