Report: Housing costs stifle economic optimism
A decade after the end of the Great Recession, the regional economy is booming, with rising wages and record-low unemployment.
And yet, one in four voters in the region say they are worse off now than two years ago, according to a recent poll.
How can that be?
A large part of the answer is increasing housing costs caused by an ongoing shortage of homes, according to economist John Tapogna, founder of the Portland-based ECONorthwest consulting firm. According to Tapogna, the region needed 103,000 new housing units built over the past decade to keep pace with population growth. But only 79,500 were built, with just 2,500 more expected to be completed by 2022.
"The result is upward pressure on housing costs, creating an affordable housing crisis and contributing to increasing homelessness," Tapogna said.
And the situation is getting worse, he said. Despite all the apartment construction that can be seen in the region, the number of market-rate apartments being built has actually declined since 2017, according to permit figures compiled by CoStar, an apartment construction tracking firm. That is true in both Portland and the entire metropolitan region.
Tapogna is scheduled to discuss these issues when he presents the annual State of the Economy report sponsored by the Value of Jobs Coalition at the monthly Portland Business Alliance breakfast forum on Wednesday, Feb. 19.
The week before that, he met with the editorial board of the Portland Tribune to discuss the findings of that report and a special one on Housing Affordability that accompanied it.
Joining him was John Horvick, director of political research at DHM Research, the Portland-based survey firm that conducted the recent poll that was commissioned by the PBA. They both agreed it is extraordinary for so many people to be so concerned about their living situations when the economy is doing so well.
"These are truly exceptional times. They are quantitatively different than in the past," Horvick said.
In addition to increasing housing costs, another reason is the uneven benefits of the booming economy. The wealthiest households have seen the greatest income gains, Tapogna said.
The poorest households also have benefited, although their incomes are still low. But wages have stagnated for middle-class households, leaving them vulnerable to overall cost-of-living increases.
As a result, 46% of all renter households in the region are now cost-burdened, which means they are paying more than 30% of their monthly income on rent. The same is true for 25% of owner-occupied households.
"In this remarkable economy, more people should be feeling better, but they're not," Horvick said.
Also joining the conversation were PBA President and CEO Andrew Hoan and Amy Lewin, the organization's vice president for strategic communications. They discussed the release of the first-ever PBA Policy Agenda, which also was posted Feb. 12.
Each of the eight position papers included specific proposals for new policies and actions. For example, the Housing/Homelessness agenda prioritizes jumpstarting housing development of all types throughout the region and adopting policies to reduce the number of people experiencing homelessness throughout Oregon.
"We are committed to being at the table," Hoan said of the business group.
The poll, reports and agenda were released as the state, regional and local elected officials have prioritized homelessness and the affordable housing crisis. In recent years, the Portland City Council has declared and extended a Housing State of Emergency.
The city and Multnomah County are now spending $70 million per year on homeless services. Portland voters approved a $258.4 affordable housing measure at the November 2016 election. Metro voters approved a $652.8 million affordable housing measure at the November 2018.
The Metro Council is considering a measure to raise up to $300 million per year for additional homeless services for the May 19 primary election. The 2020 Oregon Legislature also is considering increasing funding for homeless services and affordable housing by hundreds of millions of dollars.
However, some proposed solutions are controversial. The 2019 Oregon Legislature passed a bill allowing duplexes on most single-family lots in all but the smallest cities. The Portland City Council is considering a Residential Infill Plan that would increase that number to four and possibly eight. Some neighborhood activists and preservationists are pushing back, saying it would encourage the demolition of existing homes without guaranteeing many people could afford the new ones.
By the numbers
• 126 months: Current economic expansion, longest in U.S. history
• 23,617: Jobs created in the region since 2019
• 2.3%: Annual job growth in the Portland region, compared to 1.6% for the nation.
• Third highest: Median household income growth in the nation since 2010, now ranked at 13th.
• Minus 23%: Below U.S. average of new homes vs. new households.
• 23,500: Regional housing unit shortage since 2010.
• 46%: Cost-burdened, renter-occupied households
• 25%: Cost-burdened, owner-occupied households
Source: Value of Jobs Coalition, including Portland Business Alliance, Greater Portland, Port of Portland, Oregon Business Council, Oregon Business & Industry
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