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.

Multifamily Marketwatch Podcast - April 25, 2017

This week: Oregon's jobless rate reaches historic low; Metro mulls process changes for expanding urban growth boundary; apartment projects in downtown Vancouver, Washington.

Check out this episode!

Thursday, April 20, 2017

UD+P Pays $200,000 in Relocation Fees to Renovate Fairmount Hotel

According to the Daily Journal of Commerce, Urban Development + Partners is the first company to pay relocation fees to tenants as a result of a new city ordinance aimed at discouraging no-cause evictions. UD+P purchased the Fairmount Hotel in NW Portland with the aim of renovating it, but decided to let tenants stay until construction began. To issue no-cause evictions to 65 units, the company paid $199,800. UD+P had planned from the outset to offer relocation assistance to existing tenants, though not as much as the $2,900-$4,500 required by the new law. According to principal Eric Cress, most tenants were able to quickly find a new place to live. After it is rehabilitated, the Fairmount will have 80 units, a new roof, and modernized electrical and plumbing systems. Read more.

Developer Tom Brenneke Discusses Roadblocks to New Housing in Portland

The Portland Tribune sat down with developer and landlord Tom Brenneke of Guardian Real Estate Services to discuss his resignation from the Portland Housing Advisory Committee, as well as his views on the state of housing in the City of Portland. Brenneke expressed frustration with a system that delays rather than expedites the delivery of new, much needed housing in the city. He also stated that the Housing Bureau and City Council rarely asked the Housing Advisory Committee to weigh in on relevant issues, including the Housing State of Emergency and inclusionary zoning. On the issue of development, Brenneke is frustrated by delays caused by neighborhood associations, the Portland Design Commission, and the Historic Landmark Commission. He believes projects go more smoothly when more specific community design standards apply, as they are much easier to understand and meet. Guardian Real Estate Services recently opened NAYA Generations in Lents, which will place foster children with grandparents in a cooperative setting run by the Native American Youth and Family Center. Read more.

Wednesday, April 19, 2017

How Portland's Design Review Process is Exacerbating the Housing Crisis [Exclusive HFO Content]

by Jennifer Shuch, HFO Research Analyst. 

Half a block East of the 5-way intersection of SE Ankeny, Sandy, and 11th, an empty and unused plot of land could become something unique.

The developer, Landon Crowell, has worked with YGH Architecture to design a unique 6 story structure with photovoltaic panels, triple pane passive house windows, and highly insulated walls and roof - the kind of forward-thinking structure Portland should be proud of. And yet, the plot of land still sits empty, despite the fact that discussions with the city started 16 months ago -- in January 2016.

The project went before the design commission five times between October 2016 and February 2017. During the hearings, Crowell agreed to reduce the size of the building by 8%, from 26 units to 18. At the third hearing on January 5, 2017, a staff report and recommendation to the Design Commission recommended that the project be approved. However the Design Commission felt it did not meet "subjective" criteria, despite meeting the standards required by the Portland Zoning Code.

The decision was appealed to the City Council, with a hearing scheduled for April 5th. The council delayed the hearing until April 12th, with no publicly stated reason given for the further delay of a badly needed housing project in a centrally located, transit-heavy neighborhood.

At the meeting on April 12, it became clear that nearby neighbors are the biggest roadblock. One neighbor, William Phillips, is quoted as saying the project is a "monstrosity." Priscilla Sturges, a resident who has lived in her house for over 40 years claims the project amounts to "elder abuse" because, in her opinion, the development will only serve "wealthy short-termers." In response to complaints from residents, Bob Zimmerman of YGH pointed out that the parcel is zoned EXd, and there is barely any residential housing in the neighborhood. After three hours of testimony on a 17-unit project, it was determined that a final decision will be delayed until May 11, 2017.

According to the Portland Tribune, Amanda Fritz was prepared to vote against the project, while Commissioners Fish and Eudaly were undecided (Commissioner Saltzman was absent). These are the same commissioners who have:
  • been complaining that we are having a housing crisis;
  • increased renter protections, and;
  • declared a housing emergency because of underbuilding.

Developers have continuously pointed out that needless delays and extended timelines for the design review process adds significant expense, preventing delivery of units at the lowest cost possible (and hence the lowest rents possible). In this case, the developer has had to pay $160,000 in additional city fees -- $9,411 per unit -- through the end of March.

