Tuesday, August 15, 2017

City of Seattle Prohibits Housing Providers From Screening Applicants Based on Criminal History

The City of Seattle has passed 8-0 an ordinance called the Fair Chance Housing Ordinance prohibiting housing providers from screening applicants based on past arrests or criminal convictions.

Landlords are still allowed to screen applicants on employment, credit scores, income ratios and other criteria.

Read a statement on the City of Seattle website.

News Reports: City of Portland Plans to Extend Relocation Assistance Following Landlords' Judicial Appeal

The Portland Mercury quotes Portland Housing Bureau Manager Matt Tschabold as stating the Portland City Council will be asked to extend the relocation assistance for six months and then possibly even longer.

The news comes on the heels of two Portland landlords filing an appeal of a recent judges' ruling allowing the relocation assistance.

Multifamily Marketwatch Podcast - August 15, 2017

This week: The City of Portland considers special tax breaks for projects approved before inclusionary zoning took effect; Mayor Ted Wheeler criticized for lack of action on affordable housing initiatives; and Portland's relatively low rent-to-income cost average.

Check out this episode!

Monday, August 14, 2017

Relative to Income - Portland's Rents are West Coast's Lowest

A new report demonstrates that Portland's rents are the lowest on the West Coast relative to income.

As of the second quarter, Portland's rent-to-income ratio is just a shade under 25%, at 24.96%. The average income in metro Portland is about four times average rents. That is higher than some places, such as Raleigh at 18.77% or Austin at 21.53%, but a lot less than other markets, and less than the national average of 28.99%.

The highest rent-to-income ratio in the country is New York, at 51.33%. Other pricey markets include LA at 42.95%, San Francisco at 38.57% and San Diego at 33.28%. Among major West Coast markets, Portland has the lowest of all rent-to-income ratio.

Source: August, 2017 report from CBRE.

Wednesday, August 9, 2017

Oregonian Report: Wheeler Slow to Deliver on Affordable Housing

Portland mayor Ted Wheeler made the urgency of affordable housing a key part of his 2016 campaign, promising to deliver results quickly. Eight months since his election, not much has happened. Read today's story in the Oregonian.

Multifamily Marketwatch Podcast - August 9, 2017

In this week's news: REIS announces the national vacancy rate; streamlining Portland's design review; affordable housing bill proposed in U.S. Senate.

Check out this episode!

Multifamily Marketwatch Special

In an interview with HFO partner Greg Frick, Portland attorney Andy Hahs discusses the 2017 legislative session and Portland's relocation assistance program, which is likely to be modified and extended this year by Portland's City Council.

Check out this episode!

Friday, August 4, 2017

Seattle Tightens Rental Inspection Rules on Landlords

The Seattle City Council has reduced the amount of notice that landlords receive before building inspections. The Rental Registration and Inspection Ordinance (known as RRIO) provides for inspections for heating, infestations, leaks, etc. A property must be inspected at least once every decade.

Landlords were previously provided with 60 days' notice on which units would be inspected. Now they will receive a 60 day notice of pending inspection and a 10 day notice of the exact day, but they will not know which units will be inspected.

Previously, landlords could hire a private inspector if they didn't want the city inspector to conduct the inspection, but landlords weren't required to provide the resulting written report. The rules will now require inspectors turn over the resulting report to the city.

Thursday, August 3, 2017

Clark County Tax Appeals Due Beginning August 7

Many Washington State counties have mailed the Value Change Notices for the 2017 assessment for taxes payable in 2018. 

Appeal Deadlines
You have 60 days from the mailing date to file an appeal with the local board. 
  • The state and most counties offer a 60-day appeal window, but some only offer 30 days. 
City of Vancouver - Multifamily Abatement Program
The City of Vancouver has adopted abatement programs for new apartment construction depending on location. Developers and owners contemplating development should be aware of this program. Contact the City of Vancouver at (360) 487-8600 for details. See fact sheet. 

When considering your increase (and it will increase) the focus should be on whether the NOI supports the new value. While there is nothing wrong with trying to mitigate the value increase through an appeal, owners should be judicious with this approach.

Washington has a preference for using the sales comparison approach but also uses the income approach.

Some potential reasons to appeal your assessment
  • Your property has significant deferred maintenance or capital needs 
  • Your property has construction defects
Need help?
Contact your attorney or Christopher K. Robinson at (503) 635-9330 for assistance.

Read more.

Freddie Mac Forecast: Portland Among Leaders in 2017 Rent Growth

Portland will remain among the highest income growth for multifamily in 2017, even as vacancy rates increase. Freddie Mac estimates Portland gross income will increase by 5.7% with a year-end vacancy rate of 5.1%.

Download the full mid-year report here.

Rental Occupancy Rates Could Fall in Downtown Portland

Yardi Matrix reports that overall occupancy of stabilized properties in the U.S. was 95.6% nationwide in June, down 20 basis points year-over-year. Annual completions are expected to see a peak in 2017.

Yardi forecasts that as that new supply is absorbed, occupancy rates are likely to fall, especially in construction-heavy submarkets like downtown Portland and Austin's Hyde Park, which have seen occupancy decline by more than 3% in the past year.

Yardi expects the second half of 2017 to have slow rent growth the second half of 2017 with increases more in line with wage growth and increases in supply reducing occupancy. Occupancy rates in Portland and Austin have fallen as much as 80 basis points, according to Yardi.

