Oregon Office of Economic Analysis

Previously we took a look at Oregon’s very precedented growth. Today’s population gains are on par with the growth seen pretty much every year during the 1990s technology-led expansion. In many parts of the state the gains today are smaller than the 1970s as well. This is particularly true in growth rates, given we’re a much larger place today than a generation or two ago. However, there are a few places in Oregon that are growing about as fast as they ever do. And there is one place in particular where population gains truly are unprecedented in its modern history: the City of Portland.

In the 1980s and 1990s the City of Portland had a few annexations that boosted their population numbers, even if the actual population wasn’t increasing all that much. What was the City’s gains were the County’s losses. Once you adjust for these annexations, it looks like you have to go all the way back to 1900 to 1910 to see population gains in the City of Portland that are as large as we’re seeing in recent years. It’s entirely possible that the population increases in recent years truly are unprecedented as annexations may have been in play in the early 1900s as well.

Of course the story of strong city growth isn’t new. We’ve seen great research on the Triumph of the City, on the Shortage of Cities and the like. This relative pattern of growth has taken place in many metropolitan areas around the country, including our friends to the North. In recent decades, the primary city in the Portland and Seattle metropolitan areas — that is the City of Portland and the City of Seattle — are experiencing an increasing share of the population growth. Gains are stronger and faster in the city than in the rest of the region. This is a stark turnaround from the stagnant/stable populations in the 1950s and 1960s followed by population declines in the 1970s. This postwar period resulted in the building of many suburban neighborhoods, and some households left the city.

That said, you may notice something about the above chart. Even with the increasingly concentrated growth in the primary city, and really the urban core of the primary city, it still represents a minority of a region’s overall growth. I think this distinction gets lost at times in the discussion of growth, urbanization, planning and the like. Most of the population growth is still occurring in the suburbs, just not as much as before. To get the full picture it is important to understand the differences between levels (the actual number of population gains) and rates (the percentage increase). Both are important and both things can be, and are true at the same time.

First let’s take a look at the annexation-adjusted population gains and growth rates for the Portland MSA.

Second let’s do the same thing for the Seattle MSA. You’ll notice right away that the growth in the City of Seattle is exceptionally strong. The growth in the City of Portland is basically half that of the City of Seattle. I personally has surprised by this result. Note that I am using the published Seattle figures from the State of Washington Office of Financial Management here. I could not find anything specific on Seattle annexations, so am unsure how, or if they impact these figures. I apologize for any issues in advance.

Finally, let’s take a quick look at new construction activity relative to population growth. Here too you see that the Seattle region’s activity is significantly larger than the Portland region’s. Over the past few decades, relative to population growth, the Seattle MSA has built about 12% more housing than the Portland MSA. That works out to about 45,000 fewer housing units in Portland, once you adjust for population size and population growth. That is 3 entire years’ worth of new construction activity in the Portland region. This is one reason why our office places Portland housing affordability as worse than Seattle’s in our Housing Trilemma research. Portland and Seattle home prices relative to household incomes are nearly identical. However Seattle has a slightly higher vacancy rate – meaning it is easier to find a home to buy or an apartment to rent – and it has significantly fewer rental households that are classically cost-burdened – spending 30% or more of their income on rent. Again, housing supply matters.

Addendum: In the vein of levels vs rates, it is also important to keep in mind lifecycle vs generational effects. There are more and more articles cropping up in the past year or so talking about how Millennials are increasingly moving to the suburbs. This is true, and our office first dug into it back in 2015 with our Peak Renter work. However this shift is about lifecycle effects. As one ages out of her early- and mid-20s, and into her root-setting and prime-working years, her needs and wants change. That single family home in the suburbs with the good schools looks a whole lot more attractive to a 35 year old than a 25 year old. Even so there are two things worth mentioning.

First, even with these lifecycle effects, the generational effect is still evident. Millennials and young adults still live in urban neighborhoods to a larger degree than past generations. Research shows this is mostly a young college graduate, and if we’re honest about it a white college graduate shift. Second, even as Millennials begin moving out of apartments and into single family homes in larger numbers, the generation that follows will very likely move into those apartments. This is particularly true in a place like Oregon, and in Portland that sees net in-migration among 20- and 30-somethings. Peak Renter refers to the renter vs homeowner share of households, not the absolute number of renters. Or at least that is the case here in Oregon.