Regional Housing Pressures Across Oregon

Housing affordability and supply pressures look different across Oregon. In fast-growing metro areas, demand has far outpaced new construction, while rural communities face unique challenges tied to lower incomes, aging homes, and underinvestment.

Between 2015 and 2019, Oregon added about three residents for every one new housing unit permitted—a mismatch that deepened the state’s housing shortfall.[xii] This imbalance was especially acute in job-rich urban counties. Portland, which accounts for nearly half of Oregon’s population, saw strong population and job growth in the 2010s, but new housing was constrained by land supply limits and restrictive zoning. Similar trends emerged in Bend and Medford, where high demand pushed prices sharply upward.

Bend in particular illustrates the strain: its population has quadrupled since 1990 and is projected to grow by another 50% by 2045, according to regional forecasts [xiii] Oregon’s rental vacancy rate rose from 4% in 2022 to 6% in 2023—a modest increase that still leaves the state with one of the tighter rental markets in the country. [xiv]In high-demand areas like Portland and Bend, vacancies remain especially scarce, with homes and rentals often absorbed almost immediately after listing.

Resort communities and coastal towns are also feeling pressure, as demand from retirees and second-home buyers drives up prices. These homes are often out of reach for year-round residents, contributing to affordability gaps in places like Lincoln, Deschutes, and Clatsop counties. In some smaller towns, the challenge isn't price inflation but rather the quality and availability of housing. Developers in rural areas struggle to finance new construction, and aging housing stock often remains the only option, leading to overcrowding or unsafe conditions.

Across the state, the pattern is clear: Oregon has not produced enough housing to meet notional demand. Whether in metro regions like Portland, Salem, and Bend, or in smaller communities struggling with aging homes and stagnant construction, the shortfall persists. The OHNA’s local housing targets reflect this variation: Portland is expected to add more than 57,000 homes over the next 20 years—about 2,850 per year—while some small towns are expected to add only a few dozen. [xv]

Though the scale and context differ, the supply gap is statewide.

Policy Levers That Influence Housing Production Costs

Zoning reforms and statewide housing targets have taken center stage in Oregon’s housing policy in recent years, particularly with the launch of the Oregon Housing Needs Analysis (OHNA). But beyond land use rules and housing need allocations, other policy tools significantly influence what gets built—and where. Locally administered policies such as System Development Charges (SDCs), affordability mandates like inclusionary zoning, and permitting requirements can add substantial cost and complexity to housing development. These tools serve important public purposes—from funding infrastructure to supporting affordability—but in practice, they also shape the economics of housing delivery. Their impact is especially pronounced for cost-sensitive development types, including entry-level homes and “middle” housing. In the context of OHNA’s ambitious production goals, understanding how these cost-side levers affect project feasibility is critical to evaluating Oregon’s ability to meet its housing needs.

Urban Growth Boundaries (UGBs) and Land Supply

Oregon’s Urban Growth Boundary (UGB) system has been a defining feature of the state’s land use planning since the 1970s. UGBs are designed to limit sprawl, preserve farmland, and ensure that cities grow in a compact and efficient way. Under Statewide Land Use Goal 14, each city is required to maintain a UGB that includes enough land to accommodate 20 years of projected growth in housing and employment.

In recent years, UGB policy has received renewed attention as Oregon confronts persistent housing supply shortages. While the Oregon Housing Needs Analysis (OHNA) focuses primarily on ensuring that cities have sufficient zoned capacity within existing UGBs, it also highlights the role of land availability in meeting long-term housing needs. Under the OHNA framework, if a city cannot reasonably meet its allocated housing targets within current boundaries—even after adopting higher densities or upzoning—it can use OHNA data to support a boundary expansion.

Recent legislative changes have added more flexibility to this system. House Bill 2889 (2023) allows cities outside the Metro region to plan for “rural reserves” and broadens the criteria for UGB expansions to include equitable housing outcomes—not just population forecasts. Senate Bill 1537 (2023) also created a pilot program for fast-tracking UGB expansions tied to affordable housing projects.

Still, the state’s planning framework prioritizes the efficient use of land inside existing UGBs before considering expansion. Cities must first conduct a housing capacity analysis and implement efficiency measures to ensure that land constraints are not simply the result of restrictive zoning or underutilized parcels.

In some fast-growing areas—such as Bend and certain coastal towns—land constraints have played a visible role in housing shortages. In other cities, challenges stem more from zoning rules, infrastructure limitations, or development feasibility than from the raw amount of land available. As OHNA implementation advances, UGB flexibility may become a more prominent tool in high-demand regions where infill alone is unlikely to meet long-term housing needs.

