The narrow price gap between market-rate rental housing and affordable units means 2,200 affordable units sit vacant in Portland.
By Aaron Kirk Douglas
About 40% of Portland’s market-rate apartments now rent within 15% of income-restricted units, according to a July Yardi Matrix report cited by The Wall Street Journal.
One renter in the story waited more than a year for a subsidized unit. She then found a market-rate three-bedroom for $1,600 and moved in within a week.
Meanwhile, about 2,200 affordable units sit empty. That is 8.3% of the city’s affordable stock and the highest rate CoStar has recorded since 2000. In June, the mayor warned the council that the portfolio was nearing insolvency. The city is now spending $10.6 million to keep it afloat.
The private market is not the problem right now. It is already producing rents that working households can afford. The strain is inside the subsidized system.
Much of that system uses the 60% AMI tax credit standard, about $77,000 for a family of four. When market rents flatten, those units lose their discount. Units serving the lowest incomes don’t face that competition.
Council time and public dollars are limited. They go furthest when they stabilize the affordable buildings Portland has already paid for, revisit the 60% default, and target deeper affordability that market-rate can’t reach.
Market rents will increase as our pipeline of new units stall out. We need Portland’s affordable portfolio ready and able to serve the people who need it most. We need our city council to focus on affordable units, not market rate.
About the author:
HFO Research (Aaron Kirk Douglas) from HFO Investment Real Estate’s Multifamily Marketwatch YouTube podcast, hosted by partner Greg Frick. Aaron Kirk Douglas is director of market intelligence for HFO Investment Real Estate In Portland. Have questions about what these trends mean for your property? Call HFO at (503) 241-5541.
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