Tag: Starter homes Portland

Portland Real Estate Weekly Appraisal Digest – December 21st – December 27th, 2025: Affordability Barriers and Tax Shifts

A vibrant sunset casts warm orange and pink hues over the Willamette River in downtown Portland, Oregon. In the foreground, the green steel arches of the Hawthorne Bridge span the calm water, while the city's skyline—featuring prominent high-rise buildings with distinctive architectural elements—rises against the colorful sky. Trees line the riverbank, adding a touch of greenery to the urban scene.

The final full week of 2025 sharpened focus on the deep affordability barriers defining the Portland Region’s housing market, while also spotlighting regulatory and tax issues with real consequences for homeowners—especially veterans. A closer look at the 2024 MAV Reset Clarification revealed how the loss of a disabled veteran exemption can trigger a permanent upward reset in maximum assessed value, locking in higher property taxes even if the exemption is later restored. Meanwhile, groundbreaking on a major apartment project pushed forward despite tight financing, and fresh Q3 data underscored why most first-time buyers must now wait until age 40 to enter the detached single-family market.

That Q3 analysis, powered by the new Portland Appraisal Blog Affordability Index (PABAI), showed that fewer than 10% of recent detached sales were realistically within reach for households aged 25–44 once full PITI costs are considered. A separate deep dive into today’s typical $600,000 home purchase laid out the household income actually required—far above median levels for younger buyers. Together, these pieces highlight a region where entry-level detached ownership remains elusive without substantial down-payment help, outlier earnings, or delayed timelines.

At the same time, multifamily development continues as one of the brighter spots, with projects like the Barbur Apartments aiming to deliver more rental options amid high construction costs and steep financing hurdles. These efforts reflect broader attempts to ease the overall supply crunch, even as single-family affordability stays structurally constrained.

Table of Contents

Sunday, December 21: Barbur Apartments Groundbreaking Highlights Plottage Value

The Barbur Apartments site sits at the prominent intersection of SW Barbur Blvd and SW Capitol Hill Rd.
Photo: Portland Appraisal Blog

Groundbreaking commenced in mid-December 2025 on the Barbur Apartments, a 150-unit affordable family housing project located at the corner of SW Barbur Blvd and SW Capitol Hill Rd in Portland’s Hillsdale/Multnomah Village area. Developed by Innovative Housing, Inc., the complex will feature one three-story building and two four-story buildings, delivering 149 income-restricted units (one reserved for an onsite manager) with many larger two- to four-bedroom layouts targeted at immigrant and refugee families. Amenities include a courtyard and community spaces, with completion expected in Fall 2027.

The project carries an estimated total development cost of approximately $79.4 million, supported by about $27.3 million from the Portland Housing Bureau alongside regional Metro Housing Bond funds, federal sources, and Portland Clean Energy Community Benefits Fund contributions for energy efficiency. It emphasizes transit access along the Barbur corridor, with approved plans providing roughly 45 on-site parking spaces—a ratio of about 0.3 spaces per unit reflecting the transit-oriented design.

From an appraisal perspective, the redevelopment exemplifies plottage, the incremental value gained by assembling contiguous parcels into a larger, more developable site. Four tax lots totaling around 2.19 acres were purchased together in February 2025 for just under $6 million. Individually constrained by size, zoning, and existing improvements, the parcels supported only lower-intensity uses.

One parcel formerly held a 1927-built single-family home of approximately 2,336 square feet that was never listed on the open market and quickly demolished, demonstrating clear functional obsolescence as the corridor evolves. An adjacent former commercial strip—Barbur Blvd Rentals—remains standing but fenced within the construction zone. Together, these lots enable a density and scale unattainable separately, illustrating classic plottage and a shift to higher-density residential as the highest and best use.

Directly across Barbur Blvd sits a large Safeway complex with extensive covered and surface parking, a significant amenity for future residents. However, with the project’s limited on-site parking space and family-oriented unit mix, residents and guests may increasingly rely on this private lot for overflow. A mid-morning site visit revealed a nearly full garage, suggesting potential increased daytime use once occupied—a dynamic worth monitoring.

