On Real Estate & More – April 2026

OREGON CONTINUES to face a housing shortage, and politicians are increasingly focused on policies that can help communities create more housing opportunities. One of the most recent efforts is HB 4035, passed during the 2026 legislative session. The measure modifies earlier housing legislation and expands tools available to cities that need additional buildable land.

For property owners in Southern Oregon, understanding HB 4035 is important because it may influence future housing development, land supply, and long-term market conditions.

Oregon’s land use planning system relies heavily on Urban Growth Boundaries (UGBs). These boundaries determine where cities can expand and where land must remain rural for agricultural, forest, or resource uses. The system has been credited with limiting urban sprawl and protecting Oregon’s natural resources.

However, one unintended consequence of strict growth boundaries is that expanding the supply of buildable land can take years. When housing demand increases faster than land can be added, prices and rents can rise rapidly. Many communities across Southern Oregon have experienced these pressures.

To help address the housing shortage, in 2024 the Oregon Legislature passed Senate Bill 1537, which created a one-time, expedited process allowing selected cities to expand their UGBs. House Bill 4035 builds on that program by modifying the eligibility rules and expanding the amount of land some cities can add.

One of the primary changes in HB 4035 is that it modifies how cities demonstrate housing need. Under the earlier law, cities had to show that a large percentage of households were “severely cost-burdened,” that they spent an extremely high amount of their income on housing. HB 4035 lowers that threshold so cities only need to demonstrate that households are “cost-burdened.”

While this may sound like a small change, it significantly expands the number of cities that may qualify for the program. For Southern Oregon, this could make it easier to justify adding land for residential development.

The bill also increases the amount of land some cities may add to their UGBs. Cities with populations over 25,000 may now add up to 150 net buildable acres, compared to the previous 100-acre limit.

However, the additional acreage must be part of a planned “complete community.” This means development must include supporting public services such as transportation access, utilities, green space, and potentially neighborhood commercial services. The intent is to ensure that new housing areas are planned thoughtfully rather than developed in a piecemeal manner.

HB 4035 also clarifies which types of land may qualify for expansion. The legislation replaces the general term “undeveloped land” with more specific criteria. For example, qualifying sites must typically be larger than 20 net buildable acres, contain no permanent structures, and not already be positioned for immediate development with nearby public utilities.

These requirements are intended to ensure that land added through the expedited process is appropriate for long-term residential planning rather than small infill projects.

Another key component of the program is its focus on housing affordability. Any development built on land added through the expedited UGB process must include affordable housing requirements.

Specifically, at least 30 percent of the housing units must meet affordability standards. Rental units must generally be affordable to households earning up to 80 percent of the area median income, while ownership units may serve households earning up to 130 percent of median income. Affordable rental housing must remain affordable for at least 60 years. These conditions are designed to ensure that new land added to support housing growth helps address affordability challenges rather than simply expanding market-rate housing.

Although HB 4035 does not directly target specific Southern Oregon communities, the expanded eligibility criteria could make it easier for qualifying cities to access the program. Communities experiencing growth pressure will have more flexibility to pursue targeted UGB expansions to address housing demand.

For the real estate industry, this could eventually translate into additional development opportunities, increased housing inventory, and potentially improved affordability over time.

The expanded provisions created under HB 4035 are temporary; they are scheduled to end on January 2, 2033, meaning the bill is intended to address immediate housing needs rather than permanently alter Oregon’s land use framework.

HB 4035 represents another step in Oregon’s effort to balance its land use protections with the need for more housing. By expanding eligibility for expedited UGB expansions and allowing larger additions of buildable land, the legislation provides cities with additional tools to respond to housing shortages.