Housing Affordability: The Rental Market in Oregon
April 04, 2025Housing affordability has been a hot topic of late due to a substantial increase in housing prices in Oregon and across the U.S. since 2020. The median monthly rent for a 1-bedroom apartment in Oregon increased $154 (14%) from 2019 to 2023.
Fundamentally, the price of housing is a function of housing supply and housing demand. Housing supply is negatively correlated with price. That is, the more housing supply the lower the price, and vice versa. Housing demand is positively correlated with price. In other words, the more demand for housing the higher the price, and vice versa. Another factor that has changed the affordability picture in recent years is higher mortgage interest rates than prior to the pandemic, significantly reducing the home price that is affordable for the typical household.
There are a couple ways to track housing supply. One measure is the change in housing permits, or the number of residential housing units approved for construction each year, which is tracked by the U.S. Census Bureau though its Building Permits Survey.
On the housing demand side, we can look at the annual change in the number of households. The Census tracks the number of households in a given geography through the decennial census and the American Community Survey. According to the Census, “a household is composed of one or more people who occupy a housing unit.” Households can usually form by people moving into the state or by people moving out of a co-habitation situation – for example, children moving out of their parents’ house.
Comparing the trends of building permits approval and household formation allows us to see the relationship between housing supply and demand.
Looking at the graph, growth in the number of households in Oregon outpaced the number of new units approved for building in six of the last seven years, going back to 2017. Housing demand has outpaced housing supply to the point where there is only a 0.8% housing vacancy rate in Oregon, a full percentage point below where it was a decade ago, according to the U.S. Census Bureau.
In the 2010s, Oregon’s increase in household formation was largely due to strong in-migration. Though in-migration to Oregon has somewhat stagnated since 2020, one big trend to come out of the COVID-19 pandemic was a significant increase in the household formation rate. In normal terms, this means that people moved out of shared households and formed their own, such as kids moving out of their parent’s home or roommates moving out of shared living spaces.
Despite the lacking housing production, rental vacancy notably rose in Oregon to 6% in 2023. This is perhaps due to a couple of reasons. The number of multifamily units permitted (which are more likely to be rentals than single family units) spiked in 2022. This also aligns with both stagnation of net-immigration in Oregon from 2020 to 2023, and there were a high number of homes sold in first quarter of 2022, according to the National Association of Realtors. In other words, one possible explanation for the increase in rental vacancy might be a combination of a slew of rental units coming online combined with people moving out of rentals and into home ownership.
With a jump in the rental vacancy rate, there was a corresponding decrease in the average rent for a one bedroom apartment in Oregon from 2022 to 2023. Average monthly rent for a one bedroom apartment in Oregon increased 20% ($209) from 2017 to 2022, but then decreased 2% (-$24) from 2022 to 2023.
While monthly rent increased then stagnated, median earnings for the Oregon population has skyrocketed in the same time period. Median monthly earnings for an individual in Oregon increased 37% ($1,164) from 2017 to 2023. This resulted in the share of average one-bedroom rent as a percentage of median earnings dropping five percentage points from 34% to 29% from 2017 to 2023.
It is important to note that the renter population tends to have lower incomes, so the rent as share of earnings percentage number itself does not necessarily reflect the actual share for the renter population. It simply notes that growth in earnings has tended to outpace growth in residential rents.
More Housing Units Are Needed to Address the Current Shortage
Despite the recent uptick in the rental vacancy rate, Oregon still lags behind the U.S. in terms of rental vacancy rate and rental affordability. Matching housing supply to demand requires continuing public and private focus and investment. The Oregon Housing and Community Services department covers housing in more depth in their 2024 State of the State’s Housing Report.
For more on the housing market, see Housing Affordability in Oregon.
To learn more about demographics of renting and owning in Oregon, visit the article Characteristics of Home Ownership and Renting in Oregon.