Portland's Apartment Permits Plunge to Historic Lows Amid Construction Slowdown
HFO Investment Real Estate · Member of GREA
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Portland is experiencing a significant slowdown in apartment construction. Projections indicate the city will permit only 500 new multifamily units this year, including only 368 units in buildings of 5+ units. The slowdown is the lowest since the 2009 global financial crisis.
This downturn is driven by institutional investors' reluctance to fund new developments due to unfavorable economic conditions, including high capital costs, inflation, and interest rates. The drop in applications threatens Portland's ability to meet its long-term housing goals, with city and state leaders' efforts to stimulate development being undermined by these economic challenges.
The construction slump has already led to layoffs at Portland's permit bureau, where staff shortages could exacerbate the city's housing crisis.
This slump in housing activity is occurring just as Oregon cities are required to update their Housing Needs Analyses. Portland adopted its 2045 analysis in December, which determined that approximately 120,000 more housing units will be needed. The strategy for building those 120,000 units will be presented at a public hearing on Wednesday, August 28, at 2 p.m.
The plan calls for spending the next five years changing zoning codes and maps, reforming regulations, devising financial incentives, seeking state and federal funding, acquiring and preserving land, and partnering with developers.