Oregon last year rewrote the rules for one of the oldest and cheapest housing types: single-occupancy housing.
As part of a broader housing reform, lawmakers — with little fanfare — passed a law that gave single-occupancy housing legal status after years of SROs being considered zoning ordinances and bans allowed due to safety and health concerns about such housing.
The new measure requires cities to allow SRO units in many residential areas.
In Portland, the state’s largest city, the first step is a year-long SRO pilot program. To address the affordability crisis in Oregon’s largest city, the Portland Housing Bureau launched a program that offers financial incentives to homeowners who rent spare rooms to low-income tenants.
At the national level, growing concerns about housing affordability have led to efforts to revive SRO housing. Cities have ignored housing type – a historically important form of semi-permanent housing – for the past 75 years.
Oregon became one of the few states to pass statewide legislation on SROs, joining Washington and Hawaii.
In Congress, Republicans and Democrats have tried to address housing affordability. Allowing single-occupancy occupancy in areas zoned for multifamily housing is among land use policies included in the Housing for the 21st Century Act that would qualify for federal incentives. The House of Representatives passed the bill in early February and the Senate is now considering it.
“The math showing the surplus of existing, unused housing in the US is simple and obvious,” says shared housing platform Atticus LeBlanc. PathSplit‘s founder and CEO, wrote on LinkedIn. “Less than 1% of existing square footage could provide more than 7,000,000 new homes for American workers, students and retirees.”
Portland partnered with Atlanta-based PadSplit and Ecumenical Ministries of Oregon to assist property owners with the city’s program.
How Portland’s SRO program will work
Portland’s program provides a one-time subsidy of $1,000 for the first room rented and $500 for each additional room after 30 days of successful rental through home sharing providers. Participating rooms must be offered for a minimum of 12 months and renters cannot be members of the owner’s family or household. Weekly rent is capped at $200, including utilities and fees, to keep rooms affordable.
The home sharing provider links tenants to homeowners and can help with applications and ongoing rental support.
“For many Portlanders, home sharing is a win-win solution, helping homeowners supplement their income while providing low-income renters with affordable housing options,” Mayor Keith Wilson said in a statement.
In addition, the city will fund capacity building grants for community organizations that support participants. Landlord-tenant law classes for interested homeowners will begin in March through real estate and property management education.
“It’s encouraging to see city leaders recognize that co-living, home sharing and room rentals can play an important role in addressing the housing crisis,” said Sam Hooper, legislative counsel for a nonprofit public interest law firm. Institute for Justicetold The builder’s newspaper. “While pilot programs like this can help demonstrate proof of concept, government subsidies are not a long-term solution to what is ultimately a supply shortage caused by exclusionary zoning and overregulation.”
The Institute has traveled across the country to convince state lawmakers to enact laws legalizing SROs. The pitch includes a legislative template called the Restoring Options in Occupancy Models Act.
Oregon’s SRO law
Under the amendment, Oregon’s SRO law defines a one-room occupancy development as at least four rented, lockable rooms that provide living and sleeping space but share a kitchen or bathroom. Cities within urban growth limits must now allow a maximum of six SRO units on each lot where a single-unit detached dwelling is permitted. Cities must also allow higher-density SROs in multifamily zones, consistent with existing density standards.
The law also limits how local governments can regulate SROs. This means measures such as limiting parking and infrastructure requirements of localities, which can financially hinder small residential projects.
Local planners review codes and design standards. Developers are testing whether the newly permitted buildings can be designed.
Housing officials describe the SRO shift as part of a broader effort to expand access to “middle” and lower-priced housing. This means housing types ranging from duplexes to cottage clusters and co-living projects.
The SRO legislation harmonizes with the missing middle
Lawmakers simultaneously passed a broad policy overhaul to support more middle-income housing. This initiative makes it easier to build small, lower-cost homes in the same zones where SROs are now allowed. The measure expands and streamlines Oregon’s median housing needs and extends them to more cities.
The law directs government agencies to define what counts as “unreasonable cost or delay” for projects. Furthermore, the measure prescribes new rules to curb local location and design standards that have thus far derailed or diminished mid-rise housing development. These rules now allow manufactured and prefabricated units, outbuildings and SROs, especially within urban growth limits.
The sweeping measure also allows for density bonuses and relaxed size standards when projects include affordable or accessible units. The changes are expected to improve the economics of SRO-style and co-living developments on small plots.
Can an SRO pilot help with housing affordability?
Even as vacancy rates rise slightly and rent growth cools, many renters still face cost burdens well above 30% of income, according to affordable housing advocates. Housing production has lagged far behind demand, leaving many residents with few options.
The new room rental pilot attempts to unlock underused bedrooms in existing homes and convert them into cheaper rental properties. By offering modest subsidies and a guaranteed match between tenants, the city hopes to entice skeptical or risk-averse homeowners to participate. If enough owners sign up, the model could add hundreds of units faster than building from the ground up, which typically takes years.
Even in the best-case scenario, home sharing would only be a partial solution to Portland’s housing shortage. However, it can act as a relatively ‘low-hanging fruit’ bridge, easing pressure on the rental market while larger reforms – such as middle and social housing initiatives – slowly add new supply.
Combined with zoning changes and faster permitting, the model could become a useful tool in the city’s broader affordability strategy.
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