The Commissioner blames the development community for building luxury apartments and not affordable housing, again, blaming developers for the crisis. In practice, most new affordable housing in the region is being built by the private sector using federal subsidies. However, it’s unrealistic to expect new housing to be priced below market levels without subsidy.

Even in the fastest growing community, new housing represents 1-2% of the stock. And because it’s new, that housing is typically of higher than average quality and is marketed to the upper half of the income distribution. As those households move into the new housing, older housing that has depreciated in value is freed up for lower income households. Just as you look for affordable transportation on 82nd street, you find affordable housing by looking for older, depreciated housing stock. By imposing multiple burdens on developers, such as inclusionary zoning and threats of rent control, the Commissioner is reducing housing production and preventing the filtering process described above from working.

Finally, a good part of the reason we aren’t building sufficient housing is that Metro assumes that our 20-year housing supply (as required by state law) can come from high density zoning in outer east Portland and the mid-county area governed by the City of Portland. However, high density typically requires 50% higher rents than garden apartments, and these east Portland areas are among the lowest rent districts in our Metro area. Five-story developments will not be built on 82nd Street or 122nd Street without subsidy. Yet, Metro uses that theoretical capacity as an excuse not to expand the boundary.

Dr. Gerard Mildner
Center for Real Estate
Portland State University