Project Development/Roadblock Timeline:
  • The initial request for a pre-application conference for this project was in January of 2016. 
  • The first design review request was in June, but the project did not go before the Design Commission until October, 2016. 
  • The Design Commission reviewed the project five times between October 2016 and February 2017, when it was ultimately denied.
  • The project was appealed to the City Council April 5th, and postponed to April 12th.
  • Now, a final decision is scheduled for May 11th. 

In the End -- More Delay May Mean More Units, Even Unhappier Neighbors
Ironically, Landon Crowell has the option of holding off until next year in order to apply to  build a significantly larger structure in the exact same spot when new comprehensive plan takes effect and raises the parcel's height limit from 75 to 125 feet.

Read more:
NextPortland - Ankeny Apartments Denied by Design Commission
Portland Tribune - Ankeny Apartments: Part 2 of 2 Redlined and Denied
Daily Journal of Commerce - Multifamily Project Hearing Rescheduled
Portland Tribune - Update: Council Kicks Ankeny Apartments Back to Developer, PDC
Daily Journal of Commerce - Ankeny Apartments Project Appeal Extended

Tuesday, April 18, 2017

Multifamily Marketwatch Podcast - April 18, 2017

In this episode: the release of Multifamily Northwest's apartment report for greater Portland; a surge in the number of homes for sale in Portland, and the Portland Tribune weights in on pending rent control legislation. 

Check out this episode!

Monday, April 17, 2017

Portland Tribune to Legislature: Fix House Bill While There's Still Time

The Portland Tribune editorial board opined this past week that after hosting a 90-minute discussion with renters and landlords it was clear that elected leaders need to get both sides to the table to craft a better solution than HB 2004-A which was adopted by the house earlier this month. "Talking -- and listening -- to landlords who disagree with their proposal will make for better policy." Read the editorial.

Wednesday, April 12, 2017

HFO Announces Philanthropic Contributions to Affordable Housing Nonprofits

At the close of each brokered apartment sale, HFO makes a contribution in honor of the client(s) represented to a charity of their choosing. In addition to the thousands of dollars distributed in this manner each year, HFO matches those contributions in a separate account from which it makes several additional larger year-end contributions. 

This year, the HFO team felt strongly about focusing its charitable dollars on nonprofits serving families and children with affordable housing. HFO's distributions from its 2016 charity account were as follows (includes year-end 2017 contributions):

Human Solutions - $7,500
Habitat for Humanity - $3,250

“Each of us at HFO thoroughly understands the dynamics behind increasing rents. No one is more aware of the market influences at play. We call on our elected leaders to take whatever steps necessary to encourage the development of additional affordable housing in our community," said marketing director Aaron Kirk Douglas. "Economists agree: trying to micromanage the local rental market through rent control is not the answer."

Other nonprofits receiving cash funding from HFO throughout 2016 included: Big Brothers Big Sisters Columbia Northwest, Providence Cancer Research Institute, Doernbecher Children’s Hospital, Friends of the Children, the Oregon Humane Society and Outside In.

Tuesday, April 11, 2017

Multifamily Marketwatch Podcast - April 11, 2017

In this episode: status of Oregon House Bill 2004-A allowing rent control, Portland's new committee oversight on affordable housing, and a new 220-unit apartment building slated for the South side of the Burnside Bridgehead.

Check out this episode!

Important News for Owners of Unreinforced Masonry Buildings

As you may be aware, the City of Portland is planning to adopt mandatory seismic upgrades for unreinforced masonry (URM) buildings.  

The final meeting of the URM Building Policy Committee is Wednesday, April 19th, from 3-5 PM at CH2M Hill, 2020 SW 4th Ave, Portland, OR 97201.
  • The requirements are intended to protect brick buildings from collapse in the event of an earthquake.
  • The policy will go before the City Council for a vote this summer.
  • Roughly 1,500 properties in Portland will face mandatory reinforcement over the next 10-25 years. You can see whether your building is on the list by clicking here.
  • Seismic upgrades are expensive. Costs are estimated at $50+ per square foot. This plan may pass without any subsidies to help owners pay for these improvements.
Failure to comply with the new ordinance would result in stiff fines and, ultimately, the revocation of a building’s occupancy permit. If you own an URM Building and did not receive our email blast with additional information, please contact our offices at (503) 241-5541 or email service@hfore.com. 