The company forecasts effective annual rent growth in Portland this year will be 2.5%.

A mid-year report by Fredie Mac Multifamily Research Group forecasts Portland's gross rent growth at 5.7% for 2017, with an end of year vacancy rate at 5.1%.

Tuesday, August 1, 2017

U.S. Census: Portland Rental Vacancy Rate Climbs to 6.7% - Middle of the Pack

The U.S. Census Bureau reports that the rental vacancy rate for the Portland-Vancouver- Hillsboro metro area was 6.7% percent for the second quarter of 2017* -- an increase of 2.8% from Q1. The next definitive report on the area's vacancy rate -- by Multifamily NW -- is due out in October.

Seattle's Vacancy Rate Jumps 2.8%
Census estimated Seattle-Tacoma-Bellevue's vacancy rate has also increased the same amount -- 2.8% in the past three months -- from 1.9% to 4.7%.

The nation's lowest vacancy rates:

Allentown-Bethlehem-Easton, PA-NJ (1.2%)
Fresno, CA (2.2%)
Grand Rapids-Wyoming, MI (2.7%)
Jacksonville, FL (3.2%)
San Jose-Sunnyvale-Santa Clara, CA (3.5%)
Syracuse, NY (3.5%)
San Diego-Carlsbad, CA (3.6%)
Buffalo-Cheektowaga-Niagara Falls, NY (3.7%)
Los Angeles-Long Beach-Anaheim, CA (3.8%)
Worcester, MA (3.8%)

Average National Rental Vacancy Rate
The average national rental vacancy rate for Q2 2017 was 7.3 percent for multifamily dwellings of five or more units -- up 0.6% from one year earlier.

Year-over-year vacancy rates in the western U.S. have climbed from 4.9% to 6.0%.

Click to Enlarge

U.S. Homeownership Rate Increases
After falling to a 26-year low last year, homeownership rates have been increasing. The current homeownership rate in the West has increased the past 12 months by 1%.

Click to Enlarge

*The margin of error for the Greater Portland MSA is 2.9%

Multifamily Marketwatch Podcast - August 1, 2017

This week: housing shortage to possibly worsen by 2030; developers underbuilding to avoid Portland IZ rules; Clark County tax appeals due 8/7.

Check out this episode!

Want to Increase Your Google Map Rankings for Your Apartments?

From the Apartment SEO Blog - learn how to increase your community's Google Map Rankings.

Monday, July 31, 2017

Calculating the Potential Impacts of Inclusionary Zoning Requirements

The Grounded Solutions Network recently launched a tool developers can use to determine if projects built under inclusionary zoning will pencil out. The Inclusionary Housing Calculator was launched at a YIMBY conference in Oakland, and allows users to view pre-populated data for sample projects or customize several property- and market-specific variables to determine the viability of a prospective development. The tool considers a project feasible if it results in at least a 10% profit for developers. Read more.

Thursday, July 27, 2017

Developers Opting-Out of Inclusionary Zoning by Building Fewer Than 20 Units

The Daily Journal of Commerce reports that planning officials in the City of Portland are tracking development trends to see if the city's inclusionary zoning (IZ) policy is driving developers to keep projects to 19 units or less. The policy, which went into effect in February 2017, requires developers to include affordable housing units in projects with 20 or more units. So far, the number of 15-19 unit buildings proposed between February 1st and July 7th has been roughly equal to what it was over the same period in 2016. According to Tyler Bump of the Portland Bureau of Planning and Sustainability, the city is concerned that developers are planning to build 19-unit properties on parcels that could support more density. This would indicate that the IZ policy is working against the interests of the city, which is facing a housing shortage. David Wark, Chairman of the Design Commission, believes Portland should promote incentives for density rather than requiring developers to shoulder additional requirements. Read more.

Wednesday, July 26, 2017

Vancouver Washington Beats Portland With Implementation of Efficient, Electronic Permit System

The City of Vancouver, Washington has one-upped Portland in its implementation of an electronic permit application system. In early 2016 -- about five years after the project began -- Vancouver launched its system that allows businesses to submit digital copies of plans online, rather than physically bringing them to City offices -- where plans have to be physically filed away and can be misplaced. Vancouver's new system was developed by software company Avolve of Scottsdale, Arizona. The city says it is also in the process of an update to the software that will make it even easier. Total cost: about $500,000. The City will make use of the new electronic permit system mandatory by the end of 2017.

Meanwhile, five years into a similar project, the City of Portland has spent $12 million and it is expected to spend at least $1.6 million more. Portland fired its original vendor -- Sierra Systems of Vancouver, B.C. -- last fall. Local news reports indicate costs are expected to climb even higher. Officials hope to implement the Portland system by the end of 2018. 

Note: This story was updated July 27 to include information contained in a July 26th report by the Daily Journal of Commerce which appeared following this posting.

Study: Portland One of the Hardest U.S. Markets to Build Apartments

A new study from Washington DC ranks Portland 21 out of 50 metro areas in terms of difficulty adding necessary new apartments. Topping the list are Honolulu, Boston, Baltimore, Miami and Memphis. Rankings are based on local regulations and amount of available land. Top obstacles to building apartments listed in the report include:

  • Outdated zoning laws
  • Unnecessary land use restrictions
  • Arbitrary permitting requirements
  • Inflated parking requirements
  • Environmental site assessments
Read more in the Portland Tribune.

