Compared to its peer cities or its own past performance, Portland is building significantly less housing.
Based on our recent analysis, permit data maintained by the US census bureau does not show a good picture for Portland. By looking at the previous 6 years of data, we've found that Portland has permitted housing at a rate that is far below other comparable cities in the Western and Southern US regions. Portland is also showing continuing declines in permit activity compared to its own activity in years prior.
Growth in new permitting activity is lagging behind other cities
First, we looked at housing production across multiple cities in comparison to their own levels of production in 2017.
We indexed each city’s 2017 levels at 100 in the chart above. This is a way to gauge permitting activity growth or declines in comparison to a city's own performance at a particular point in time. A value of 100 (shown with the dashed horizontal line) indicates permitted housing units at the same level of activity as in the year 2017; numbers above 100 indicate a growth in the units permitted (compared to 2017-levels), and any value below 100 (the gray shaded region) indicates production levels below 2017 levels.
Within this time span, we see that many cities, led by San Antonio, Las Vegas, Phoenix, and other Texan cities are consistently growing the number of housing units permitted.
But many cities, seemingly all West Coast cities, are showing multi-year consistent declines in the level of housing units permitted (the exception being Los Angeles, which, except for the year 2020, has shown relatively consistent levels of permitted housing).
At the end of 2022, the worst performing city amongst all compared in the given timespan is Portland, Oregon, followed closely by San Jose and San Francisco.
As could be expected, many western cities with stricter COVID lockdowns showed dips in year-over-year permitting activity in the year 2020. Other cities, particularly non-coastal cities, showed no discernable change or even showed increases in year-over-year permitting in 2020.
Portland, San Jose, and San Francisco have shown scant recovery post-2020. Indeed, looking at this chart, declines in permitting activity in these cities seem to actually pre-date 2020, suggesting the recent decline may be part of a longer trend.
In 2022 Portland is permitting fewer new units per capita than peer cities
Next, we looked at housing permit activity per capita for the year 2022.
When normalized for population, we see that many of the same cities that are showing consistent growth in permit activity also have higher levels of housing production in general. Austin and the other Texan cities lead the way, while again the West Coast Cities of San Francisco, Portland, and San Jose show the least amount of housing permit activity.
In fact, adjusted for population, Portland, San Francisco, and San Jose are permitting housing units at a mere fraction of the Texan cities. And as we saw in the previous graph charting growth, Texan cities are continuing to increase the amount of housing permitted and the West Coast cities are continuing to decline.
These trends will widen the gap in available housing for the foreseeable future.
Portland has seen a rapid decline in permits for large residential buildings
Portland has implemented some very large new zoning changes in the time span that we looked at (2017-2022), so it's worthwhile to look a bit deeper into the data for Portland.
In 2017, Portland's Inclusionary Zoning (IZ) requirement went into effect, which required all buildings with more than 20 units to set aside a portion of those units for low and moderate-income housing, or pay a fee per unit in order to comply. Information for that program can be found here: Inclusionary Housing | Portland.gov
In 2021, the Residential Infill Project (RIP) went live, which modified the regulations to permit additional units (such as ADUs, duplexes, triplexes, and fourplexes) in zones previously designated exclusively for single-family use. Implemented in two phases, the most recent set of changes went into effect in 2022. Details about RIP1 and RIP2 can be found here: Residential Infill Project (RIP and RIP2) and New Development Projects | Portland.gov
We looked at the number of housing units permitted over the same timespan broken down into building typologies.
Since 2017, the number of permitted housing units has decreased dramatically in Portland, from just a shade under 7,000 in 2017 to just over 2,000 in 2022. That represents a decrease of 68% in 6 years.
What's also notable is that, over that timespan, the number of single-unit housing permits has decreased moderately (from 703 to 489), but the number of units in multi-family (5+) buildings has decreased severely (from 5,932 to 1,659).
While it's too early to understand the potential impact of the Residential Infill Project (RIP), the number of housing units in buildings with 2-4 units has also decreased significantly (from 154 in 2017 to 49 in 2022).
