Why Subsidized Housing Costs So Much

By Randall O’Toole, The Antiplanner, February 25, 2026

Oregon Housing and Community Services, the agency that hands out state and federal subsidized housing grants, is biased toward developers who support the agency’s ideology regarding social services, a former affordable housing developer emailed to me. Responding to my recent posts about Portland’s affordable housing projects, this developer notes that “the most expensive project I ever built [was] 50 units of two story garden apartments” that averaged 1,000-square-feet in size and cost just “$88 per square foot.”

Artist’s rendition of Albina One, a subsidized housing project in north Portland built at a cost of $909 per livable square foot.

That was in 2008. As I reported in my previous post, costs in the Portland area are now averaging nearly $700 per square foot. “How is it that very profitable development went from under $100/SF in rural towns to over $600/SF in big cities in less than two decades?” this developer asks rhetorically.

His answers include:

“Private developers were forced to include a non-profit to score enough points to win tax credits.” This resulted in “in two mouths to feed from the profit pot” (meaning the non-profit and the for-profit company that did the actual construction);

“Favoring mid- to high-rise construction over garden style apartment construction changes code requirements for the structure including building material suitability;

“Statewide political ideology favoring concentration of housing in . . . cities along the I-5 corridor vs in the suburbs where both land and construction costs are significantly lower”;

The housing bureaucracy “prioritizing paperwork over housing production, driving up costs to apply for tax credits” and other housing funds;

All of this bureaucracy “discouraged small developers from risking limited capital to compete with large, well-capitalized companies,” thus reducing competition that might have encouraged more efficient construction.

“All these and more add to the toxic mix driving costs up,” concludes the developer, who is still working on various projects but no longer with government subsidies.

According to Census Bureau construction cost indices, the cost of building single-family housing is up 95 percent since 2008, while multifamily costs are up 86 percent. But, judging from this developer’s experience, the cost of subsidized housing is up about 600 percent.

Metro, the agency whose subsidized projects I specifically examined, clearly has an agenda that differs from providing low-income housing, and that is to increase the amount of high-density housing in the Portland area. Oregon Housing and Community Services apparently has its own social services agenda that partly aims to put low-income people in transit corridors so that they don’t have to own cars. Most of the other players in the affordable housing industrial complex have their own agendas, but none of them are at all interested in policies that would actually make Oregon housing more affordable.

And that’s the key problem. In a compassionate effort to help people who can’t afford basic housing, we’ve let people take over the housing process who aim to simultaneously increase overall housing prices (thus making more people dependent on subsidized housing) and increase the cost of building subsidized housing.