Tuesday, July 25, 2017

Multifamily Marketwatch Podcast - July 25, 2017

This Week: Low unemployment and lack of construction workers; city of Portland plans to renew the relocation assistance program this October.

Check out this episode!

Monday, July 24, 2017

U.S. Needs 4.3 More Apartments by 2030 to Avoid Even Worse Housing Shortage

The National Multifamily HOusing Council and the National Apartment Association have launched a joint Vision 2030 campaign. The foundation of that campaign is a new academic examination of how many apartments will be needed in the next 13 years.

The upshot: We’ll have to build 4.6 million new apartments between now and the end of 2030 to keep up with growing apartment demand—or risk exacerbating today’s existing housing shortage. Read more. 

Wednesday, July 19, 2017

What to Ask Prospective Tenants

In cities like Portland, a low vacancy rate means landlords and building managers are frequently faced with multiple applications for a single vacancy, and narrowing down the list can be overwhelming. In an effort to simplify the vetting process, the Global Verification Network has put together a slideshow of questions landlords or property managers can ask prospective tenants in order to determine which applicant is the best fit for the building.

7 Questions For Prospective Tenants created by Global Verification Network

Tuesday, July 18, 2017

Friday, July 14, 2017

Portland City Council Passes "Fixes" to Renter Relocation Law

The Portland Mercury reports that the Portland City Council has voted to address some outstanding issues with the renter relocation ordinance. The revisions give tenants 45 days to request payments, up from 14 days, and gives landlords 31 days to provide payment. After a rent increase goes into affect, tenants now have six months to decide whether to give notice that they will leave or choose to stay and repay the relocation money. The Council also closed the "loophole" that allowed landlords who owned their properties under different LLCs to evade having to pay relocation costs. The new revision disregards the form of ownership under which a landlord operates. The law sunsets in October of this year, but the Council is working on a longer-term version. Read more.

Thursday, July 13, 2017

New Multnomah County Property Assessment Law to Go into Effect Oct 10

HB 2008 passed in the Oregon Senate on June 13, and was signed into law on June 22nd. The law, which we wrote about in an earlier post, could change the way that new construction and renovated homes are assessed in Multnomah County. Under the new law, city councils may choose to base property assessments on city-wide rather than county-wide average home values. If city councils within Multnomah County vote to adopt these changes, it will raise taxes on all new construction in those cities. The law goes into effect October 10, and does not apply to anything built before October 10th or before the date cities adopt the ordinance. Although the bill was passed at the state level, it only affects counties with more than 700,000 residents - Multnomah is the only county in Oregon that meets the criteria.

Tuesday, July 11, 2017

Monday, July 10, 2017

Portland Relocation Ordinance Upheld in Court

On Friday, Judge Henry Breithaupt of the Multnomah County Circuit Court upheld the Portland ordinance that requires landlords to pay relocation assistance to tenants facing no-cause evictions or rent raises above 10% in a year. The ordinance is tied to the housing state of emergency declared in Portland in 2015, which expires in October of this year. The City Council could choose to extend the state of emergency or renew the relocation cost ordinance at that time. Read more.

Thursday, July 6, 2017

Oregon Ban on Rent Control Remains Intact

HB 2004, a tenant protection bill initially written to overturn the state's ban on rent control and end no cause evictions, did not go to a vote in the Oregon Senate. Senate Majority Leader Ginny Burdick attempted to negotiate a compromise that limited no cause evictions and addressed some of the landlords' concerns, but in the end all Senate Republicans and at least two Senate Democrats remained opposed to the bill. Senator Knopp of Bend argued that he bill could limit the development of much-needed new housing units, while Jonathan Lockwood, spokesman for the Senate Republicans, argued that the legislature should be addressing land-use laws rather than landlord-tenant relationships. Read more.

Friday, June 30, 2017

No-Cause Eviction Ban Could End Month-to-Month Leases

According to the Willamette Week, Portland Tenants United's Margot Black and John DiLorenzo of the Equitable Housing PAC find themselves on the same side of a tenant's rights issue this week. Though the two outspoken voices are generally on opposite sides of the housing debate in Portland, they agree that HB 2004 is likely to be a death knell for month-to-month leases. In its current form, the bill's restrictions on no-cause evictions only protect tenants who are on month-to-month leases. If it passes many landlords are likely to stop offering those leases, requiring instead that tenants sign a fixed term lease. A spokeswoman for Tina Kotek argues that tenants and landlords will both benefit from the stability created by fixed term leases, but Margot Black disagrees. She argues that there are many instances in which a tenant might need the flexibility of a month-to-month lease, and absent that option would have to pay lease-break fees in the event of a move. Read more.

Thursday, June 29, 2017

Portland Ranks #21 out of 50 Metros on Barriers to Apartment Construction Index

The National Multifamily Housing Council and the National Apartment association commissioned a report from Hoyt Advisory Services ranking the 50 metros based on how difficult it is to build new apartment units. Portland ranked #21 on the list, while Seattle ranked #7 and San Francisco #8. Austin fared much better - it ranked #35 out of the 50 metros. The metro area with the highest barriers to apartment construction was Honolulu. The data is compiled on the We Are Apartments website, where users can search for specific states or metro areas to learn more. For Portland, Hoyt predicts that the metro will add 47,000 new households by 2030, but only 33,230 units are likely to be built by that time. Read more.

