By editorial board • 

We need to all pull as one to solve our housing crisis

Oregon has been caught in the grip of an escalating housing crisis for at least 10 years now. As a result, it has become one of the least-affordable states in the nation for both home ownership and apartment dwelling.

The wheels of state government seem finally to be taking serious notice under Gov. Tina Kotek, who made the state’s intertwined crises of housing unaffordability and homelessness the major thrust of her winning campaign. She’s bent on getting 36,000 new units on line this year, representing a more than doubling of anemic recent-years production.

But that’s an ambitious goal, and even if she achieves it, may not be enough. According to a comprehensive housing needs analysis laid out Monday by the state’s new chief economist, former Wall Streeter Carl Riccadonna, Oregon needs to up annual production by 29,500 units to fully meet current and future needs.

The analysis cites three main factors affecting affordability — actual rent or purchase price, interest rates and household income.

Oregon’s interest rate and household income levels have been closely tracking those of the nation as a whole, as has its share of residents experiencing poverty.

However, scarcity of new units coming on line and residential land to accommodate them is driving prices disproportionately higher here. Escalating material and labor costs are also major drivers in the cost of new residential construction, but no more so in Oregon than elsewhere in the country.

On the need side, the analysis identified five main drivers, some more pronounced in Oregon and others not. They are:

- Historic underproduction since residential construction peaked at 31,000 units in 2005. Production cratered in the wake of the housing crash of 2008, falling to just 7,000 units in 2009, and never coming close to fully recovering since. Oregon saw 20,000 residential permits issued in 2022, 18,000 in 2023, and just 13,000 in the first 10 months of 2024. That not only represents serious underproduction, but serious underproduction headed the wrong direction. The analysis estimates the catch-up need over the next 20 years at more than 50,000 units.

- A 22% surge in homelessness between 2020 and 2022, second only to California’s — one serving to exacerbate a long-festering challenge showing little sign of on-the-ground improvement so far. It’s both a byproduct of past unaffordability and driver of present and future unaffordability in Oregon’s housing market. The catch-up estimate here is more than 45,000 units.

- Rapid population growth in Oregon, far outstripping that of the nation as a whole. The state grew nearly 11% between 2010 and 2020 alone, earning it an extra seat in Congress at a time when many other states were shedding seats. The analysis pegs the 20-year need here at a whopping 240,000 units.

- A national demographic shift toward smaller households, with more baby boomers on one end and millennials on the other living by themselves or with lone partners. That means it takes more units to serve a given population. And, as we just noted above, Oregon is undergoing sustained growth, making that a moving target. The analysis says that adds almost 140,000 units to the state’s projected 20-year housing need.

- Finally, we have diversion of desperately needed housing to the second home and vacation rental market. That’s not a big factor in some parts of the state, but it’s a major factor in cities like Bend, Hood River and McMinnville, as it is all down the coast. The analysis estimates the need contribution there at just over 17,000 units.

When Oregon launched its nationally groundbreaking land use system in 1973, the overriding goal was preservation of farmland. Expansion of housing stock merited barely a footnote.

But the tables have begun to turn. In fact, Kotek is looking to the state’s Land Use and Development Commission to lead the way in putting new emphasis on housing goals all across the state.

The newly released housing analysis goes so far as to assign specific number goals for cities big and small.

Its 20-year target figures for Yamhill County call for 4,660 new housing units in McMinnville, 185 in Amity, 276 in Carlton, 200 in Dayton, 287 in Dundee, 479 in Lafayette, 4,248 in Newberg, 457 in Sheridan, 225 in Willamina, and 108 in Yamhill. They are dwarfed by targets of 188,000 in Portland Metro and almost 500,000 statewide, but significant in their own right, nonetheless.

If we are to meet those goals — and it’s incumbent on us to do so if we are to preserve our historic standard of living and way of life here — we are all going to have to make some compromises.

For starters, land prices are one of the major cost drivers, particularly in McMinnville, where minimum lot sizes are far more generous than up the road in Newberg. If we aim to boost both the magnitude and affordability of housing, we are going to have to boost density via smaller lot sizes.

This may seem like anathema out here in the wide open West, but tightly packed housing has long been the rule rather than the exception in more heavily populated portions of the Midwest and East Coast.

The only alternative is spreading out across our rich heritage of farm and forest land, and that would be utterly fatal over the long haul. No one down here sees a U turn of that nature being viable.

There are many things our state and local governmental leaders can accomplish now that they appear to have finally become fully engaged in the effort.

However, we as voters, residents, citizens and taxpayers need to get on board as well. Our elected leaders can’t shoulder the burden alone and make it work.

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