Local market data from 2024–2025 closed sales in Hillsdale and Multnomah Village underscores limited affordability. Detached homes led with 351 sales averaging $750,000 and 50 days on market. Condominiums, the most accessible ownership segment by volume, averaged $445,000 across 78 sales with longer 68-day absorption. Attached homes, a small segment of just 13 transactions, averaged $581,000—likely due to more recent construction (average year built 2010) and associated premiums. Overall averages reached $691,000, highlighting ownership barriers and the critical role of regulated rentals like Barbur Apartments for lower-income and larger households.

This assemblage aligns with broader city efforts to expand housing through density and public investment, including recent regulatory reforms aimed at reviving Portland development.

Tuesday, December 23: The Measure 50 Compression Trap and the 2024 MAV Reset Clarification

A classic pre-1940 home in the Portland Region – the type of property often benefiting from deep Measure 50 tax compression.
Photo: Abdur Abdul-Malik, Portland Appraisal Blog

In Oregon’s property tax system, established by Measure 50 in 1997, a common pitfall has emerged for buyers of older homes: unexpectedly high tax bills following the loss of certain partial exemptions. This occurs when a veteran or active-duty partial exemption ends—often upon sale or the owner’s passing without a qualifying successor—triggering a reset of the property’s Maximum Assessed Value (MAV) closer to current market reality. Previously, counties preserved the low MAV after removing the exemption, but updated 2024 guidance from the Oregon Department of Revenue now enforces a constitutional recalculation, potentially adding $2,000–$6,000 annually to taxes for pre-1997 properties with deep compression.

Measure 50 created two key values: Real Market Value (RMV), reflecting current market conditions, and MAV, initially set below 1995–1997 RMV and capped at 3% annual growth thereafter (with exceptions). The Assessed Value (AV) is the lesser of the two, leading to substantial compression in high-appreciation areas like Portland, where older homes often have MAV far below RMV. When a partial exemption disqualifies, the new guidance applies the Changed Property Ratio (CPR)—around 0.54 for residential properties in Portland Region counties for 2025–2026—to reset MAV to current RMV multiplied by CPR, aligning taxes more closely with newer homes.

Q3 2025 sales data for detached single-family residences in the Portland Region highlights this compression. Pre-1940 homes averaged $671,295 in sale price but only $6,396 in annual taxes, while 1940–1959 properties averaged $607,466 with $5,766 in taxes. In contrast, 2000–2019 homes averaged $761,061 with $7,685 in taxes. Effective tax burdens remained consistent at ~$9–$10 per $1,000 of sale price across eras, showing the market prices properties assuming similar overall loads. However, absolute taxes rise with newer construction due to less historical compression, and pre-1940 homes often command premiums despite lower taxes—creating vulnerability when resets occur.

The veteran (ORS 307.250) and active-duty (ORS 307.286) exemptions provide modest reductions—up to $31,565 or $108,366 for 2025–2026, worth $400–$700 annually in savings—but their disqualification now triggers the full MAV reset. With over 114,000 veterans in the metro area, affected transactions can see increases of $1,500–$4,000 yearly in typical cases, or $4,000+ in deeper-compression scenarios. This translates to $125–$333 monthly, comparable to a car payment, potentially straining affordability and prompting renegotiations.

For market participants, the reset introduces friction: buyers may demand concessions, sellers (including veterans or surviving spouses) face lower net proceeds, and properties can linger on the market if low current taxes mask future costs. Outliers with unusually low taxes may reflect active exemptions or compression soon to erode.

Appraisers should verify exemption status via county records, estimate post-reset taxes, and comment on marketability when material. Low-tax comparables warrant scrutiny—effective rates of 0.6–0.8% may signal compression, better aligned post-reset at 1.1–1.3%. Providing dual tax scenarios aids informed valuation. As resets appear in more closed sales from 2026 onward, this factor will increasingly explain pricing anomalies in Oregon’s older housing stock.

Thursday, December 25: Portland’s Starter Home Market (Q3 2025) — What $469k Really Buys

A classic early-20th-century bungalow in the Portland area—the type of modest, well-loved home that dominates today’s starter-tier inventory.
Via Canva Pro

In another Appraisal Deep Dive, we examine Portland’s starter-home market using Q3 2025 RMLS data for detached single-family residences in the 5th–35th percentile by price—the same convention Redfin used in its October report highlighting Portland’s strong starter activity.