Inclusionary Zoning and Affordability Mandates

Inclusionary zoning (IZ) is one of Oregon’s most visible efforts to promote housing affordability within new development. After lifting a statewide ban in 2016 (via Senate Bill 1533), Oregon now allows cities to require that a share of units in larger rental projects be set aside as affordable—typically for households earning 60–80% of area median income (AMI).

Portland remains the only major city to implement a mandatory IZ policy. Its program requires 10–20% of units in new buildings with 20 or more units to meet affordability thresholds. To offset the added costs, the city offers developers incentives such as property tax abatements and density bonuses. Since adoption, Portland’s IZ program has produced over 1,000 affordable units, though critics argue it may have discouraged some market-rate projects, particularly in weaker submarkets.

Outside of Portland, few jurisdictions have adopted IZ policies—often due to financial feasibility concerns. In many parts of the state, especially where rents are lower and construction costs high, developers may not be able to absorb affordability requirements without substantial public subsidies. As a result, most affordable housing outside Portland continues to rely on dedicated funding sources like the Low-Income Housing Tax Credit, Metro housing bond funds, or local housing trust funds.

While IZ can be a useful tool in high-demand markets, it is unlikely to drive large-scale affordable housing production on its own. The Oregon Housing Needs Analysis now includes affordability targets in city-level housing needs assessments, which may increase pressure to use IZ where feasible—but also reinforces the need for complementary strategies, including direct subsidies and cost-reduction tools like SDC waivers.

System Development Charges (SDCs)

System Development Charges (SDCs) are one-time fees that local governments in Oregon impose on new developments to fund infrastructure such as water, sewer, transportation, parks, and stormwater systems. While these charges ensure that growth contributes to necessary infrastructure, they also add significant upfront costs to housing construction, potentially affecting the financial feasibility of certain projects.

SDC rates vary widely across the state. According to a 2022 report commissioned by OHCS, the average SDC for a single-family home in Oregon is approximately $15,000, but this can vary significantly depending on location and utility.[xvi] For example, Wilsonville charges over $52,000 per single-family home with a standard 5/8” water meter. [xvii]

Multifamily developments, middle housing types (like fourplexes), and accessory dwelling units (ADUs) are often charged per unit or at a flat rate per structure. This can make smaller-scale or lower-cost housing disproportionately expensive on a per-unit basis. For example, if a fourplex is charged four times the SDC of a single-family home on the same lot, the economics may not pencil out—even if the zoning allows it.

Developers and housing advocates frequently cite SDCs as a barrier to building entry-level and “missing middle” housing. In response, some jurisdictions have reduced or waived SDCs for ADUs, affordable units, or middle housing—particularly when paired with density bonuses or other affordability incentives.

Portland, for example, waived SDCs for accessory dwelling units (ADUs) between 2010 and mid-2018, a policy that coincided with a significant rise in ADU construction—from just 24 permits in 2009 to over 600 by 2016. When the waiver expired, the city introduced a revised program that continued the waiver but required property owners to sign a 10-year covenant agreeing not to use the ADU or the main home as a short-term rental. Violating the agreement triggers a penalty equal to 150% of the waived SDCs. The policy shift was intended to ensure that ADUs function as long-term housing rather than vacation rentals 

Still, reforming SDCs is politically and fiscally complex. For many jurisdictions, SDCs are a critical revenue stream for capital improvements. Waiving or reducing fees can strain city budgets—especially in smaller communities with limited tax bases—and may delay needed infrastructure projects.[xviii]

As the Oregon Housing Needs Analysis framework shifts focus from zoned capacity to actual housing production, SDC policy is likely to face increasing scrutiny. A key question moving forward is whether Oregon should provide more direct state infrastructure support to cities or continue relying on locally administered SDCs—even when those charges may discourage the types of housing most needed statewide. 

Middle Housing: Legalization and Implementation Challenges

“Middle housing” refers to housing types that fall between detached single-family homes and large apartment complexes—such as duplexes, triplexes, fourplexes, townhomes, and cottage clusters. These types are often more space- and cost-efficient, making them a key strategy for increasing housing supply in established neighbourhoods.

