Tag: Affordable Housing Vacancy

Portland Real Estate Appraisal Brief – Friday, December 12, 2025: $20.7M RSO Reallocation, Rent Hikes Reversed, HUD Policy Pause

Portland’s Home Forward reverses rent hikes at subsidized properties amid 14% vacancies, $20.7M RSO reallocation, and HUD’s CoC pause—appraisal risks for multifamily in the Portland–Vancouver region.

The paradox of empty apartments amidst a backlog of applications
Via Canva Pro

The Affordable Housing Paradox: Local Action and Federal Uncertainty

The dynamics of affordable housing in the Portland metro area are currently defined by a convergence of major local policy responses and intense federal uncertainty. The situation presents a complex risk profile for homeowners, investors, lenders, and appraisers focused on the multifamily sector across the region.

Locally, the Portland Housing Authority, Home Forward, recently reversed planned rent increases at two properties, The Yards at Union Station and Pearl Court Apartments, after tenant outcry. The decision was made following reporting that the region has at least 1,863 income-restricted apartments sitting empty while waitlists remain years long—an affordable-housing paradox our brief from Sunday, December 7th examined. Home Forward’s vacancy rate is approximately 14% across its portfolio, significantly above the general market rate. The rent increases, which were as high as 10% for tenants using government rent subsidies, were originally deemed necessary due to a combination of rising operating costs and delayed federal voucher renewals and payment shortfalls. This immediate reversal highlights the degree to which local administrative and political pressures are mitigating instability that often originates from federal payment issues.

Local Fiscal Correction and Spending Priorities

Adding to the local action is the controversy over approximately $20.7 million in unspent funds from the Rental Services Office (RSO), as uncovered in last month’s reporting on landlord relocation fees. This surplus prompted concern after former Housing Director Shannon Singleton told city council she was instructed not to disclose the accumulated balance. The discovery has pushed the City Council to act quickly, especially as Home Forward is currently facing an estimated $35 million budget gap next year due to insufficient federal funding.

The Council introduced a resolution to allocate the approximately $20.7 million. The intent is to “slow the inflow into homelessness” by prioritizing upstream renter stabilization and prevention programs. Key components of the Council’s directed priorities include:

  • $9 million designated for Home Forward to stabilize households affected by ongoing federal funding cuts and help close the agency’s widening budget gap.
  • $4 million over three fiscal years for new, flexible, short-term rent assistance aimed at tenants facing imminent eviction.
  • A minimum of $2 million of RSO revenue set aside for capitalizing a Revolving Loan Fund, which would be used for the future acquisition of market-rate housing or land banking for the development of social housing.

The allocation of these funds underscores a local commitment to mitigating housing instability in the face of dwindling or volatile federal support.

Federal Policy Shifts and HUD Overhaul Pause

The urgency behind the local fund allocation is intensified by volatility at the federal level, which affects the entire Portland–Vancouver region. Nationally, housing authorities and property owners have been dealing with operational disruptions, including delayed Housing Choice Voucher (Section 8) payments to landlords due to a recent federal government shutdown. Furthermore, Home Forward was forced to halt the issuance of new vouchers in August due to the looming $35 million budget gap driven by insufficient HUD funding.

On December 8th, the Department of Housing and Urban Development (HUD) temporarily withdrew its highly controversial Continuum of Care (CoC) Notice of Funding Opportunity (NOFO). This withdrawal occurred just hours before a court hearing related to multiple lawsuits, including one in which both Oregon and Washington were key plaintiffs, as detailed in our December 2nd brief on the HUD lawsuit. The NOFO was widely criticized for proposing a significant shift in federal policy by drastically limiting the amount of CoC funds—the largest federal grant source for homelessness prevention—that could be used for Permanent Supportive Housing (PSH). Oregon Housing and Community Services (OHCS) and other local providers had warned that this policy change would create a conflict with state policies requiring services to be voluntary, threatening to disrupt or displace existing programs. The temporary pause on the overhaul grants local housing authorities and service providers a crucial—though potentially brief—reprieve as HUD reviews its funding strategy.

Appraisal Implications

The confluence of extreme local policy action, high subsidized vacancy rates, and unstable federal funding introduces unique valuation and market risks for properties, particularly in the multifamily segment across Clackamas, Multnomah, Washington, and Clark counties.

Income-Restricted and Section 8 Properties

The financial state of Home Forward, marked by a 14% vacancy rate and a $35 million budget gap, injects severe income-approach risk for appraisers. Restricted rents that appeared stable only weeks ago have proven volatile, and operating expenses continue rising faster than allowed rent adjustments. Appraisers valuing LIHTC, project-based Section 8, or other regulated affordable properties must account for elevated policy risk.

  • Vacancy Analysis: The high vacancy is driven by both administrative issues and market factors. Specifically, many 60% AMI units are no longer competitive as market-rate rents have dropped, causing demand to lag in this specific income tier while the deepest need remains in the 0-30% AMI range. Appraisers must carefully analyze these tiers, alongside physical risks, to determine the actual loss-to-lease and economic vacancy.

Market-Rate Multifamily Rentals

The $20.7 million reallocation and potential influx of new renter stabilization resources may modestly ease pressure on market-rate rents in lower-price segments, though the effect will likely be concentrated in central Portland submarkets.

Sources & Further Reading

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