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June 26, 2023

Portland housing production exceeds city's target, but affordability remains a problem

building with car and street Photo / Peter Van Allen At 83 Middle St., on what had been city-owned property, Phoenix Flats is a mixed-use building of 45 affordable apartments, with 11 units set aside for long-term stayers from a local shelter; and a commercial storefront and parking garage.
By Laurie Schreiber

Housing development trends in Portland show that production is exceeding the city’s goal to build 2,557 new units between 2017 and 2027, or 256 new units per year.

But affordability remains a problem, as the cost of housing continues to escalate. 

The city’s 2022 housing report, issued this month, gives an overview of housing development activity, funding sources and projects benefiting from funding subsidies in the 2022 calendar year.   

Total production

Recent building permit data show the city is on track to exceed the housing production goal of 2,557 new units between 2017 and 2027 by a significant margin, with certificates of occupancy issued for 1,954 dwelling units, or 76% of the target. 

“If the current pace continues, the city will meet the target by 2025 and exceed its 2027 comprehensive plan goal by more than 1,000 units,” the report says.

Portland also performs well when compared to some national housing production metrics, outperforming larger peers such as New York City, San Francisco and Boston, in some cases by significant margins, according to the report.

“When reviewing housing approvals in Portland over time, the trend is also generally positive,” the report continues. “Over the last 12 years, the city has approved an average of 387 units per year, with over 80% of those units approved from 2015 on.”

Last year generally held with recent trends. While total 2022 approvals represent a fraction of those for 2021, 2021 saw an unusually high number of units approved, and the 2022 approval figures are consistent with the previous five-year average. 

Multi-family

Year over year, the vast majority of units are the result of multi-family development; multi-family units as a percentage of the annual total generally hovers around 90%.

The planning board approved 10 new multifamily development projects totaling 322 units; another 21 single- and two-family projects totaling 22 units were permitted administratively. The total figure exceeded the city’s goal of 256 new units per year.

Of the approved units, 232 are anticipated to be for ownership, with 62 of the ownership units proposed under a cooperative housing model. 

The largest percentage of ownership units were approved as part of the Stevens Square development in Deering Center. 

Of the approvals, 108 were deed-restricted for affordability to households earning at or below 100% area median income. They are all multi-family units, and all will be located on former city-owned property at 43 and 91 Douglass St.

Rentals

Another 112 are anticipated as rental units. A large percentage of the rental units were approved within the Libbytown neighborhood on former city-owned property, with additional rentals approved for downtown, Valley Street and Oakdale.

Approvals for the 112 rentals included 63 that were supported with affordable housing tax increment financing from the city, and $649,356 inclusionary zoning fee-in-lieu payments designated for deposit into the Jill C. Duson Housing Trust Fund. 

The activity builds on over 2,000 housing units approved in the previous five years, and over $4 million in Jill C. Duson Housing Trust contributions to assist in the creation of new affordable housing. 

Over the past 12 years, significantly more of the units approved have been rental versus owner-occupied units. On any given year, the number of rentals approved generally exceeds homeownership units by a large margin.

However, as with several years in the mid-2010s, 2022 diverged from the trend, with significantly more ownership units approved than rental units. 

Affordability

To address the affordability challenge, the city continues to support deed-restricted affordable housing. Since 2010, nearly a quarter of the approved multi-family units qualify as affordable units with rents or purchase prices limited to households earning below 120% of the area median income. Of those units, the majority were designated for households earning less than 80% of area median income.

In 2022, the proportion of deed-restricted affordable units approved was higher than for the last 12 years as a whole, at 31%. Of those units, 42% will be deed-restricted to families earning 60% or less of AMI, 16% will be deed-restricted to families earning 80% or less of AMI, and the remaining 42% will go to families earning 100% of AMI.

Location

In the past 12 years, areas with the most approved new housing have generally been Bayside, downtown and the West End — including recent developments at the former Mercy Hospital campus and in the vicinity of York and High streets.

New housing, particularly multi-family housing, has been significantly more common in on-peninsula neighborhoods, where the zoning generally allows additional density and there is easier access to public transit, jobs and services. 

map with colorful dots
Courtesy / City of Portland
This chart shows housing units approved by location from 2010 through 2022.

Off-peninsula, single- and two-family housing construction has been most common in the last 12 years.

The pattern changed in 2022. More development was approved for off-peninsula than for on. The pattern was largely the product of several large developments: two in Libbytown, at 43 and 91 Douglas St., and one multi-building development in Deering Center, at Stevens Square on McAuley Way.

Ongoing initiatives

The city has additional land use work underway that’s focused on housing creation, diversity and affordability. The work includes:

  • Participation in the Peer Cities Network of the Housing Solutions Lab at New York University — a network of small and mid-size cities with housing strategies in various stages of development. Goals included looking at best practices in housing policy and programs that address the city’s current needs around supply, diversity and affordability, and coordinating a broad plan for housing moving forward. Further concept work is expected to continue over the coming months and years.
  • Evaluation of the city’s land use code remains underway, with the first stage of drafting amendments expected to conclude in the coming month and public engagement expected to proceed through the summer.

The report next goes before the council at its July 17 meeting before it is finalized. 

To view the full report, click here.

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