New HUD Portland Metro Market Analysis: Need To Produce Additional For Sale Units is 5 Times Need for Additional Rental Housing Unit Production.

A new 40 page HUD comprehensive housing market analysis for the Portland metro area was recently published HERE. 

The report covers the 3 year period from September 2021 to September 2024. 

The analysis divides the Portland metro area into three submarkets 1. Portland/Multnomah county 2. Suburban Oregon counties, and 3. Suburban Washington counties. 

Within the report counts of units under construction and units needed (demand) are made for each of the submarkets, with a further breakout of for sale units and rental units.  

Subtracting units under construction from demand produces an estimate of ADDITIONAL units needed. 

I consolidated those counts and constructed the table below. 

Key Observations

• Metro wide Additional SALES production needed (17,275 Units) is more than 5 times additional rental production needed (3,225 Units). Put another way, needed additional sales production accounts for 84% of all additional needed construction (17,275 of 20,500 units).
• Needed additional rental production in suburban markets totals 3,875 units (2,025 in Suburban Oregon, and 1,850 units in Suburban Washington). 
• Additional for sale production needed in suburban markets totals 14,445 units (7,370 in Suburban Oregon, and 7,075 units in Suburban Washington); that is 84% of all additional 17,275 for sale units needed. 
• NOT in the report is my speculation that the failure to produce for sales units increases demand for rental housing and may be a contributing factor in increasing both rents and home prices.  

Focus on the Portland/ Multnomah Submarket: 

• Rental units already under construction (4,000 units) Are MORE than enough to meet submarket demand (3,350 units). 
• There is a need for additional production of 2,830 for sales units.(Demand of 3,250 units less 420 units under construction).  
• The report notes the decline in condominium construction in this submarket:

"From 2000 through 2006, an average of approximately 920 condominium units were permitted annually, constituting 36 percent of all sales housing construction and an average of 80 condominium units were permitted annually from 2009 through 2011, constituting only 14 percent of sales housing construction. Condominium construction remains low; from 2015 through 2019, an average of 160 condominium units were permitted annually, or 14 percent of all sales housing construction. High rent growth in the post-2014 period and lower legal liability for construction defects in rental housing have induced developers to build apartments instead of condominiums."

Originally created and posted on the Oregon Housing Blog.