The City of Roses continues to see a rise in demand for homes and a decrease in useable inventory. No question, affordable housing is a very large concern and one that can’t go unchecked because of the glaring example we have seen from the larger NW cities that surround us. Currently, according to recent home inventory numbers, Portland leads the Nation in annual gains in home values. In fact, in Portland’s seller-favoring market we see a home inventory of just 1.3 months.
For those who don’t know what that number means, home inventory is basically the amount of months it would take to sell the remaining homes on market at the current home sell rate. The number that is considered “comfortable” for most markets throughout the country is 6 months. Portland is well below that, but what’s more striking, they are also well below the current national average of 4.8 months. In a market that is as hot as Portland’s no one feels this shortage more than the entry and mid-level buyers.
“Entry-level and mid-market buyers – typically the housing market’s bread and butter – are likely to face stiff competition, rapidly rising prices and very limited inventory,” said Svenja Gudell, chief economist at Zillow, in an email. “The patience of many buyers will be tested in coming months.”
There is no indication that the massive influx of businesses and people into the City is going to slow down any time soon, and if Portland sits idly by and does nothing we will see long time denizens forced out by the cost of living like we have in other cities close to us. It is for these reasons that our fair City is so intent on dealing with this affordable housing dilemma now.
Last month, the Portland Housing Bureau (PHB) announced that it will contribute $47million to help fund 8 projects that will create or preserve 840 affordable housing units. This is the largest such commitment in the City’s history. The list of projects includes 6 new buildings and two rehabilitation projects with an average per unit costs of $213,000.
You may be thinking that seems pretty affordable, but for affordable housing there are much cheaper solutions out there. Rob Justus, the Co-owner of Home First, an affordable housing building company said that, “The city hasn’t gotten serious about cost containment.” His company is able to build smaller projects that average about $80,000 per unit.
The reason for the gap in costs has to do with city fees and policies that get imposed on all housing projects, but are met tooth with nail when it comes to affordable housing as most people feel that the nature of these projects should exempt them from much of home building’s traditional policies and fees.
It has been a source of labored debate in the city council and, while some of those fees have been slashed over the last year, there is still contention as to what else should be cut and what should remain. Chief advocate for the cost cutting is Commissioner Dan Saltzman who feels very encouraged by the PHB, but does feel that future projects could be less expensive.
“I commend the Housing Bureau for stretching itself and its resources to get here, and I commend our proposers for the creativity and resourcefulness they brought to meet the challenges we face,” Saltzman says.
Though the debate on construction numbers is likely to stay at the forefront of the affordable housing conversation for the foreseeable future it remains a continual source of encouragement that Portland is so committed to solving an issue that has plagued hot migratory cities for decades. Hopefully Portland’s efforts will pave a path that will allow first time and mid-level home buyers to have a leg to stand on as they write offers on their future dream homes. One thing’s for sure, if Portland continues to be proactive in the fight for affordable housing, we are definitely moving in the right direction.
Here is a complete list of the 8 partially funded projects planned by the Portland Housing Bureau, the chosen builder for the projects, and where they will be located in the city:
- 72Foster (REACH) — $23 million total, city share $5 million to develop 108 new affordable units on a PDC-owned property in the Lents Town Center Urban Renewal Area with resident services provided by Asian Health & Services Center, plus commercial space to support and enhance neighborhood businesses.
- N. Williams Center (Bridge Housing Corp) — $18 million total, city share $4.5 million to develop 61 new affordable units for low-income families on Multnomah County property in the Interstate Corridor Urban Renewal Area, plus supportive services for residents and a possible partnership with Albertina Kerr to provide programming for developmentally disabled residents.
- The Creators Collective (Meta Housing Corp) — $24 million total, city share $9 million to develop 76 new affordable units complete with arts and entrepreneurship programming for very low-income families, seniors and veterans on the PHB-owned King/Parks site in the Interstate Corridor Urban Renewal Area.
- Block 45 (Home Forward) — $$56 million total, city share $5.6 million for a mixed-income, mixed-use development with 127 affordable units on PHB-owned property in the Oregon Convention Center Urban Renewal Area, including units and supportive services for vulnerable populations such as the chronically homeless and survivors of domestic violence.
- Interstate (Central City Concern) — $8 million total, city share $2.2 million to develop 51 new affordable units in the Interstate Corridor Urban Renewal Area providing culturally specific recovery and employment support services to residents.
- Stark I & II (Central City Concern) — $18 million total, city share $7 million to develop 162 new units of low-barrier housing on two adjacent parcels in the Hazelwood neighborhood.
- The Henry Building (Central City Concern) — $22 million total, city share $12.9 million for seismic and capital renovations to preserve 153 single-room occupancy units currently serving vulnerable populations in the Central City.
- Gladstone Square/Multnomah Manor (Home Forward) — $18 million total, $1 million to renovate and preserve 102 affordable units serving low-income families in two Home Forward-owned projects in the Lents and Montavilla neighborhoods.