City leaders universally agree Portland is facing a crisis when it comes to homelessness and housing affordability. Their ideas on solving the problems, however, seem starkly at odds. With recent revelations that the city has $106 million in unspent housing funds, progressives are calling for spending on social housing. Others, including the mayor, appear far more hesitant.
With social housing, local governments aim to remove the profit motive from this human need by creating a housing supply that’s independent from market forces. The Alliance for Housing Justice defines it as “a public option for housing. It is permanently and deeply affordable, under community control, and most importantly, exists outside of the speculative real estate market.”
Vienna is the quintessential example of social housing in practice. Rent in Vienna is dramatically more affordable when compared to other large European cities. Advocates often attribute this to the fact that social housing makes up over 40% of the city’s housing stock.
With a city-commissioned study on how Portland could implement social housing due August 31, left-leaning city councilors are hoping to ignite a possible remedy for the city’s housing crisis. They are calling for an investment of $10 million of the approximately $56 million in unspent, uncommitted housing funding to kickstart acquisitions for Portland’s social housing program.
Molly Hogan, executive director of Welcome Home Coalition, a local nonprofit that advocates for innovative social housing solutions, says it’s not a moment too soon.
“The ‘business as usual,’ traditional ways of supplying affordable housing in this country (are) just not working anymore,” Hogan said.
The $56 million question
“Our country has effectively turned over the entire construction and management of affordable housing to the private market,” said Candace Avalos, city councilor and chair of the Homelessness and Housing Committee. “Today we are seeing the limits of that broken housing model: more people becoming homeless than we can house, more people severely burdened by their rents, and stagnant housing construction. Social housing shows us that there’s a better way to do housing.”
Avalos is working with Councilors Jamie Dunphy, Angelita Morillo and Mitch Green on a spending proposal for the flexible portion of $106 million in unspent housing funds. Notably, a draft proposal brought by Morillo and Green from the council work session on March 5 includes $10 million to acquire approximately 50 units for social housing.
“Right now is the best time to do acquisitions because the cost of building new units is exorbitantly high, but we have buildings that already exist and we can take a look at what exists in order to buy the mortgage,” Morillo said. “Then they’re not going to have to increase the cost of rent to cover that every year.”
The proposal lists a number of benefits of acquisition over traditional affordable housing methods.
The units would be permanent city equity, while rents would provide cost recovery and possibly funding for further acquisitions. The estimated price per unit is $200,000, substantially lower than the $600,000-$800,000 estimate for traditional affordable housing, which also lacks the cost recovery methods that social housing offers. Units would also forgo income restrictions, creating mixed-income spaces that limit income-based segregation.
The proposal also lists the limitations of social housing, including a need for strong project management from the Portland Housing Bureau and no immediate access to low-income housing tax credits, commonly known as LIHTC.
Beyond providing lower rents to tenants, social housing may also benefit private market renters. A 2023 study from the Austrian Institute of Economic Research found that increasing the share of nonprofit housing associations — what many would consider a form of social housing — had a significant dampening effect on rents in the private market.
However, amid the housing crisis Portland is facing, social housing has one, primary problem: it is not an immediate solution. Additionally, the city may not be able to provide deep subsidies on many units.
Matthew Gebhardt is an associate professor of urban studies and planning at Portland State University and chair of Home Forward, the housing authority serving Multnomah County. He says the true affordability of social housing comes after the mortgage is paid off and is no longer part of the property’s operating costs.
At the cost of having pricier units now, the city could more rapidly expand social housing. As time goes on and the mortgages are paid off, rents would remain stably at cost or for limited profit. Affordability would continue to improve over time and eventually could lead to dampening of private market rents as well, as the 2023 Austrian study showed. However, it remains unclear how the private market could grapple with rising production costs.
Affordability and homelessness
According to 2024 data from the Harvard University Joint Center for Housing Studies, 51.5% of renter households in the Portland-Vancouver-Hillsboro region have unaffordable housing cost burdens between 30% and 50% of their income. And 27% of renter households have severe cost burdens, meaning more than half of their income is spent on housing.
