Housing and Costs in Portland and its Suburbs

In our past article we wrote about how housing construction in Portland has been concerningly low, particularly since Portland adopted its 2020 Inclusionary Zoning ordinance. The challenge with this kind of analysis is that we can’t run back time and see what would have happened had the ordinance not been in place. 2020 was a tumultuous year and we are still living in uncertain times; perhaps what we’ve seen in Portland is to be expected. Alternatively, many US cities saw a construction boom fueled by low interest rates during this period, perhaps Portland fell far behind of what could have been.

One potential way of checking this is to compare Portland’s outcomes to its surrounding towns. Portland’s surrounding towns are dealing with at least some of the same factors as Portland so they may be able to form a sort of natural experiment. However, we need to be realistic and honest about how far we can take this. Portland and its surrounding towns are small and while they have many things in common they also differ in a lot of ways. It will never be possible to demonstrate that any one factor is causing different housing outcomes.

What surrounding towns can show us is some outcomes that are at least plausible within Portland’s context. If there is an area where they diverge, it is interesting and worth looking into, but this data can’t on its own explain why that is happening.

So how does Portland’s housing production stack up against its three largest neighbors: South Portland, Scarborough, and Westbrook. Note that this is using census bureau data which tracks units permitted not units approved. These numbers will not perfectly line up with our previous article which tracked planning board applications and approvals. The permitting step happens after both of those steps so there is an even longer gap between policy changes and observed outcomes. Permitted also doesn’t mean constructed but a permitted building has a higher chance of actually getting built compared with one that has only received planning approval.

Portland is building less per 100 existing units than all three of its largest suburbs. It is building a little bit less than South Portland and 2.7 and 4.1 times less than Westbrook and Scarborough respectively. Not only is Portland proportionally building less, Scarborough alone has permitted more housing than Portland in the last 15 years despite starting out with a quarter of Portland’s housing stock (2,667 units vs 2,574). This lines up well with a previous article, where we found the population of Cumberland County has been growing much faster than Portland. Other towns are building more than Portland is and more people are living in other towns.

One potential reason Scarborough and Westbrook might be building more than Portland is because they have more undeveloped land to sprawl into with more single family homes. However, the breakdown of the permits tells a different story.

All four municipalities permitted a majority of their housing as multi-family. Notably, Scarborough went from around 3% of its permitted units in multi-family buildings between 2010 and 2014 to 60% between 2015 and 2019. In Scarborough, a lot of this is at Scarborough Downs. Scarborough is now working with GPMetro to provide a brand new bus line that takes residents to downtown Portland. This does not mean that Scarborough Downs is a perfect example of good urbanism, but these are real steps away from single family sprawl style development.

Portland’s surrounding suburbs are building more homes, but are they staying more affordable? The best data we have here are changes in home prices from Zillow:

Housing is getting more expensive across our entire region and across the country. Regional and national trends are always going to be driving a lot of housing affordability in a given area. That being said, prices are increasing more slowly in Scarborough and Westbrook compared to Portland and South Portland. 

Home prices tend to be generally correlated with rents, but are not perfectly so. The Census’ ACS provides median rent price estimates, but these are based on sampling so there is more error in them than home prices (they are also reported annually, hence the jaggedness):

Again Scarborough and Westbrook have seen less increase than Portland, though this time Portland has seen less than South Portland. We can’t say with a statistical degree of certainty why these trends look the way they do but one plausible reason it may be growing more slowly is that Portland has rent control and the surrounding suburbs don’t. In light of that, it shouldn’t be surprising that median rents in Portland are increasing slower than in South Portland. It is interesting that without rent control rents in Scarborough and Westbrook are increasing more slowly than Portland.

Portland is certainly building less than its surrounding towns but this doesn’t tell us conclusively why. It does suggest that it is at least plausible that a town in our region could have built more homes than Portland. In fact, Scarborough did. The two towns with significantly more housing production did also see their housing costs increase more slowly. This is consistent with the idea that construction is helpful, but with so few towns we can’t establish causality. It does however suggest that despite significantly more policy focused on housing affordability and more subsidized affordable projects, Portland does not necessarily have better affordability outcomes than its neighbors.