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Speakers at the 2020 Housing Forecast talk about the need for missing middle housing, but wonder who is going to build it

PMG PHOTO: JIM REDDEN - Speakers at the 2002 Housing Forecast inlcuded (from left); Kathryn Harrington; moderator Jim Irvine; Jerry Johnson; and Robert Deitz.In contrast to previous years, the need for more diverse housing dominated the presentations at the Home Builders Association's 2020 Housing Forecast. Although the association primarily represents single-family home builders, it also supports increasing residential densities with relatedly small multifamily developments, including duplexes, triplexes, fourplexes and accessory dwelling units. It helped convince the 2019 Legislature to pass House Bill 2001, which will require practically every city in the Portland metropolitan area to allow a duplex on every lot — and up to four units on some lots within any given single-family zone .

The forecast was sponsored by the Home Builders Association of Metropolitan Portland. Before the presentation started, slides flashed its priorities on the large screen behind the head table at the Oregon Convention Center. They included "Housing Affordability," "Housing Livability," and "Housing First," the last of which is the policy of creating government-subsidized housing to reduce homelessness.

"It's not enough to just build housing for people who can afford it," Nathan Young, the association's president-elected, said during his opening remarks. The association worked with the 1000 Friends of Oregon land-use watchdog organization to pass HB 2001.

The need for all kinds of additional housing was reinforced by the three main speakers at the forecast, Washington County Chair Kathryn Harrington, National Association of Home Builders Chief Economist Robert Dietz, and Jerry Johnson, the founder of the local Johnson Economics consulting firm. They all stressed that not enough new single-family homes are being built to keep up with the growing regional population, adding to the existing shortage that is driving up home costs.

"The Portland region's population is growing faster than the national average, and that is contributing to the housing affordability issue," said Dietz.

Despite the hope that the additional housing allowed under HB 2001 will reduce home costs, Johnson raised an important question, however. He said that most of the units will be rentals and wondered who will finance and build the projects, which will represent a largely untested product. He predicted they will be smaller investors and builders without a lot of experience in that market segment, at least at first.

"Nobody has a model that works," said Johnson.

Harrington said the need for such so-called missing middle is great, especially in Washington County, which is the second largest and most diverse county in Oregon.

Forty-five thousand people in Washington County are living just one paycheck away from being homeless," said Harrington, who was elected county chair in 2018 after serving 12 years on the Metro Council. She also noted the elected regional government is working on a regional transportation finance measure for the November 2020 general election ballot with is intended to increase options, such as transit, to such new housing along major corridors, such as the Tualatin Valley Highway in Washington County.

Dietz was optimistic that the economy will support such experimentation for the foreseeable future. Some economists are warning of a coming recession. Practically all home building stopped during the Great Recession that started in 2006, contributing to the current shortage. But Dietz said he does not believe another recession is near, although he thinks economic growth is slowing and will likely slow even more over the next 18 months to two years.

Johnson and Dietz said demand remains high for single-family homes, the style of housing that has historically dominated the Portland area. But construction costs have increased for several reasons. They include a lack of buildable lots, high system development charges imposed by governments for services, and an ongoing labor shortage that has pushed up wages. Builders have adjusted by constructing larger homes with higher profit margins, but the resulting prices are now higher than many households can afford.

"The greatest demand is in the $250,000 to $550,000 range, but no one can build them," said Johnson. He insisted that the quickest way to bring down costs is to increase the supply of buildable land, which he said HB 2001 will do. The Residential Infill Project currently headed to the Portland City Council would implement many of the bill's requirements. It is supported by the association and 1000 Friends of Oregon, but opposed by some historic preservationists and neighborhood asociations. The council is scheduled to hold the first hearing on Dec. 18.

Dietz said governments should also issue bonds to help pay the infrastructure costs of new development, which would reduce SDC charges on new homes by spreading the costs over more years.

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