In the short time since RIP has been active, it has been accompanied by a decrease in permits for the types of buildings that it purportedly aims to increase.
Taken all together, Portland's housing production has plummeted. It has decreased in all building types from moderate to severe degrees, but the decline in the number of larger multi-family buildings has had the greatest impact on the overall number of housing units produced for jurisdiction.
Many other researchers have pointed to the Inclusionary Zoning (IZ) policies as responsible for this decrease in larger multi-family housing buildings. In the context of many other city's ability to increase permitting of housing units, larger macro-economic events do not seem to be the cause for Portland's decrease in multi-family buildings.
It has been commented that while the IZ policies were developed in 2016, they went into effect in 2017, allowing developers and builders to file for permits without IZ mandates during that year, which might explain a large increase in permit activity for the year 2017. See: Portland’s Inclusionary Zoning Law: Waiting for the other shoe to drop | City Observatory
However, looking back an additional 3 years of permit data seems to show steady levels of permit activity up until 2017, with a significant bump in 2017, followed by the current downward trend.
Furthermore, based on the number of units permitted in the 2-4 unit building size, the additional units allowable under the Residential Infill Project (RIP) do not seem likely to make up the gap left by Portland's dwindling pipeline of large multi-family buildings.
A prior quick use-case study of UrbanForm's capabilities has shown that far fewer properties are good candidates for additional units than may have been initially assumed, especially after diving into the intricacies of the regulations, which actually are more restrictive under RIP in certain cases: Use-case: Finding ADU-receptive Properties (urbanform.us)
For more commentary on Portland's Inclusionary Zoning, see articles from Roger Valdez, Director of the Center for Housing Economics, Joe Cortright of City Observatory, and Dirk Vanderhart at the Portland Mercury.
Conclusions:
Housing production, as measured by permit activity over the past several years in the US West and Southern regions, appears to be strongest in the cities of Austin, Houston, Phoenix, and San Antonio.
The cities of Portland, San Francisco, and San Jose are the worst when measuring permits per capita as well as permit growth over the timespan from 2017-2022. Other cities show a mix of permit growth and robust activity per capita.
If the goals for these cities include more housing and/or more affordable housing, then it seems reasonable to assert that things need to change. Given that many other cities are capably permitting housing, and increasing in their ability to do so, then the solutions will need to be particular to the jurisdictions looking to change.
As discussed in prior articles, there is no silver bullet for jurisdictions looking to increase housing supply and/or lower housing costs (see: "We're getting worse at construction" (urbanform.us)).
“I don’t know how you get 50 years of decline without having multiple problems,” said Austan Goolsbee and Chad Syverson in a National Bureau of Economic Research paper about construction productivity.
If increased housing production is a goal, then jurisdictions will need to identify and remove barriers to production.
UrbanForm perspective:
While there is no silver bullet to solve the myriad problems and inefficiencies in the construction industry, UrbanForm believes that zoning complexity and inaccessibility is a significant barrier to efficient building and housing production.
UrbanForm accelerates the process of zoning discovery, bringing digital capabilities to a process that is currently managed completely manually.
Increasing data and technological capabilities are but one front against increasing demands placed by steadily increasing professional burdens.
By removing obstacles and providing tools that empower our building professionals, UrbanForm is contributing to better buildings, cities, and environments.
Please reach out to us to discuss how UrbanForm can help building professionals manage the zoning information required by every single construction project.
Notes on methodology:
Data was gathered from the US Census Bureau's Building Permit Survey from 2017 through 2022 across cities in the west and in the south. More information about US Census methodology can be found here:
Data from 2022 has yet to be annualized by the US Census, so the data from that year is considered preliminary.
COVID lockdowns began in the first half of 2020 and had varying degrees of impact that continue through to the present.
For arbitrary reasons, we chose to include data from selected places with a population greater than 500,000 in the Western and Southern geographic regions (an arbitrary number and region sampling).
For reference, here are the US Census designated regions:
댓글