Seattle Creates 15-Member Renters' Commission

This spring, the Seattle City Council created a renters' commission that will begin meeting this summer to talk about pushing laws to cope with numerous things including soaring rents, displacement, zoning, transportation and access to open space. The City announced that members will be appointed by the council and mayor and will consist of people living in an array of rental housing types including students, low-income renters, LGBTQ renters, people with past felony convictions and those living in subsidized housing. Read more.

Friday, April 7, 2017

Arguments Regarding Portland Relocation Ordinance Presented to Multnomah County Judge

Attorney John DiLorenzo argued on Thursday that Portland's new tenant protection rule is illegal under Oregon's ban on rent control, and that the rule violates a statute in Oregon's Constitution that prohibits passing laws that change existing contracts. Judge Henry Breithaupt questioned whether the relocation fee constituted a form of rent control, asking if landlords truly cannot raise rents. DiLorenzo has stated that he will not withdraw his suit if the rent control ban is overturned by the Oregon Legislature. Similarly, Judge Breithaupt does not plan to dismiss the case if Oregon's housing rules change. City Commissioner Chloe Eudaly spent Thursday lobbying lawmakers in Salem to repeal the rent control ban. Her office has stated that if the ban gets repealed, she will begin working to create a rent stabilization policy in Portland. Read more.

Wednesday, April 5, 2017

Legislation Lifting Rent Control Ban, Eliminating No Cause Evictions Passes OR House

House Bill 2004 passed the Oregon House of Representatives 31-27 on Tuesday. The bill does not establish any specific rent control policies, but would allow local municipalities to enact rent ceilings. It also bans landlords who rent more than four units from issuing no-cause evictions to month-to-month tenants after their first 6 months of renting. Rep. Bill Kennemer of Oregon City described the bill as "well-intentioned" but also noted that it "does not build a single apartment unit." It will now go to the Senate, where it is expected to get a hearing. Read more.

Tuesday, April 4, 2017

Multifamily Marketwatch - April 4, 2017

In the headlines this week: Oregon House Bill 2004-A allowing rent control and ending no-cause evictions moves out of committee; Portland Mayor Ted Wheeler plans a new city department to license and monitor landlords; news outlets reporting that some recent market data shows rents starting to flatten in Portland.

Check out this episode!

Monday, April 3, 2017

Portland Metro Area Underbuilt by 27,000 Units Over Last 10 Years

The Willamette Week reported over the weekend that according to the Oregon Office of Economic Analysis, a lack of new housing construction has been a major contributor to rising housing costs in the Portland Metro Area. Since 2006, the ratio of housing permits per population change has remained below the 1980-2004 average almost every year. The article notes that at the high end, rents are beginning to come down as new developments come online. At the lower end of the market, however, both renters and aspiring homeowners are feeling the effects of building trends that have not kept up with population growth. Read more.

Thursday, March 30, 2017

Zumper Report Shows Rents Flattening in Portland

According to Zumper's April 2017 National Rent Report, Portland dropped to #19 from #17 on the list of most expensive cities for renters in the US. Rents for a one-bedroom apartment in Portland have decreased 1.5% in the past month, and year-over-year have only increased by 0.8%. On average, two bedroom units cost 0.6% less than they did a year ago. The two cities where rents increased enough to overtake Portland were Philadelphia and Minneapolis. Read more.

House Bill to Lift Rent Control Ban & Require Relocation Fee Approved by Committee

The Oregon State House Human Services & Housing Committee voted 5-4 to approve a revised bill that lifts the statewide ban on rent control and imposes relocation fees for no cause evictions. Now that the bill has been finalized in committee, it will proceed to the House floor for a vote. Revisions made by the committee include an exemption of units less than five years old from any local rent control measures, as well as a reduction in the amount of relocation assistance landlords are required to pay to the equivalent of one month's rent, rather than three months. Read more.