Wednesday, June 28, 2017

HFO Sets Record With Oregon Sale

HFO Investment Real Estate has arranged the sale of Brentwood Estates Apartments in Springfield, Ore., for $40.5 million. That sum establishes a new record as the largest dollar figure in history for a Springfield multifamily property transaction.

The sale represents a price of $137,288 per unit and $116.34 per square foot. Read more.

Tuesday, June 27, 2017

Multifamily Marketwatch Podcast - June 27, 2017

This week: Sen. Rod Monroe offers amendments to HB 2004; Laurelhurst fights to keep out the housing crisis; City Councilor Chloe Eudaly criticizes landlords and developers

Check out this episode!

Monday, June 26, 2017

Portland's Economy Booms But Risks Ahead

At this month's HFO Investor Roundtable, State of Oregon Employment Division Economist Christian Kaylor offered an update on Greater Portland's booming economy. While he doesn't see signs of recession ahead, his report included information on a some items items that pose the biggest risks to continued growth.

Friday, June 23, 2017

The Ankeny Apartments Saga, Continued

In April, HFO wrote a blog post detailing the herculean effort developer Landon Crowell has put into getting his 17-unit apartment development on SE 11th and Ankeny approved. After going before the Design Commission five times only to have his project rejected, he appealed the decision to the Portland City Council. In April, the Council delayed giving an opinion, ultimately stating that a final decision would be made May 11th. No decision was made at that time, but this week the net-zero energy, transit oriented development was presented to City Council once again.

On June 22, Crowell presented the Council with a new plan, which incorporates input from the local neighborhood. The new plan eliminates two units, reduces the height of the building, and increases setbacks from neighboring properties. In response, the City Council expressed concerns that he didn't make enough changes, while also arguing that the changes should have gone before the Design Commission prior to being presented to City Council. The Council plans to continue the hearing August 9th, over a year and a half after the developer first requested a pre-application conference in January 2016. Read more.

Thursday, June 22, 2017

Demand for Apartments Projected to Stay Strong as Supply Struggles to Keep Up

New studies by the National Multifamily Housing Council (NMHC) and the Joint Center for Housing Studies at Harvard University predict that demand for apartment housing will stay strong due to population increases, delayed marriages, and the lack of affordable owner-occupied homes. The NMHC study projects that developers must build 325,000 apartment units per year to keep up with the current demand, well above the 2012-16 average of 244,000 units per year. Over the last four years, 1 million new renter households were formed, bringing the total number of renter households to 39 million in the U.S. Along with the increase in demand, high prices for rental housing are exacerbated by the sharp rise in costs for land and construction. Read more.

Sen. Rod Monroe Proposes Amendments to HB 2004

The Portland Tribune reports that Senator Rod Monroe, an East Portland landlord and hold-out vote on HB 2004, has proposed amendments he believes will balance tenant protections with landlord realities.

On the tenant protection side, Monroe proposes:

  • Limiting rent increases to once per year
  • Requiring leases be a minimum of 6 months
  • Requiring landlords to notify tenants at least 90 days before the end of a lease of a rent increase, or of the intention not to renew a lease
  • Requiring tenants to inform landlords of plans to stay or move 45 days prior to the end of a lease

Monroe also proposes limiting the situations in which relocation costs are paid, and removing a ban on no-cause evictions. His proposed changes include:

  • Landlords with more than 5 units would only be required to pay relocation costs if evicting 50% or more of tenants in a multifamily complex in the first year after the landlord has purchased the property
  • Landlords with fewer than 5 units would not be required to pay relocation costs

John DiLorenzo of More Housing Now supports Monroe's amendments, arguing that they would target bad actors while still giving most landlords the option to use no-cause evictions when necessary. Read more.

Wednesday, June 21, 2017

Nike to Eliminate 2% of its Global Workforce

Nike announced it will cut 2% of its global workforce of 70,000 employees - or about 1,400 people. The company has been losing some market share to Adidas and Under Armour (which also have major offices in the Portland area) and is restructuring. Read more.

Laurelhurst is Latest Portland Neighborhood Seeking Historic Designation to Block Development

Laurelhurst has voted overwhelmingly for neighborhood association leaders who are in favor of designating the 425-acre neighborhood as a historic district. Laurelhurst, located in Northeast Portland, is following in the footsteps of Peacock Lane and Eastmoreland, two other upscale neighborhoods that have recently submitted historic designation requests. Residents of Laurelhurst like Mike Parrott hope the designation will "add one more barrier against my street becoming filled with duplexes and my corner lots becoming triplexes." The median home price in Laurelhurst is $750,000, but advocates claim a historic designation is the only way to keep the neighborhood "affordable" for residents. Groups like 1000 Friends of Oregon and the Homebuilders Association are in favor of the Residential Infill Project in Portland as well as HB 2007. They argue that historical designations put the burden of providing housing entirely on less wealthy neighborhoods, which don't hold as much political sway. Read more.

Tuesday, June 20, 2017

Neighborhood Coalition Gets Cash to Clean Up Trash

A coalition of NE Portland neighborhood groups received a grant from the city of Portland for up to $90-thousand dollars in cleanup funds. The year-long pilot project will contract to add a full-time employee to clean-up a 1-square mile area in the Elliot, Lloyd, and Central Eastside Industrial areas. Cleanup will include picking up trash and needles generated by the city’s homeless and heroin addicted. If successful, the Office of Neighborhood Involvement hopes to replicate the program throughout the city. Read more.

