Nearly two years ago, Oregon’s Governor Tina Kotek set a target of increasing the number of homes built in Oregon each year from 22,000 to 36,000. At the time, I argued that the subsidies Kotek was proposing wouldn’t work, partly because builders would respond to new subsidized homes by reducing market-rate home construction.
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A recent report from the state’s office of Housing and Community Services finds that the situation is worse than I thought. The state and local governments have spent $2.2 billion subsidizing new housing, mostly since 2020. Yet the most recent data indicate that the number of new homes constructed each year is no greater than it was before. Although demand for housing has fallen because so many people are leaving the state due to high housing prices, housing is considerably less affordable today than it was in 2020. Continue reading
