Housing Affordability: How Expensive Is Affordable Housing in Southwestern OregonJuly 14, 2020 Prior to the unexpected pandemic surrounding COVID-19, Oregon was experiencing fast growth in home prices across the state, strongly affecting housing affordability. In order to understand what “affordability” entails, we must have a better understanding of the affordable housing rental market. Oregon Housing and Community Services (OHCS), “is Oregon’s housing finance agency, providing financial and program support to create and preserve opportunities for quality, affordable housing for Oregonians of lower and moderate income.” OHCS administers these programs to provide housing stabilization and does so through grants, contracts, and loan agreements with local partners (primarily non-profits) and community-based providers.
The Area Median Income (AMI) is the midpoint of a region’s income distribution – half of the families in a specified region earn more than the median and half earn less. To set rental rates for each county, the U.S. Department of Housing and Urban Development (HUD sets income thresholds relative to the area’s median income to identify households eligible to live in the income-restricted housing units and the affordability of those housing units to low-income households. HUD has set three levels of affordability based on AMI: at or below 30 percent (Extremely Low Income), 50 percent (Very Low Income), and 80 percent (Low Income). Depending on household size, HUD also defines and calculates the different levels of AMI for a geographic location. OHCS then uses HUD’s data to set rental limits for each of the three groups mentioned, separating Oregon by counties.
Using data from the American Community Survey, in 2018 Southwestern Oregon (Douglas, Coos, and Curry County) had an estimated 82,106 occupied housing units. Renter-occupied units account for 33 percent of all occupied housing units in the Southwestern Region of Oregon. Curry County leads the region in median rental prices, costing households $870/month, sitting $76 above both Douglas and Curry County. As expected for rural counties, monthly housing costs are lower than Oregon’s median ($1,050). The monthly median cost is also a reflection of the price range that renters are willing or able to pay. All three counties have more than half of renters paying rent within the $500 to $999 range. Comparing that across Oregon, 38 percent of renters paid rent within the same range.
There is a golden rule in budgeting of spending around 30 percent of your income on rent, and is highly suggested to not go over that share. So what income percentage are Southwestern Oregon residents paying towards their rent? Across Oregon, five out of every 10 renters are paying more than 30 percent of their household income, which was also true in Douglas, Coos, and Curry counties during 2018. With median household income in Southwestern Oregon sitting at $45,569, we can estimate that half of the region’s housing renters pay more than $1,139 towards their rent. Affordable housing units are required to stay under their designated AMI’s for their county. Unfortunately, there are not enough affordable housing units to fill the high demand in Southwestern Oregon.
Across Oregon the number of new building permits has increased since the Great Recession of 2008. While the number of building permits has increased, it has not yet reached the levels seen in 2000 through 2007, when 20,000 permits were administered per year. In 2013, the new building permits started to level out, with more permits allotted to developments of multi-unit dwellings. Before 2013, more than half of new building permits were allocated towards single-unit developments.
So how does the shortage of affordable housing units look? Throughout Southwestern Oregon, when only analyzing affordable housing that is available at less than 30 percent of Area Median Income (AMI), there is a vast deficit of units. This shortage of units leads more than half of the renter population within this region to pay more than 30 percent of their household income towards rent. When we look at the shortage of units for less than50 percent AMI the scarcity is even higher for affordable units available. In total, there is a shortage of (-5,450) affordable renting units within Southwestern Oregon, when holding the AMI to less than 50 percent.
Housing affordability continues to be a serious concern across the state of Oregon and within rural counties. Affordable housing rental prices are limited to the maximum amount they can charge a low-income household, due to the laws and requirements set by both HUD and OHCS. Therefore, while affordable housing rental prices are reasonable, the shortfall of available and affordable units is the most problematic and pressing issue within not only the Southwestern region, but in Oregon.