Social housing units are intended to emphasize tenant control and a shift away from the profit motive. When the LIHTC system fails to meet the need and there are limited opportunities for people to get into Section 8 housing, where rent is based on income, tenants feel the pressure.
Laurie Palmer is a former housing specialist with Central City Concern, who retired directly into a building with her clients. She was living in LIHTC housing and paying over 50% of her Social Security income on rent until winning the Section 8 lottery.
“I got Section 8 after seven years,” Palmer said. “Oh my god, what that did to me? That put me back in the game, and that took my mindset out of doom and shame.”
Many people who qualify for LIHTC housing are unable to afford their rents, which can create a downward spiral, making outflows from homeless shelters more difficult and increasing inflows into homelessness.
Exits from adult shelter into permanent housing dropped from 21% in 2024 to 17% in 2025, according to county data, a far cry from the goal of 41% in Multnomah County’s Homelessness Response Action Plan.
Making matters worse, the homeless population in Multnomah County increased 25% between January 2025 and January 2026, driven primarily by the rise in unsheltered homelessness, from 6,275 to 8,797 people.
Issues in the private market
In January, Mayor Keith Wilson set a goal of building 20,000 new housing units in the next eight years, a greater than threefold increase in production from current rates. It’s unclear how Wilson plans to achieve this goal, and it wouldn’t be the first time a major Oregon elected official over-promised on housing development.
When asked about social housing, Wilson’s office said he looks forward to the report coming in August on how social housing could be implemented in Portland, but he was generally hesitant to endorse the idea. In October, Wilson placed Helmi Hisserich, his housing bureau director whose expertise is in social housing, on administrative leave. Hisserich later resigned.
The market-based solution to housing affordability is to build more housing supply, raising the vacancy rate and driving down prices. But the housing market isn’t that simple.
Gebhardt acknowledged that an overall housing shortage is an issue, but said the private market has limitations in how it addresses the problem.
“The private market has a tendency — and there’s a whole host of different things built into the system and incentives and structural limitations that are the reason for this — but they tend to build at the top of the market,” Gebhardt said.
Developers build expensive housing because it’s easier for them to recoup costs and profit, especially right now when the cost of building is high. In theory, Gebhardt said, as higher-income people move out of these rentals over time, the units would filter down to lower-income people.
However, he said that doesn’t reflect the reality in Portland. Here, higher-income housing tends to get locked into expensive neighborhoods — either not filtering down, or taking a decade or more to do so.
One way Wilson has attempted to address private market issues is by temporarily waiving system development charges, the fees developers pay to cover the cost burden placed on city utilities during construction.
City council adopted the waiver program last summer, but whether it’s actually spurred development remains unclear. Oregon Public Broadcasting reported that during the first five months of the program, the city issued 338 fewer housing permits to developers than in the same five months in 2024.
Wilson’s office says the SDC waiver is accomplishing exactly what it’s meant to: “unsticking housing development.” It’s possible the overall reduction in permits issued is from a retraction in demand or rising development costs, but there may be a deeper problem still.
“You can give the land away, you can give away the service development charges, (but) the cost for materials and labor is going to exceed the amount that anybody can pay who is poor,” said Marisa Zapata, director of PSU’s Homelessness Research & Action Collaborative and associate professor of land-use planning.
While advocates, including Gebhardt, are not necessarily against the SDC waivers, there is still skepticism around a private market solution to the housing crisis.
A recent study led by Maximilian Buchholz, assistant professor in the Department of City and Regional Planning at University of California, Berkeley, found that “even a dramatic, deregulation-driven supply expansion would take decades to generate widespread affordability in high-cost U.S. markets.”
Wilson appears open to the social housing push, but it remains to be seen if the city will adopt it as a broader policy prescription for housing affordability.
“We are not having the deeper policy discussion that we probably need to have,” Gebhardt said. “This is where I think social housing fits into this, is trying to create an entry into that policy discussion around (having) a very different ownership model … as well as funding approaches that aren’t reliant on private investment.”
This article appears in March 25, 2026.