Redfin’s reported median of approximately $420,000 includes all property types, but focusing solely on detached homes—a popular choice across the metro, including for urban buyers seeking yard space and privacy—yields an average close price of $469,000. Local buyers want to know how much home this budget actually buys, and the data reveals a market overwhelmingly dominated by mid-century inventory, with stark county differences and only a modest presence of brand-new construction.

Across the core counties, Multnomah drives nearly half the volume with the oldest average build year (1951), while Washington posts the highest prices and hosts the most new homes. Outer counties like Columbia and Yamhill offer newer builds on larger parcels but far fewer sales. Square footage emerges as one of the stronger (though still modest) drivers of price, with most sales clustering between 1,200 and 2,000 square feet. Lot size patterns show a clear historical shift: post-war boom homes (1940s–1950s) typically enjoy generous parcels, while newer construction relies on much smaller lots—often the result of infill and divisions.

New homes account for just 4.2% of starter-tier sales (versus 9.1% market-wide), yet their presence remains noteworthy in a high-cost building environment. They sell for only about 3% more than existing homes despite brand-new condition but deliver less interior space and roughly half the land. For buyers, this creates a clear trade-off: modern efficiency and low maintenance on a very small lot (often minimal usable yard, especially in Multnomah and Washington) versus an older mid-century home with significantly more outdoor space, albeit with potential challenges in systems and layout—a choice particularly relevant for growing families prioritizing play areas or privacy.

Appraisal insights reveal that chronological age correlates weakly with both sales price and price per square foot. Effective age, condition, and site utility drive value far more, with lot size advantages in older homes often offsetting credits for new condition. When appraising the limited new-construction sales (down ~25% YoY overall, 48% in Multnomah), appraisers typically rely on other recent builds and adjust heavily for quality of upgrades and site characteristics.

Overall, Portland’s starter segment continues heavy reliance on mid-century stock on larger lots—a pattern unlikely to change dramatically in 2026 without major supply shifts, though the City of Portland is attempting to incentivize new projects via SDC waivers. The modest new-construction foothold demonstrates builder adaptation, but at the clear cost of site size and outdoor space.

Saturday, December 27: Portland’s First-Time Buyers Have No Choice But to Wait Until 40 — Q3 2025 Data Explains Why

Classic Craftsman bungalows homes in a Portland neighborhood. While older detached stock like this offered relatively better access for younger buyers in Q3 2025 (15% affordable in Multnomah County under realistic PITI assumptions), many close-in properties commanded premium prices—this example on the right sold for $1.1 million.
Photo: Abdur Abdul-Malik, Portland Appraisal Blog

Recent Q3 2025 data reveals that only about 10% of detached single-family homes in the Portland Region were affordable to typical households aged 25–44 under realistic payment assumptions, highlighting why first-time buyers are increasingly delayed until reaching age 40. Nationally, the median age of first-time buyers has hit a record 40, with their share of purchases at a historic low, driven by persistent affordability barriers.

Traditional measures, such as the National Association of Realtors’ Housing Affordability Index—which considers only principal and interest with a 25% qualifying ratio—suggest that roughly 28% of Q3 2025 detached sales in the six-county Portland Region were affordable to a household at the area median income of $124,100. However, incorporating actual property taxes and a conservative homeowners insurance estimate into the full PITI payment drops this to 20% for the same benchmark.

This analysis introduces the new Portland Appraisal Blog Affordability Index (PABAI)—a more accurate, PITI-based metric tailored to the Portland Region’s market. The PABAI expresses affordability as an index value (100 indicating exact qualification for the typical home) and derives the percentage of sales affordable to reference households. For the regional benchmark using HUD’s $124,100 area median income, the PABAI stood at approximately 78. For younger 25–44 households with a median income of about $110,000, it fell to 69—meaning only 9.8% of Q3 detached sales (460 out of 4,682) were within reach. The typical $600,000 detached home required roughly $159,000 in household income—45% above this cohort’s median.

County-level variation underscores geographic disparities for 25–44 buyers. Outer areas like Columbia County (34% affordable) and Yamhill County (23%) provided the most options, though often at the cost of longer commutes to urban centers. Multnomah County outperformed at 15%, benefiting from denser, older stock, while suburban Washington (3%) and Clackamas (5%) counties lagged due to larger lots and higher-priced inventory. Hood River registered just 3%.