Report: U.S. Apartment Market = Full Despite Booming Construction

Axiometrics reports that the average national apartment occupancy rate has reached the statistically significant level of 95%, which was last reached in September, 2016. This is the level at which apartments are considered "full."

Year-to-date rent growth through May is pegged at 2.97%.  Read more.

Multifamily Marketwatch Podcast - June 20, 2017

This week: It's the economy -- higher interest rates, Oregon unemployment reaches a new record low and Amazon will create 1,500 new jobs in Troutdale by next summer.

Check out this episode!

Amazon to Create over 1,500 Jobs in Troutdale Next Summer

Amazon plans to open a $178-million warehouse facility in Troutdale by July 2018 that will create 1,500 new jobs, possibly more, The Oregonian/Oregon Live reports. Read more.

Thursday, June 15, 2017

Portland Tenants United Pressuring Sen. Rod Monroe on HB 2004

Portland Tenant's United (PTU) has been putting pressure on State Senator Rod Monroe to support House Bill 2004, as the bill is likely to fail without the Senator's support. PTU has been contacting Monroe's tenants, hanging signs on the freeway, and demonstrating outside of his church in hopes that he will support increased tenant protections in the state legislature. The group also brought a cardboard cutout of Monroe to a town hall meeting in Gresham that he chose not to attend. Senators Law Frederick and Ginny Burdick have questioned these tactics, calling the group's church demonstration particularly counterproductive. Since the Portland Mercury first reported the group's targeting of Senator Monroe on Tuesday, PTU has withdrawn its support from HB 2004 "in its current form." Read more.

Wednesday, June 14, 2017

Fed Raises Interest Rates by a Quarter Point

The Federal Reserve raised its rates today for the second time in 2017, despite inflation that is lower than the normal target rate. The new range for the Fed's benchmark is 1-1.25%, up from 0.91%. Inflation is currently expected to be 1.6% for the year, below the normal target of 2%. Read more.

Tuesday, June 13, 2017

Multifamily Marketwatch Podcast - June 13, 2017

This week: Lawmakers in Oregon and Washington consider real estate tax increases; Oregon's rent control saga; Amazon to bring 1,500 new jobs to Troutdale; wages vs. rent; and across the country - slowing rent growth.

Check out this episode!

Friday, June 9, 2017

Washington County Housing Summit Addresses Development & Affordability Challenges

A housing summit held in Beaverton last week addressed housing-related issues such as increasing demand for low income housing as well as single family homes in the area. The meeting was organized by Westside Economic Alliance, which aims to encourage economic development in Washington and Clackamas counties. Jerry Johnson of Johnson Economics emphasized that increasing supply will help bring housing prices down, but Brenner Daniels of Holland Development cautioned that developments are facing headwinds such as a restricted land supply, increasing labor costs and development fees, and lengthy permitting processes. U.S. Senator Merkeley spoke at the summit, and assured attendees that he would try to protect federal affordable housing programs from proposed budget cuts. Read more.

Thursday, June 8, 2017

Oregon Senate to Vote on Bill that Could Raise Property Taxes on New & Renovated Properties in Multnomah County

Oregon House Bill 2088 unanimously passed out of committee and now heads to the Senate floor. The bill gives cities the ability to use city-specific rather than county-specific averages to calculate tax values of new and renovated property, and applies only to counties with greater than 700,000 residents (Multnomah County). Currently, the taxable value of new homes is calculated based on "the average difference between assessed value and market value countywide." Proponents of the bill argue that this calculation causes inequity, as new construction in Multnomah County is taxed at 53% of its assessed value, while most older homes in Gresham are taxed at 75% of their values. New homes and homes that undergo a renovation valued at $10,000 in one year or $25,000 over five years would be affected. Cities would have to vote to enact the new system. Initially the Oregon State Association of County Assessors came out against the bill due to the potential costs associated with implementing a new system for assessment, but after the bill was amended to ensure counties would be reimbursed the Association took a more neutral stance. If adopted by cities in Multnomah County, the new assessment method would apply to residential, commercial, and industrial properties. Read more.

Wednesday, June 7, 2017

National Year-Over-Year Rent Growth Decelerates For Third Consecutive Month

In its monthly rent survey, Yardi Matrix reports that May, 2017 was the third consecutive month of rent deceleration in its survey of 121 markets. The company reports 36,000 units will come online in 2017 in addition to the 281,000 new units added in 2016.  According to the report, Portland metro's year-over-year average rents increased about 5%. Yardi Matrix forecasts Greater Portland will see rent growth in 2017 of 2.5% and job growth at 2.2% Meanwhile, vacancy rates among their surveyed properties increased 0.2% between March and April, from 5.2% to 5.4%.

