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.
He spoke at 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 situation is getting worse, Tapogna said. Despite all the apartment construction that can be seen in the region, the number of market-rate apartments being built actually has declined since 2017, according to permit figures compiled by CoStar, an apartment construction tracking firm. That is true in Portland and the entire metropolitan region.
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.
John Horvick, director of political research at DHM Research, attended the PBA breakfast. "These are truly exceptional times. They are quantitatively different than in the past," Horvick said. "In this remarkable economy, more people should be feeling better, but they're not."
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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