In Q3 2025, younger buyers seeking detached homes typically needed substantial family assistance, extreme lifestyle sacrifices for larger down payments, or outlier incomes well above cohort medians to gain entry. Without these, most were effectively priced out until accumulating higher earnings in their late 30s or early 40s—or forced into alternatives like condominiums.

The PABAI models affordability with a 20% down payment, 28% front-end ratio, actual rates, listing taxes, and a 0.40% insurance rate, offering granular insights beyond national indices that overlook taxes and insurance. This realistic approach confirms the structural challenges pushing first-time buyer ages upward in the Portland Region.

Week’s Blog Posts & Further Reading Links

Closing Remarks

Taken together, this week’s coverage paints a picture of a Portland metro market where structural barriers—high prices, elevated property taxes, and insurance costs—continue to sideline younger households from detached homeownership. The introduction of the Portland Appraisal Blog Affordability Index offers a clearer, more localized tool for understanding these gaps, showing that realistic PITI-based qualifying leaves fewer than 10% of recent sales within reach for 25–44-year-olds.

Regulatory and measurement topics add another layer of complexity for industry professionals. Clarifications around the 2024 MAV Reset and the accompanying tax implications serve as reminders that appraisal assignments increasingly demand careful awareness of tax policy and its effects on value and marketability.

The common thread remains one of constrained supply at affordable price points, driving both multifamily investment and prolonged timelines for single-family entry. These dynamics suggest the region will continue favoring those with established equity or higher earnings, while first-time buyers face extended waits or alternative paths like condominiums.

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Thanks for reading—I hope you found a useful insight or an unexpected nugget along the way. If you enjoyed the post, please consider subscribing for future updates.

Question: With first-time buyers now commonly having to wait until 40 to purchase a detached home in the Portland Region, what trade-offs are younger households making today to eventually break into ownership?

CODA

Are you an agent in Portland who wonders why appraisers always do “x”?

A homeowner with questions about appraiser methodology?

If so, feel free to reach out—I enjoy connecting with market participants across Portland and the surrounding counties, and am always happy to help where I can.

And if you’re in need of appraisal services in Portland or anywhere in the Portland Region, we’d be glad to assist.

Appraisal Deep Dive: Portland’s Starter Home Market (Q3 2025) — What $469k Really Buys

Q3 2025 RMLS data shows the Portland Region’s detached starter homes (5th–35th percentile) average $469k and are dominated by mid-century builds on larger lots—with new construction offering modern features but far less space. Appraisal and buyer insights below.

Yellow 20th-century bungalow in the Portland area typical of starter homes.
A classic early-20th-century bungalow in the Portland area—the type of modest, well-loved home that dominates today’s starter-tier inventory.
Via Canva Pro

Earlier this month, Redfin highlighted Portland as one of the stronger markets nationally for starter-home activity, defining starter homes as sales in the 5th–35th percentile by price. We adopt the same percentile convention here for consistency.

Redfin’s reported median of approximately $420,000 for Portland starter homes includes all property types (condos, townhomes, and single-family). Focusing solely on detached single-family residences—a popular choice across the region, including for many urban buyers seeking yard space and privacy over attached ownership—Q3 2025 RMLS data for the 5th–35th percentile tier shows an average close price of $469,000.

Few would be surprised that new construction plays a limited role in true entry-level pricing—after all, building costs remain elevated. Yet the data shows builders are still delivering a modest but meaningful number of brand-new homes into this tier (about 4.2% of starter sales, compared to 9.1% across the full market). This demonstrates that, through efficient design, infill strategies, and lot divisions, new product can compete in the lower price bands.

Local buyers want to know: how much home does a starter budget actually buy? This analysis examines square footage, lot size, build era, and location differences across counties—revealing a market dominated by mid-century homes with a modest but noteworthy presence of brand-new construction.

How Much Home a Starter Budget Buys by County

The table below summarizes Q3 2025 closed sales for detached single-family homes in the 5th–35th percentile across the core Portland Region counties (Hood River row excluded due to only two qualifying sales).