Tuesday, June 6, 2017

Attention Washington Residents and Owners: State Considers 7% Capital Gains Tax, B&O Tax Increase, and Graduated Real Estate Taxes

In order to balance the state budget, the House Democrats & the Governor introduced HB 2186/SB 5929, new state capital gains tax of 7% and other tax increases to include:

1.    New State Capital Gains 7% Tax:
  • Sale of real-estate, commercial, industrial and residential rental (exempts your home, certain pensions, agricultural land and property)
  • Sales of stocks and bonds, gold and silver, other precious metals
  • IMPACTS: Sale of business, real-estate property and stocks and bonds, etc. It’s taxing your investment pension.
2.    B&O Tax Increases: 20% increases – 1.5% to 1.8%
  • 1.50: Services: property management, realtors, architect, accounting, window washers, legal, janitorial, and engineers, etc.
  • 0.471: Retailing: contractors, restaurants, clothing, Costco, Nordstrom, etc.
  • 0.484: Subcontractors, wholesale and manufacturing, etc.
  • 1.63: Private Nontribal Gambling: “Contest of chance” (card rooms)
3.    New: Graduated Real Estate Excise Taxes (Now 1.28%):
  • 0.75: Selling price is less than 250K
  • 1.28: Selling price is $250K to $1 million
  • 2.0: Selling price is $1 million to $5 million
  • 2.5: Selling price is $5 million and above
You're invited to contact your two house of representative members and one senator (call and follow-up with an email) to let them know your position on HB 2186 and SB 5929.

You can locate your lawmaker at the following “District Finder” link:

You can find their contact information at the following: 

Courtesy: Manufactured Housing Communities of Washington 1-(800) 345-5608

Multifamily Marketwatch Podcast - June 6, 2017

This week: Rent control appears dead in Oregon legislature (but is it? stay tuned!); a second bill requiring local governments to allow duplexes, ADUs and small multifamily projects in single family neighborhoods may be moving forward.

Check out this episode!

Friday, June 2, 2017

Oregon and Washington Have Fastest Growing GDP in the US

Washington and Oregon ranked #1 and #2 in GDP growth among US states for 2016, with 3.7% and 3.3% growth respectively. According to Amy Vander Vliet of the Oregon Employment Department, this is the eighth time in 18 years that Oregon has cracked the top five. Durable goods manufacturing and construction were top contributors to Oregon's growth in 2016. Other states with at least 3% GDP growth include New Hampshire, Utah, Georgia, and Florida. Read more.

Thursday, June 1, 2017

HB 2004 Will Go to Senate Floor without Provision Allowing for Rent Control

In a 4-1 vote on Wednesday, the Senate Committee on Human Services approved changes to HB 2004, including the removal of the provision allowing cities to impose rent stabilization policies. Instead of limiting the amount by which landlords can raise rent, the new language limits the number of times a landlord can raise rent to once per year. HB 2004 still limits the circumstances under which a no-cause eviction can be issued, and requires landlords to pay a month's rent to tenants who face an eviction without cause. The dissenting vote was Senator Tim Knopp, R-Bend, who voted against the bill because it does not address land use restrictions that make it difficult for developers to build affordable housing. The bill will now head to the Senate floor for a vote. Read more. Meanwhile, the Portland Mercury reported yesterday "A Proposal to Allow Rent Control in Oregon is Probably Dead."

Wednesday, May 31, 2017

Portland Development Fees to Rise, Effective July 1

The Daily Journal of Commerce reports that the Portland City Council approved an increase in development fees last week. The new fees are set to take effect July 1, 2017. Costs for a type II development review would increase 4.3% to $1,617 (currently $1,551); type III master plan review costs will rise 4.3% to $13,351 (currently $12,801); the pre-application conference fee will increase by 4.2% to $1,150 (currently $1,104); and early assistance meeting fees would rise 3.9% to $632 (currently $608). Read more.

Record Number of Active Construction Projects in Central City

A new report by the Portland Business Alliance outlines the projects currently under construction in the central core of Portland. According to the report, the citywide occupancy rate is 94.6%, and rent growth is 4.2%. 5,000 new residential units have been built since 2010, and an additional 3,000 residential units are under construction, not including projects outside of the downtown core such as the Conway Blocks in NW Portland and Jefferson Flats in Goose Hollow. Projects located just outside of the Central City represent an additional 14,000 units proposed or under construction. According to the Portland Tribune, Portland will also see a 40% increase in hotel rooms over the next few years, positioning the city as an ideal location for vacations, business conferences, and large conventions.

Read the full report.

Friday, May 26, 2017

Bend is the 6th Fastest-Growing City in the Nation

According to a new report by the US Census, Bend is the 6th fastest growing city in the nation. Bend's population has grown 4.9% since July 1, 2016, and now stands at 91,122. This is the second population boom in recent memory for Bend - the city's population doubled during the 1990s. Bend is one of the few cities on the Census's list that is not in the South, and no cities in the Northeast made the top 15. Bend's rapid growth has contributed to soaring housing prices in recent years. An urban growth boundary that remained unchanged since 1981 limited new supply in the area, and developers have only recently started bringing new product online. Read more.

Southern Cities Growing Quickly [Source: U.S. Census Bureau]

Wednesday, May 24, 2017

Tenant Shoots Apartment Managers in Portland

HB2004 prevents landlords from evicting dangerous tenants quickly—putting good tenants in jeopardy.

Tell the Oregon State Legislature to vote NO! Contact numbers and email addresses below...

Senate President Peter Courtney

Senate Majority Leader Ginny Burdick

Multifamily Marketwatch Podcast - May 24, 2017

This week: Portland's budget, school district levy, Oregon's robust economy, and where, oh where are the inclusionary zoning projects? We return after Memorial Day on June 6th.

