Oregon’s deepening housing shortage is colliding with a sharp slowdown in new multifamily construction, raising fresh concerns about affordability and homelessness across the state.
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A recent state report shows Oregon needs 95,000 additional housing units to make up for years of underbuilding and to better serve its growing homeless population. Yet at a time when supply is most urgently needed, development of multifamily housing — one of the fastest ways to increase inventory — has fallen to its lowest level in more than a decade.
In 2024, local and state officials issued permits for just 4,800 multifamily units statewide — the lowest annual total in 12 years. Preliminary figures suggest 2025 will see only a modest improvement, barely surpassing that number.
Multifamily housing, which includes duplexes, triplexes, townhomes and apartment buildings, is widely regarded as one of the most efficient ways to quickly expand housing stock. But the slowdown highlights the gap between Oregon’s housing ambitions and economic realities.
When Tina Kotek took office in 2023, she declared a statewide homelessness emergency and signed an executive order setting a goal of producing 36,000 new housing units per year. So far, the state has fallen well short of that target.
Looking ahead, the challenge grows steeper. A December “Oregon Housing Needs Analysis” projects the state will require nearly 500,000 additional housing units over the next 20 years to meet population growth and demand.
Housing experts emphasize that boosting supply does more than shelter people experiencing homelessness. Increased inventory can ease upward pressure on rents and home prices, making housing more accessible across income levels. It also creates opportunities for homeownership, allowing families to build long-term equity and wealth.
The ripple effects extend into the broader economy. Employers across Oregon report difficulty recruiting workers because prospective hires struggle to find affordable housing.
In coastal Lincoln County, short-term vacation rentals further strain availability.
To work for the public school district or Samaritan Health Services, two of the county’s biggest employers, “you want to have a couple of choices of places to live or homes to buy, and that’s not an option,” says Karen Rockwell, executive director of the Lincoln County Housing Authority.
Lawmakers have taken steps to encourage what’s often called “middle housing” — duplexes, triplexes and townhomes that bridge the gap between single-family homes and large apartment complexes. In July, five new laws were enacted to streamline permitting and provide additional funding for housing development. One measure limits local governments’ ability to block duplexes and triplexes on land zoned for single-family homes.
Still, public incentives have not been enough to counteract broader financial headwinds.
“No matter how many millions of dollars or incentives the state puts into affordable housing, however, it isn’t enough to match the lagging efforts of the private sector.”
“[The state] can certainly stimulate additional building activity,” McMullen says, “but it’s really dwarfed sometimes when we look at these large market forces.”
Those forces include higher interest rates, more cautious lending practices by banks and a shrinking number of local lenders in Oregon. Out-of-state banks, which often finance large construction projects, tend to rely heavily on economic and census data when evaluating risk.
That data can shape perceptions in ways that affect investment decisions.
“People are worried about our education rankings, our crime rankings, homelessness rankings. If you’re looking at this stuff, it doesn’t look as great as it used to,” McMullen says. “I still think there’s a tremendous quality of life here.”
Developers also face rising construction costs, labor shortages and regulatory complexity — all of which can stall projects even after permits are issued. Importantly, not every permitted unit ultimately becomes completed housing, meaning the actual number of new homes delivered may fall short of already modest permit totals.
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Oregon’s housing dilemma underscores the tension between public policy goals and economic conditions. While lawmakers continue to push reforms and funding strategies, private-sector confidence remains a decisive factor in determining whether projects move forward.
Without a significant rebound in multifamily construction — and sustained collaboration between state leaders, local governments, lenders and developers — Oregon may struggle to close the widening gap between housing demand and supply.
For a state aiming to reduce homelessness, strengthen its workforce and improve affordability, the pace of building will likely remain one of the most closely watched indicators in the years ahead.
Originally reported by Khushboo Rathore, Oregon Journalism Project in Philo Math News.
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