CountyAvg Close PriceAvg Yr BuiltAvg Total SFAvg Acres# of Sales
Clackamas$474,73819651,5530.279256
Columbia$457,10819831,7740.61758
Mult.$459,90919511,5910.163666
Wash.$488,95419761,4950.154323
Yamhill$453,52219811,5320.197113
Grand Total$468,59519631,5650.2031,418
Data: RMLS | Portland Appraisal Blog

Multnomah County drives nearly half the volume, delivering the oldest average build year (1951). Washington County posts the highest average prices and hosts the most new construction. Outer counties like Columbia and Yamhill provide newer homes on larger parcels, though with far fewer transactions.

Surprisingly, across the region, starter homes are very similar in average price. The standard numerical metrics which are easy to see in RMLS, (e.g. total square footage, lot size, year built, etc.), are not the primary determinant of value. As we shall see, what matters more is quality, condition, and overall site & functional utility. Buyers in the starter home tier make conscious trade-offs between older homes with larger lots and newer homes with little to no functional backyard.

Of all the standard numeric metrics, total square footage shows one of the stronger relationships with price in the starter tier—though the influence is still modest.

Scatter plot of Close Price versus Total Square Footage. The graph shows a slight tilt, indicate a noticeable though modest correlation between the two variables.
Close Price vs. Total Square Feet for Starter-Tier Detached Homes ≤ 0.5 Acres (Q3 2025 RMLS data – 1,380 observations).
Note: The Y-axis begins at $350,000 to allow for better viewing of the dataset.

Larger homes tend to sell for higher prices, though with considerable variation—most sales fall between 1,200 and 2,000 square feet. The very slight tilt to the right indicates a weak but present relationship between starter home size and close price. The coefficient of determination (R2) for this graph is 0.1253, meaning total square footage explains only about 12.5% of the variation in price. Since total square footage is often one of the primary determinants of value in the broader housing market, this is a big clue that the size of the home isn’t the primary factor for buyers looking to enter the starter home market.

The Historical Supply Pattern: Lot Size and Build Era

Portland’s entry-level inventory bears the clear imprint of the post-war building boom.

Scatter plot of Lot Size versus Year Build. The graph shows lot sizes rising up to the 1960s, where it begins steadily declining into the modern era, indicating the high cost of land and increasing lot splits.
Lot Size vs. Year Built for Starter-Tier Detached Homes ≤ 0.5 Acres (Q3 2025 RMLS data – 1,380 observations).

A polynomial trendline highlights the peak lot sizes during the 1940s–1950s post-war era, followed by a steady decline that began in the early 1960s and accelerated in recent decades. The pattern reflects an era when generous lots were standard, followed by shrinking parcels as land values rose, urban growth boundaries took effect, and lot divisions became common. Buyers choosing older starter homes today typically gain significantly more outdoor space than those selecting new construction.

New Construction: A Modest but Noteworthy Presence

While new homes account for only 4.2% of starter-tier sales, their ability to reach this price range in a high-cost building environment remains impressive.

SegmentAvg Close PriceAvg Total SFAvg Acres# of Sales
Existing$467,9961,5690.2071,359
New$482,3871,4790.10759
Grand Total$468,5951,5650.2031,418
Data: RMLS | Portland Appraisal Blog

New homes sell for only about 3% more than existing ones despite brand-new condition, but deliver less interior space and roughly half the land.

Buying a new home in the starter tier is akin to buying a new car on a tight budget: you gain the benefits of fresh systems, modern design, and warranty peace of mind, but often in a smaller package with fewer amenities compared to a well-maintained used model from a higher trim line.

CountyAvg Close PriceAvg Yr BuiltAvg Total SFAvg Acres# of Sales
Clackamas$489,80320251,6060.1548
Columbia$420,00020251,4580.1302
Mult.$450,82020251,0980.08818
Wash.$509,36620251,6990.07925
Yamhill$475,57820251,5400.2166
Grand Total$482,38720251,4790.10759
Data: RMLS | Portland Appraisal Blog

For buyers, this creates a clear choice: a brand-new home with modern efficiency but typically on a very small lot—often with minimal or no usable yard space, especially in Multnomah and Washington counties where most new construction occurs—or an existing mid-century home that generally offers significantly more land and outdoor space, albeit with the potential challenges of older systems and layouts. This trade-off is particularly relevant for growing families or those prioritizing play areas, gardens, or privacy.

Appraisal Insights and Challenges

One of the most revealing patterns appears when plotting close price against build year.