Check out this episode!

Tuesday, May 23, 2017

Bureau of Planning and Sustainability Seeks Input for Better Housing by Design Project

The Portland Bureau of Planning and Sustainability will be hosting two open houses in June for community members to learn about and provide input on the draft code concept for the Better Housing by Design project. The open houses will be Thursday June 1, 5:30-7:30 pm, and Saturday June 3, 10 am-12 pm.

The Better Housing by Design (BHD) project aims to improve the design of multifamily housing outside of the central core of Portland. It covers all multi-dwelling zones (R3, R2, R1, and RH), and aims to strengthen requirements for outdoor spaces, encourage a range of housing that includes "missing middle" structures, and improve walkability. Bureau of Planning and Sustainability staff are expected to release the final Code Concept Report in the Summer of 2017. Read more.

Wednesday, May 17, 2017

Portland School Bond Passes, Adding to Portland Property Tax Bill

The $790 million Portland Public School (PPS) bond passed with 66% of the vote in Tuesday's special election. The bond will cost property owners $1.40 per $1,000 of assessed value for the first 4 years, and then will cost $0.68 per $1,000 of assessed value annually for 30 years. Portland homeowners are still paying for the 2012 PPS bond, which cost $1.10 per $1,000 for the first 8 years, and $0.30 per $1,000 annually for the next 12 years. In PPS bonds alone, Portland property owners will be paying $2.50 per $1,000 of assessed value for the next few years.

Supporters of the new PPS bond point out that Portland school buildings are 77 years old on average, and many have health and safety issues including high lead levels. The bond will provide the funding needed for projects such as improving water quality, removing asbestos and lead-based paint, improving fire alarm and sprinkler systems, and ADA/accessibility improvements. In addition, Benson, Madison, and Lincoln high schools and Kellogg middle school will be rebuilt and renovated. Read more.

Tuesday, May 16, 2017

Multifamily Marketwatch Podcast - May 16, 2017

This week: Portland Mayor says housing trumps need for parking; conflict continues in the Eastmoreland neighborhood and the Portland Development Commission is now Prosper Portland. Our podcast returns next Weds 5/24.

Check out this episode!

Multifamily Permit Applications Still Down, PHB Looking to Increase IZ Incentives

Since the City of Portland's Inclusionary Zoning (IZ) requirement went into effect February 1, the number of applications for multifamily permits has stalled. The Portland Tribune estimates that a valuation of $270 million worth of development could be eliminated by the IZ program. The Portland Housing Bureau claims that the slowdown in development is due to a softening of the market, a tariff on Canadian lumber, and increasing interest rates rather than the IZ program itself. The bureau is offering incentives to projects that were vested prior to February 1 in hopes of getting more affordable units built in the city. In January, the city received 20 permit applications valued at $74.7 million. Since February, there have been only 6 permit applications for developments with more than 20 units, the threshold for the IZ requirement. Four of those projects are being developed with assistance from PHB. Read more.

Friday, May 12, 2017

Esco Decommissioning 15 Acre NW Portland Site to Allow for Redevelopment

Just north of NW Vaughn Street and two blocks west of NW 23rd Avenue, the Esco Corporation plans to decommission a 15 acre site that was previously home to its main plant. The northern portion of the Northwest neighborhood of Portland has seen a flurry of development activity, including the new Slabtown redevelopment project and the currently under construction George Besaw Apartments. The neighborhood's walkability and access to transit have attracted new residents and developers alike. City zoning for the Esco site would restrict the possibilities for development, however. The site is zoned for "mixed employment," which would allow for office or industrial use, but not residential development. Read more.

Wednesday, May 10, 2017

Federal Housing Assistance Goes to Homeowners, Even as Renters Become Increasingly Cost-Burdened

PBS reports that of the $200 billion per year the United States government spends on housing assistance, 70% goes to subsidizing homeowners. Since the 2007 recession, however, an increasing percentage of the population has become renters, with many unable to purchase a home. As of 2015, over 11 million households spent more than 50% of their income on rent, up from 8.9 million in 2007. Andrew Aurand, president of research for the National Low Income Housing Coalition, attributes this phenomenon largely to the decline in federal investment in public housing and housing assistance vouchers, which occurred at the same time as demand for rental housing surged. Read more.

Tuesday, May 9, 2017

Multifamily Marketwatch Podcast - May 9, 2017

In this episode: newspapers worldwide reporting on Oregon's battle over rent control; a zoning bill in Salem causes uproar in Multnomah Village and Portland Mayor Ted Wheeler proposes financial support for a Portland startup website to help renters.

Check out this episode!

Monday, May 8, 2017

Website to Help Renters Find Home With One Application, One Fee, Plans Launch This Fall

KGW reports on a new app that the City of Portland will spend $125,000 helping to launch this fall. The website will charge a single $35 fee for a background check that will tell applicants which apartment communities they qualify for. Read more.

Thursday, May 4, 2017

U.S. Census: Portland Rental Vacancy Rate Climbs to 3.9% - Nation's 8th Lowest

The U.S. Census Bureau reports that the rental vacancy rate for the Portland-Vancouver- Hillsboro metro area was 3.9 percent for the first quarter of 2017. Census data indicates an increase in Greater Portland's vacancy rate from 3.1% in Q4 -- but down significantly from the 6.6% vacancy rate reported for the first quarter of 2016.

