In my last column, I argued that Eugene now possesses two distinct rental markets: a starved traditional market limping at 3.4% vacancy, and a glutted student housing market with 8.25% vacancy.
The divergence was a predictable outcome of Real Estate Investment Trusts (REITs) and Private Equity (PE) development patterns. As Christina Bollo, assistant professor in UO’s School of Architecture & Environment, explains, “REITs want maximum return while the private landowner… has a ‘return’ of doing the right thing for a community and maybe leaving something for their grandchildren.”
In this installment, I’ll shift focus to examine how we became overdependent on REITs and PE to build homes, what Bollo called the “financialization of housing.” I’ll follow the path of a construction project, examining how obstacles mount at each step, filtering out the contractors we rely on to build the homes Eugene lacks.
To begin, I must first choose where to build. Already, the first barrier emerges: a unique Oregonian wrinkle known as the urban growth boundary. Conceived in the 1970s, the UGB is a “cornerstone of land use planning in Oregon. It is the line that separates urban uses from rural uses with the aim of protecting our farm and forest lands.”
I adore the UGB. One trip to LA, where freeways snake between houses instead of rivers between trees, and you’ll appreciate the simple elegance of the anti-suburban sprawl clause in our social contract.
But the UGB carries a price. By drawing a hard line against sprawl (otherwise known as greenfield development), it makes land inside the boundary scarce and costly. It forces what planners call infill: slipping new homes into the seams of the existing city. Infill often means demolition before construction, as well as lots that are small, irregular and resistant to standardized designs, further increasing cost.
Once I’ve picked a lot, the next question is what to build. I’ll choose middle housing, the gentle density between single-family homes and high-rises; what Emma Singleton, a fourth year studying political science and PPPM sees as “endless possibility.” Putting middle housing on land once reserved for single-family houses adds supply without upending neighborhood character.
That logic drove Oregon’s landmark HB 2001, the first law in the nation to end exclusive single-family zoning in larger cities. The State believes “too many Oregonians face high housing costs because their options are limited… [and] to address these needs… middle housing plays an important role.” Bollo agreed, stating that “these reforms have the greatest potential to impact infill.”
The proportion of construction qualifying as middle housing has increased from 4% to 11% since HB 2001, so there are early results, but Eugene is still failing to hit its middle housing goal. Bollo wasn’t too surprised, since “the current construction climate… means the impact will be more gradual than the politicians believe.”
Interning for Sen. Merkley, Singleton also saw the federal government step up through the ROAD to Housing Act. “It’s clear we’re trying to give cities the tools they need to build more housing by helping them streamline reviews and create pre-approved designs,” she said.
Other zoning hurdles still remain though. When a builder wants to put, say, a triplex on one plot and sell them individually, they must first divide it into three separate parcels. The subdivision is called the land-use process, and Eugene has only approved 41% of middle housing proposals in 2025.
The city also mandates parking, another source of friction which Bollo (and I) disagrees with: “Parking should react to the market, not be regulated with minimums… it is a very poor use of precious land.”
By contrast, high-density zones often have hurdles already cleared, which makes it faster and cheaper to produce student towers.
Suppose I clear the zoning maze; next comes the permit gauntlet. The mission of permits is real and necessary. No one wants a faulty foundation or wiring, but we’ve built a system with great administrative hazard.
The process generally takes around two or three months but often drags on, and fees can quickly climb into the thousands, many tied to hourly inspector rates. The resulting unpredictability of cost and time harms all contractors, especially the smaller ones.
Now, assuming I acquired a permit, I must now assemble a construction crew. Oregon’s construction sector has been deeply mired in a labor shortage, so this will be no easy feat. The 2008 crash gutted the trades, and only recently has the workforce clawed its way back to pre-recession levels.
Despite the rebound, 92% of construction firms still struggle to find qualified workers. Recent shifts in immigration policy will further compound the shortage considering immigrants make up 32.5% of the trades.
Even with a crew, I still face the exuberant cost, what Bollo found to be the “biggest barrier.” Across the country, “construction costs have risen 30 to 50 percent since 2020,” far outpacing inflation. Bollo explained this is felt even more profoundly in Eugene, since “the greenfield developer, working at scale, can get much better prices and can fix those prices. The infill developer cannot.”
As a direct result, towers of student housing with high rents per square foot become the only financially viable choices while middle housing projects die before they even have a chance to start. New federal policies on tariffs make the picture even worse, raising the cost by an additional $7,000-10,000 per house.
Pause for a moment. Follow the project through. The conclusion is inescapable: every step bends the process in favor of the giants. UGB, zoning, permitting, labor shortages and cost inflation all combine into a system where only REITs and PE can absorb the risk, float the costs and wait out the process.
That doesn’t mean we’re powerless to rebalance the scales. Local agency is limited, but there are levers we can pull.
For zoning, we ought to make the land-use process easier and eliminate parking minimums. For permitting, an easy solution is providing preapproved designs that can reduce wait times and drastically cut down on fees.
Push for reform on these fronts is underway: “Eugene Mayor Kaarin Knudson… (is) in talks about… tweaks to middle housing rules that could make the projects easier to build, as well as financial incentives for developers.” Bollo is supportive, hoping “politicians will keep incrementally reducing barriers.” So is Singleton, who “took a class with Mayor Knudson on affordable housing, and is encouraged to see that she understands the barriers our city faces and is ready to push for new ways to build.”
Just as urgently, we must rebuild the pipeline into construction. We can’t build homes if we won’t build the trades. Current apprenticeship mandates on public projects are a start, but we ought to go further by offering financial incentives to encourage contractors to expand apprenticeship programs and workers to enroll in them. Similarly, community colleges and vocational schools deserve greater investment.
Eugene doesn’t need to cede the future of its housing to the giants. The opportunity is here, if we choose to lower the barriers for the small contractor. Only then can middle housing consistently rise alongside student towers; when the work of building homes becomes shared across many hands instead of concentrated in the deepest pockets.