Scatter plot of Close Price versus Year Built. The graph shows virtually no correlation between the two variables, indicating start homes are driven by factors other than the year built.
Close Price vs. Year Built for Starter-Tier Detached Homes ≤ 0.5 Acres (Q3 2025 RMLS data – 1,380 observations).
Note: The Y-axis begins at $350,000 to allow for better viewing of the dataset.

The remarkably consistent price band across decades illustrates that chronological age has little direct influence on value in the Portland Region’s entry-level segment.

In this tier, actual age correlates weakly with sales price because buyers weigh multiple factors:

  • Functional obsolescence in mid-century stock (outdated floor plans, smaller kitchens/bathrooms, less efficient systems) is often mitigated by updates and strong location appeal.
  • Effective age and condition drive far more of the value than the original build date.
  • Lot size and site utility frequently favor older homes; the smaller parcels common in new construction require substantial negative adjustments that offset much of the credit for new condition.
  • Comparable selection remains within county, where abundant mid-century comps in Multnomah, Clackamas, and Washington provide solid support — but thinner volume in outer counties demands careful bracketing.
  • When appraising a new-construction home in this tier—where truly similar recent sales are still limited and down approximately 25% year-over-year in Q3 2025 (with Multnomah County off 48%)—appraisers typically rely on other relatively recent builds (often within 10 years) and apply appropriate adjustments for differences in site characteristics, size, and location.

The same pattern holds when looking at the data from a price-per-square-foot lens, but with a slight twist:

Scatter plot of PPSF (TSF) versus Year Built. The graph shows virtually no correlation between the two variables, but with a twist. There is a clear compression of PPSF for homes starting in the 1950s up to the modern era. This indicates a homogenization of the market following WWII. The only exception are completely brand new homes, where the PPSF widens again. This indicates new homes form a distinct submarket where location and site utility play a large role.
PPSF (TSF) vs. Year Built for Starter-Tier Detached Homes ≤ 0.5 Acres (Q3 2025 RMLS data – 1,380 observations).

From the 1950s onward, PPSF becomes progressively more compressed—older homes exhibit wide spreads driven by dramatic differences in condition, updates, historic appeal, and location premiums, while mid-era and late-20th-century stock tightens as market expectations and remodeling homogenize perceived value.

Brand-new 2025 homes, however, break this decades-long compression pattern. Their PPSF spreads out again, reflecting greater influence from location-driven land costs and builder-specific choices (e.g., finishes, lot configuration) rather than the uniformity imposed by age and updates on existing stock. In effect, today’s entry-level new construction reintroduces variation that mirrors pre-1950 homes—but for different reasons: land value dominance and strategic specs to hit price points, rather than condition swings. This underscores why new-construction starter homes often form their own submarket. Appraisers valuing them face a narrower but distinct comp pool.

These dynamics show that the starter home market is not uniform and the appraiser needs to carefully delineate the competitive market segment to avoid having to make large adjustments between disparate properties. One technique appraisers often employ is to use similar, but older sales when recent data is thin and make an appropriate market conditions adjustment.

Conclusion

The Portland Region’s Q3 2025 starter-home segment continues to rely predominantly on mid-century inventory on lots larger than anything new we’re building today—a pattern unlikely to shift dramatically in 2026 absent major changes in new supply. (Although the City of Portland is certainly trying to incentivize new projects with SDC waivers.) The modest foothold of new construction shows builders adapting through infill and efficient design, but at the clear cost of site size and outdoor space.

For buyers, the choice boils down to priorities: modern and low-maintenance on a small lot, or more space and yard with the realities of an older home. For appraisers, lenders, and agents, recognizing how effective age, site utility, location, and condition outweigh chronological age remains key to accurate valuation in this segment.

Sources & Further Reading

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Thanks for reading—I hope you found a useful insight or an unexpected nugget along the way. If you enjoyed the post, please consider subscribing for future updates.

CODA

Are you an agent in Portland who wonders why appraisers always do “x”?

A homeowner with questions about appraiser methodology?

If so, feel free to reach out—I enjoy connecting with market participants across Portland and the surrounding counties, and am always happy to help where I can.

And if you’re in need of appraisal services in Portland or anywhere in the Portland Region, we’d be glad to assist.