Portland’s apartment-building binge appears to be headed off a cliff.
Applications for new housing developments have nearly ground to a halt over the past year, and there are plenty of reasons for that. Construction costs have ballooned, as have land prices. The glut of new construction, meanwhile, has taken the wind out of rising rents, at least at the high end.
But Portland officials are increasingly worried the city’s inclusionary zoning policy, which compels developers to set aside rent-restricted units in large apartment and condo projects, might be playing a role, too. And if home construction dries up, it could ultimately push housing costs even higher.
Only 12 privately financed developments large enough to trigger the mandate, totaling 654 units, have sought building permits since the policy took effect last year. A more typical year in the recent housing boom has seen thousands of new apartments proposed.
Those projects would create 89 units geared toward households earning significantly less than the median income.
It’s difficult to say, given the many conflicting variables, whether or to what extent inclusionary zoning is to blame for the drop-off. Meanwhile, there’s a backlog of projects that had been submitted before the rules took effect, representing up to two years of future development.
Nonetheless, a city economic planner tasked with monitoring the program says it might be time to consider changes that could give developers a better deal — or risk putting an artificial cap on the housing supply, driving rents higher in the long run.
“It’s not that the policy is currently broken,” said Tyler Bump, a senior economic planner with the Bureau of Planning and Sustainability. “It’s that we need to track it before it breaks.”
Read the full article at OregonLive.