What to Expect for Affordable and Multifamily Housing in Oregon & Washington in 2026

As we look toward 2026, both Oregon and Washington face a complex, high-stakes moment in their housing markets. Demand for apartments, especially affordable units, remains intense, but supply constraints, rising costs, and shifting policy are shaping a landscape that will challenge both developers and residents. Here’s how things are likely to unfold in the next year, based on current trends and projections.

Oregon: Tight Supply, Falling Permits, and Affordability Squeeze

In Oregon, the affordable housing problem is becoming more acute. A report from Common Sense Institute shows that multifamily permits (5+ units) dropped dramatically — over 50 percent from 2022 through 2024. Meanwhile, the state aims to build roughly 29,500 homes per year over the next two decades just to close its housing gap. Clearly, current production is not meeting the need.

On top of that, high system development charges, long permitting delays, and financing challenges are slowing down development of middle-housing types (like duplexes, triplexes, and small multiunit buildings) that could help ease affordability. But demand isn’t cooling. Oregon’s rental vacancy remains very tight — particularly in key markets like Portland and Bend — which keeps upward pressure on rents. According to a recent survey, average multifamily rents in Oregon rose roughly 3 percent to $2.11 per square foot, even as vacancy rates ticked up slightly in the Portland-Vancouver area.

Investor activity is picking back up too. Multifamily sales in the Portland metro increased, and capital is flowing in from buyers who see long-term value. But at the same time, there are only about 2,000 units under construction, leaving the development pipeline at one of its lowest levels in years. With that constrained pipeline, affordability will continue to be a challenge.

On the policy front, Oregon already has rent stabilization in place. But supply-side reforms, especially faster permitting and reduced fees, are widely seen as critical if the state wants to meaningfully tackle its housing gap. Without more units, especially more affordable ones, the state risks falling further behind its goals.

In 2026, we should expect:

1. Continued upward pressure on rents in tight markets, especially if the construction pipeline doesn’t expand.
2. Slower growth in multifamily development, unless permitting and cost barriers improve.
3. More policy debate over how to unlock middle housing and reduce the cost of building affordable units.

Washington State: Policy Momentum, High Costs, and Growing Need

Washington’s outlook is shaped by both very real housing needs and strong political will. According to the Office of Financial Management, Washington needs about 1.1 million more homes over the next two decades, and nearly 650,000 of those will need to be affordable for low-income households. 

To respond, the state is doubling down on investments in the Housing Trust Fund. The 2025–27 budget proposal includes significant capital to both build new affordable housing and preserve existing units, especially for vulnerable populations like people experiencing homelessness, tribal communities, and folks with disabilities.

Still, costs remain an obstacle. A recent report shows that even with public funding, the median cost per affordable multifamily unit in Washington is extremely high — over $300,000 per unit in 2023. King County, in particular, sees the steepest costs, making it very difficult to build deeply affordable housing in high-demand areas.

However, demand is strong and the outlook for multifamily remains resilient. According to Kidder Mathews, outer-suburban Class B and C apartment markets are attractive because they are more affordable and less exposed to overbuilding risk. These submarkets could absorb demand if renters get priced out of more expensive areas.

Tech-sector growth also plays a big role. With major employers like Amazon, Microsoft, and other companies continuing to expand, demand for quality rental housing is expected to stay high, particularly near transit and in suburbs. As long as tech talent stays in the region, multifamily properties in these tech-adjacent areas may stay in favor.

On the regulatory front, Washington is also moving on rent control. In 2025, Governor Bob Ferguson signed a bill (House Bill 1217) that limits rent increases to 7% plus inflation or 10%, whichever is lower. That change could help stabilize costs for renters, but might also create tighter margins for developers of market-rate multifamily units.

For 2026, here’s what seems likely in Washington:

1. Robust demand for rental housing, especially in tech-driven markets and more affordable suburban corridors.
2. Strong public and private investment in affordable housing, but persistent cost challenges for deeply affordable units.
3. Continued policy pressure on local governments to fast-track permitting and make development easier, particularly for projects that serve lower-income residents.

Shared Challenges & Regional Opportunities

Across both states, a few common themes are emerging as 2026 approaches:

• Permitting and regulatory bottlenecks are a major drag. Slow approvals and high fees are undermining production of both affordable and multifamily housing.
• Construction costs remain elevated. High labor and material costs make affordable housing especially hard to build without substantial subsidies.
• Supply pipelines are weak, which could lead to renewed scarcity if demand recovers or remains steady.
• Public funding is critical, particularly for affordable housing, but it has to be paired with smart policy reforms to produce meaningful volume.
• Tech-driven growth is a double-edged sword: it boosts demand (and the economic case for new apartments), but also raises costs and tightens competition.

Why 2026 Is a Pivotal Year

By 2026, how Oregon and Washington respond to these challenges could define their housing markets for years. If supply constraints remain, affordability could worsen. On the other hand, if policy reforms move swiftly, especially on permitting, development costs, and funding, both states have a real opportunity to close part of the housing gap.

Developers, affordable housing advocates, and local governments will need to work closely. For those building new multifamily projects, or planning affordable housing, 2026 will likely be a year of balancing tight economics with pressing social need.

And for residents, renters, and community groups, the stakes are high. More housing doesn’t just mean more units: it means more chance at stability, affordability, and a place to call home.