Austin, Texas and Denver were two of America’s biggest boom towns in the 2010s. Housing demand far exceeded the supply of affordable housing, and rental rates were climbing. Economists generally agreed that the path to lower housing costs would not come by artificially restricting the current supply, but by increasing it. Failing to focus on supply would only exacerbate the affordability problem.

In response, the Democrat-controlled city councils in Denver and Austin initiated an aggressive pro-development approach to build tens of thousands of new rental units as quickly as possible. Planning doors were swung wide open, red tape slashed, and developers responded. Austin has built tens of thousands of units in the past three years and Denver has added more than 21,000 rental units this past year alone. (Source)

The results: Austin has seen declining rental rates for 19 consecutive months and rental costs in Denver have dropped almost 6% in the last year.

In the summer of 2024, the Biden administration proposed capping rental rates nationwide. Colorado’s Democratic Gov. Jared Polis criticized the approach, saying the plan “would lead to less affordable housing being built and substantially increase housing costs.” The governor was seeing the impact of a supply generation approach firsthand, and the results are impressive.

Oregon Gov. Tina Kotek has a firm grip on the economics of the state’s housing needs and has called for an ambitious annual goal of 36,000 new housing units statewide. The legislature also responded with an infusion of capital on multiple fronts in the past two years and more is on the way.

Despite these efforts, Oregon has not seen the rapid response as experienced in Austin or Denver. Kotek rightfully sees affordable housing as an emergency, but not everyone has moved with the focus and speed this emergency requires.

The state cannot create new housing stock without the commitment of local governments, as seen in Austin and Denver, to move aggressively to meet the state’s stated benchmarks. That means streamlining the permit processes, easing development codes wherever possible, and setting unit objectives and timelines to achieve those goals. Both state and local government can help incentivize builders for both market-rate and subsidized projects by reducing the time — and thus the costs — associated with getting shovels in the ground.

Success requires focusing on increasing the supply of affordable rental housing and avoiding distractions from the stated goal. Yet there is movement in the Legislature this session to sidetrack from that focus by further tightening rent caps in parts of the housing market, such as aging manufactured home parks. That approach has not only proven ineffective but could rapidly accelerate park closings as owners seek to redevelop the land for more financially stable purposes, leaving more people searching for affordable housing.

Multi-family developers, who are keys to meeting this housing emergency, may also be wary of investing large sums of capital in an environment where stifling rent control ideas are constantly looming.

As Jason Furman, the top economic advisor to former President Barack Obama, said last summer: “Rent control has been about as disgraced as any economic policy in the toolkit,” in an interview with the Washington Post. He went on to say that “it will ultimately make our housing supply problems worse, not better.”

The Legislature and local housing authorities can help those currently struggling on fixed incomes to meet housing costs by ensuring those impacted individuals are aware of all existing assistance programs and resources, and supplementing those resources wherever possible, without jeopardizing the financial viability of current housing providers.

Oregon needs more affordable housing, and on an accelerated pace to make up for lost time and escape this every-other-session Band-Aid approach to systemic issues. Gov. Kotek has identified the solution and the path forward. Time to stay focused on outcomes. If they can do it in Texas and Colorado, we can do it in Oregon.