👋👋 Good morning real estate watchers! Today, we are going to talk about how Portland’s affordable housing system is a lot like an airline’s customer service line: you can see the empty seats, you’re technically eligible to board, and somehow you still end up sleeping on the floor next to a Cinnabon.

But first, here’s what we’ve been paying attention to this week…

1️⃣ Lock-In, Still: Mortgage rates slid from a 2025 peak of 7.04% to the low-6% range by year-end, but staying above 6% since September 2022 keeps homeowners “locked in” because trading up could mean roughly $1,000 more per month on a median home. Inventory is improving (helped by new construction). (Realtor.com)

2️⃣ Tweet, Then Refi: A Trump social post saying he’d direct Fannie Mae and Freddie Mac to buy $200B in mortgage-backed bonds briefly shoved the 30-year fixed rate under 6%, helping push the MBA’s average to 6.18% (down from 6.25%) and total mortgage applications up 28.5% week over week. Refi demand (the rate-change drama queen) jumped 40% on the week and 128% year over year. (CNBC)

3️⃣ Bottom-Bounce Blues: Existing-home sales rose 5.1% in December to a 4.35M SAAR, but 2025 still ended basically glued near the floor (about 4.06M sales for the year), with inventory at 1.18M and the median price at $405,400 (about +0.4% YoY). Zillow says affordability is finally helping (the typical mortgage payment was down 5.2% YoY in December) and forecasts a modest rebound to about 4.2M existing-home sales in 2026. (Zillow)

4️⃣ HUD Takes the Wheel: The House passed H.R. 5184, the Affordable HOMES Act, 263–147, shifting manufactured-housing energy standards back to HUD and blocking DOE’s manufactured-housing efficiency rule. Supporters say that rollback could cut costs by up to ~$10,000 per unit and speed affordable supply, though it still has to clear the Senate next. (HW)

5️⃣ Retirement Roulette: The White House has put the 50-year mortgage idea on ice (FHFA Director Bill Pulte said they have “other priorities”_ after experts warned longer terms could cut payments but also slow equity-building and run into rule hurdles. Instead, reports indicate that Trump’s team is drafting an executive order to allow buyers to tap 401(k) (and possibly 529) funds for down payments without incurring the usual penalties. (HW)

TOP STORY

Ambrose Haynes spent six months on affordable housing waitlists before making a decision that says everything about America's affordable housing experiment: he gave up.

Fresh out of a methamphetamine recovery program and eager to rebuild his life, Haynes couldn't reach the administrators managing the lists meant to help people exactly like him. So he did what economists would consider irrational: he rented a market-rate studio for nearly $1,300 a month with no subsidies and no safety net.

"I'm waiting on people I can't even reach, and it's frustrating," Haynes told The Oregonian. "I felt like my life was just on hold."

His story highlights a paradox unfolding across Portland that should prompt housing policymakers nationwide to pause: nearly 7,800 people sleep outside or in vehicles, while almost 1,900 publicly subsidized apartments remain vacant. The affordable housing system, built on decades of good intentions and billions in taxpayer investment, appears to be eating itself.

The Numbers Don't Lie

The financial deterioration is stark. According to data from advisory firm CohnReznick, Multnomah County's affordable housing properties reported a median debt-coverage ratio of 0.97 in 2024, meaning providers can't cover their mortgage payments with rental income. That's down from 1.05 the prior year and dramatically below the national median of 1.46.

Translation: Portland's affordable housing landlords lost $411 per unit last year. In 2015, they generated $963 in positive cash flow per unit. That's a swing of nearly $1,400 per apartment in less than a decade.

"It's a business model that's failing," said Mary-Rain O'Meara, senior director of community development at Central City Concern, one of the region's largest affordable housing providers.

Home Forward, Oregon's largest affordable housing provider, exemplifies the crisis. Of its 6,847 units across Multnomah County, 956 (roughly 14%) sit empty. The organization recently announced staff cuts amid a $35 million budget deficit from federal funding reductions.

Perhaps nowhere is the dysfunction more visible than The Yards, an apartment complex sitting half-empty next to Portland's Union Station. With 57% of its 158 units vacant, the property recently reversed planned rent increases of 5-10% after tenant pushback. Management is still completing repairs from flood damage sustained in January 2024.

When "Affordable" Meets "Market Rate"

Here's where policy meets pavement: the gap between regulated affordable rents and market rates has narrowed to near irrelevance. The federal maximum allowable rent for a one-bedroom affordable apartment for households earning 60% of the area median income stands at $1,396. A comparable market-rate unit? $1,465.

For $69 more per month, tenants like Haynes can skip the waitlists, avoid buildings plagued by what providers diplomatically describe as "client churn" from undertreated behavioral health issues, and simply close their door.

"The people who suffer most in this situation are the folks with no income, or minimal income," said Michael Andersen, a housing researcher at the Sightline Institute. "They haven't caught the rising tide of wages, so everything—market price or affordable—is just further out of reach."

The Waitlist Wilderness

The administrative machinery meant to connect homeless individuals with available units operates with Kafkaesque inefficiency.

Max Kinsella, who previously administered waitlists for homeless veterans at Central City Concern, described a typical scenario: A veteran enters the waitlist with proper documentation. Six months later, when his name surfaces, his phone number has changed—because he's been living on the streets. The case manager spends two weeks attempting contact before removing him from the list. Five days later, the veteran calls back.

"Now," Kinsella asked, "am I even doing my job the right way?"

Section 8 voucher processing sometimes took 50 days, though O'Meara said recent improvements have reduced turnaround to as little as one day in some cases. "We were losing people along the way," she acknowledged.

A tech nonprofit called Housing Connector has placed 187 households since late 2023 through an online clearinghouse visible to 700 local case managers (a modest number, but the group hopes to scale up).

The Quality Question

Even when units are available, conditions sometimes deter eligible tenants from applying. Melody Frye, a decade-long resident of The Yards, showed reporters photos of cockroaches she'd squashed the night before. Kinsella, who lived at a Central City Concern property described as "alcohol- and drug-free," said he witnessed substantial drug use during his year there.

"Without these elements," said Lance Orton, who runs the recovery program Haynes graduated from, "we risk creating housing that simply warehouses people, rather than environments that foster stability, healing and long-term success."

Governor Tina Kotek has stated the obvious: "Affordable housing properties should not have substantial vacancies while people need homes."

But stating the obvious and solving the crisis are proving to be very different exercises.

The Market-Rate Escape

Haynes now lives near Hayden Island after being promoted, and is pursuing an associate's degree in computer information systems. He achieved stability not through the system designed to help him, but despite it.

"I was able to get myself financially stable because I was able to go home and close the door, if that makes sense," he said.

As he prepared to deliver supplies to homeless Portlanders under the Burnside Bridge recently, Haynes reflected on the vacant units across the city.

"It's sad, and it's frustrating," he said. "A lot of people wouldn't be homeless if the system worked."

The question for policymakers from Portland to Washington isn't whether affordable housing is needed…It clearly is. It's whether the current model, hemorrhaging money while hemorrhaging tenants, can be salvaged before good intentions produce more empty buildings and broken promises.

A balanced apartment market typically maintains a vacancy rate of around 5%. Portland's affordable stock sits at 7%. And climbing.

Portland's affordable housing crisis offers a cautionary tale for policymakers everywhere: good intentions don't pay mortgages, fill vacancies, or answer waitlist phones. Nearly 1,900 units sit empty while thousands sleep outside; not because we built too little, but because we built a system that's failing the people it was designed to serve. Sometimes the road to homelessness is paved with affordable housing subsidies.