Oregon made national headlines in 2019 by passing House Bill 2001, which requires cities with populations over 10,000 to allow duplexes on all lots zoned for single-family housing. In cities over 25,000 (and all cities in the Portland metro area), the law goes further—requiring cities to allow triplexes, fourplexes, and cottage clusters in most residential zones. The law was designed to reduce exclusionary zoning and create more diverse housing options, particularly for first-time buyers and lower-income households.

Cities adopted compliant zoning codes by mid-2022, but legalizing middle housing has not yet led to widespread construction. Development of these housing types remains limited due to a combination of factors: high land and construction costs, limited access to financing for small-scale infill, and lingering local regulations such as parking minimums or design constraints that reduce feasibility.

In 2025, the legislature introduced House Bill 2138 to further support middle housing implementation. The bill proposes to strengthen HB 2001 by:

• Prohibiting cities from downzoning middle housing in areas where it’s allowed,
• Simplifying land divisions to make cottage clusters easier to finance and sell,
• Allowing up to six Single Room Occupancy (SRO) units on any residential lot,
• Exempting middle housing projects from certain traffic impact studies and infrastructure requirements.

Early evidence from cities like Portland, Eugene, and Beaverton suggests that middle housing permitting has increased modestly, especially in areas with targeted incentives or fee waivers. However, middle housing still makes up only a small share of new housing production statewide.

Aging Homeowners and the Coming Wave of Housing Turnover

Oregon’s housing market is shaped not only by how many people live in the state, but by how they live—and who owns the housing. A growing share of Oregon homes are owned by older adults, particularly Baby Boomers, many of whom remain in single-family homes well after their children have moved out. This trend reflects national patterns, but it’s especially pronounced in Oregon, which has an older-than-average population and high homeownership rates among seniors.

This generational dynamic leads to lower housing turnover than one might expect. Older homeowners are more likely to age in place, holding onto homes that might otherwise be purchased by younger families. Over time, this slows the natural cycle of home sales and limits the number of listings available in any given year. As demand from Millennials and Gen Z continues to rise, this limited turnover adds to market tightness and inflates prices—particularly for family-sized homes.

But this won’t last forever. As Oregon’s large Baby Boomer cohort moves into their 70s and 80s, many will transition out of homeownership due to health needs, relocations, or death. According to the Oregon Housing Needs Analysis (OHNA) methodology, demographic change alone—including these aging-related transitions—will require roughly 139,000 additional units over the next two decades, just to accommodate smaller households and shifting living arrangements.

To better understand how much housing might re-enter the market due to demographic turnover, we estimated how many homes are likely to become available in the next decade as older homeowners pass away or move into assisted living. We used three main data sources for this estimate:

• 2023 population by age group from the 2023 American Community Survey (1-Year),
• Homeownership rates by age from the 2023 ACS (1-Year) tenure data, and
• Crude death rates by age from the Oregon Health Authority’s Center for Health Statistics.

We converted annual mortality rates to 10-year cumulative mortality using the standard formula:

Using this method, we estimate that Oregon may see approximately:

• 709 units turn over from homeowners aged 55–64
• 1,290 units from ages 65–74
• 2,088 units from ages 75–84
• 3,223 units from homeowners aged 85 and older

Together, these aging-related transitions could free up more than 7,300 homes statewide over the next decade. While this is not enough to offset Oregon’s current housing shortage, it represents a meaningful contribution to future supply—particularly in suburban and rural areas with aging populations.

Whether this wave of turnover relieves or prolongs Oregon’s housing crunch depends on how—and when—it unfolds. If older homeowners continue to age in place because of a lack of downsizing options, younger households may remain locked out of ownership. But if the state expands access to smaller, lower-maintenance housing types—such as townhomes, cottage clusters, and ADUs—older adults may be more willing and able to relocate, creating a more dynamic housing market.

House Bill 2138, which promotes flexible middle housing design and development, directly supports this goal. By enabling more diverse, age-friendly housing formats, Oregon can help older homeowners transition into more suitable homes—and unlock existing housing stock for the next generation of buyers.

Conclusion

Oregon’s housing crisis is not a future risk—it is a present and escalating challenge. Despite recent legislative reforms, housing production is slowing, not accelerating. Supply remains skewed toward single-family homes, even as household sizes shrink and affordability worsens. Policy levers like inclusionary zoning, UGB expansions, and SDCs play an outsized role in determining where and how homes are built—and for whom. Addressing these challenges requires a statewide strategy that balances flexibility with accountability, supports local implementation, and targets both the cost and feasibility of development. As Oregon’s population continues to age and diversify, housing policy must adapt quickly—or risk deepening a shortage that touches every corner of the state.