Seattle Vacancies Nation's 3rd Lowest
Census estimated Seattle-Tacoma-Bellevue's vacancy rate at 1.9% vacancy rate, making it the nation's third lowest. Metro areas with lower vacancies than Seattle were Sacramento (1.2%) and Cape Coral-Fort Myers, Flordia (1.8%).

After Seattle (#3) the remaining lowest vacancy rates were:

Allentown-Bethlehem-EAston, PA-NJ (3.0%)
Charlotte-Concord-Gastonia, NC-SC (3.1%)
Los Angeles-Long Beach-Anaheim, CA (3.6% (TIE)
San Diego-Carlsbad, CA (3.6% - TIE)
Salt Lake City, UT (3.8%)
Grand Rapids-Wyoming, MI (3.9% - TIE)
Portland-Vancouver-Hillsboro, OR-WA (3.9% - TIE)

Average National Rental Vacancy Rate
The average national rental vacancy rate for Q1 2017 was 7.0 percent for multifamily dwellings of five or more units -- the same as one year earlier. Vacancy rates remained lowest in the western U.S. where it declined from 5.1 to 4.7%.

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U.S. Homeownership Rate Continues to Fall
U.S. Homeownership rates have fallen from a recent high of 65.1% at the end of 2013 to an estimated 63.6% in Q1 2017. Homeownership rates in the Western U.S. has been on the upswing since reaching a 26-year low during 2016. The current homeownership rate in the west crept up 0.3% over the past year.

Click to Enlarge

Wednesday, May 3, 2017

Do You Need a Helipad? Adding Value in the Age of Amenities Wars

From helipads to breweries to concierge services that can just about read a resident’s mind, amenities have been a hot topic in the apartment industry for years, and the bar just keeps getting higher. For apartment owners and operators who have neither the capital nor even the demand for these over-the-top features, there are plenty of ways to increase their communities’ appeal through amenities, many of which are simple to implement and require little up-front investment. This report seeks to identify top amenities in their communities nationwide and in 11 selected cities, at both the community and unit level, and which ones have the greatest impact on revenue. Read the full story.

Multifamily Marketwatch Podcast - May 2, 2017

In this week's episode: Oregon economist Josh Lehner says he expects homeownership to grow relative to renting in the years ahead; a new expert report says inclusionary zoning has a near zero effect on increasing affordable housing.

Check out this episode!

Tuesday, May 2, 2017

HB 2007 Faces Opposition from SW Portland Neighborhood Groups

The Oregon House of Representatives is currently working on HB 2007, which aims to increase housing production by:

  • Requiring affordable housing projects to be approved in 100 days
  • Blocking cities from denying housing development applications due to failing to meet discretionary standards
  • Prohibiting local governments from adopting standards that would discourage needed housing
  • Stopping local governments from reducing density of housing applications if the application meets zoning requirements
  • Requiring local governments to allow detached affordable housing on properties zoned for non-residential places of worship

According to the Portland Tribune, both 1000 Friends of Oregon and the Oregon Home Builders Association support the bill, which is sponsored by 6 legislators from Portland and Southern Oregon. Supporters argue that increasing the supply and type of housing (including "missing middle" housing) would increase overall affordability. 

Neighborhood groups in areas like Multnomah Village in SW Portland strongly oppose the bill, however. These groups are worried that adding multifamily developments would "destroy the character of existing neighborhoods." Read more.

Monday, May 1, 2017

New Market Rate Housing Essential for Overall Affordability

In San Francisco-based marketing blog Art + Marketing, California State Senator Scott Wiener lays out the case for increasing the supply of market rate housing to increase affordability. He argues that while affordable housing projects subsidized by state and federal governments are badly needed, those projects will not provide enough units to house the vast majority of rent-burdened citizens, particularly middle class renters who do not qualify for subsidies. In an argument that will be familiar to Portland developers, Wiener suggests that excessive zoning restrictions and an overly complicated housing approval process have contributed to a shortage of new units as well as skyrocketing rents in California. He argues that the problem is not an overabundance of "luxury" housing, but rather a scarcity of units that has caused housing to be a luxury. Read more.

Thursday, April 27, 2017

Forecasting Future Rental Demand in Portland

The Portland Tribune reports that Josh Lehner of the Oregon Office of Economic Analysis is forecasting that we are currently at "peak renter." He expects that as millennials enter their mid- to late-thirties, homeownership rates will increase. Since the recession, however, far fewer single family homes have been built both locally and nationally. The resulting shortage of owner-occupied housing units has been driving up prices, making many homes unaffordable for first time buyers. Portland's population is also expected to increase by 35,000 people each year, which will continue to drive apartment demand for the foreseeable future. Read more.

Tuesday, April 25, 2017

Homebuilders Worried about 20% Tariff on Canadian Lumber

The announcement Monday night of a new set of tariffs on Canadian softwood lumber imports has resulted in falling stock prices for large homebuilders in the U.S., and concern among industry experts that building costs will increase sharply. Granger MacDonald of The National Association of Homebuilders (NAHB) told The Hill that NAHB is "deeply disappointed" and that the new tariffs will "negatively harm American consumers and housing affordability." Approximately 95% of lumber imports to the U.S. came from Canada last year, and lumber costs account for approximately 8-12% of the price of a new home. Read more.