Wednesday, March 29, 2017

Possible Changes Ahead for Housing Choice Landlord Guarantee Fund

According to an article in the Portland Mercury, the Housing Choice Landlord Guarantee Fund is running out of money, and state legislators and landlords alike are worrying about the consequences. The fund was created in 2013 in conjunction with a law that banned discrimination against tenants based on source of income, as a way to insure that landlords would be compensated if damage caused by a tenant was more than the tenant could afford to repay. As of January, the fund only had $115,000 remaining. Oregon Speaker of the House Tina Kotek is blaming the shortfall on "abuses" by landlords. She has introduced House Bill 2944, which requires landlords to prove to a judge rather than a clerk that they are owed the damages they seek. Read more.

Tuesday, March 28, 2017

Multifamily NW Proposes Immediate Statewide Rental Assistance for up to 40,000 Families [Video]

Multifamily NW has proposed a renter assistance program that would eliminate the need to create massive government infrastructure to monitor and enforce rent controls at various cities and counties who might adopt such a plan. The Multifamily NW program could be easily enacted right away and would serve up to 40,000 families with proven need at minimal cost of oversight and implementation.

Multifamily Marketwatch - March 28, 2017 [Podcast]

In this episode, we discuss the latest news and stories of interest to owners of multifamily property and rentals in the Portland, Oregon and Vancouver, Washington metro area.

Thursday, March 23, 2017

Multnomah County Property Tax Appeals Process Favors Assessor

According to a report today in the Portland Tribune, Multnomah County Board of Property Tax Appeals (BOPTA) hearings favor the county assessor. Critics of the process argue that frequently there is no representative from the assessor's office present at hearings, and property owners are not given supporting documents for the assessor's opinion until they walk into the hearing. Mike Vaughn, who replaced the previous assessor in July 2016, is working to improve the process. Previously, property owners had to request a copy of the county's report, which they paid 25 cents per page to view. Under Vaughn's new leadership, appellants are given a free one-page summary of the assessor's recommendation. Scott Phinney, a former Oregon Department of Revenue employee who now helps clients with property tax appeals throughout the state, says it is unusual that the assessor is not present at hearings. He also claims that the Multnomah County BOPTA panel generally only sides with his clients if the assessor's office concurs. Read more.

Wednesday, March 22, 2017

The PHB Doesn't Have Time to Review Data

After the Portland Housing Bureau (PHB) claimed in official budget documents that 400 apartment complexes in East Portland had outstanding code violations, the Oregonian double checked the numbers by comparing the city's list of code violations with a government database of multifamily properties. Reporters found that only 19 properties had code violations at that time. In response to a question about why the PHB had not reviewed the data themselves, top official Kurt Creager suggested that reporters have more time to perform reviews than housing officials do. On Tuesday, Creager told the Portland City Council, "we are committed to integrity in the data," but did not address how the PHB came up with the numbers in its budget request Read more.

Tuesday, March 21, 2017

The Impact of Rent Control on Oregon's Housing Market

This article is written by Gerard C.S. Mildner, PhD, Director of the Center for Real Estate at Portland State University.

The Oregon State legislature is considering House Bill 2001, sponsored by the Speaker of House Tina Kotek, which would override the state’s prohibition on local rent control ordinances. HB 2001 has three provisions: (1) limit rent increases statewide to 5% for 2017-18, (2) permit any local jurisdiction in the state to enact rent control, and (3) modify the inclusionary zoning legislation that was passed in 2016. The challenge in analyzing this legislation is that no details are provided regarding the nature of the rent control legislation that the local jurisdiction may implement. No limits have been placed on local governments’ rent control power, except that a “fair return” to landlords must be provided. Discussing the efficiency of rent control legislation that hasn’t been enacted is rather like commenting on whether a baby is beautiful while the mother is still pregnant.

The Speaker’s Office has circulated an argument that the rent control that will be implemented after this legislation is passed will be “second generation” rent control, as defined by Canadian economist Dr. Richard Arnott. According to Dr. Arnott, second generation rent control is typified by limits on rent increases (rather than a rent freeze), prohibition of rent control on new construction, allowances for larger increases with rehabilitation and major improvement, and allowances of decontrol between tenancies, none of which is included in HB 2001. I believe the differences between first-generation and second-generation rent control are largely semantic, and if there is a difference, it’s really a degree of the harm that the legislation will generate.

Monday, March 20, 2017

Metro to Decide on Designating Urban Reserves April 13

The Metro Council has stated it will delay the decision to designate 23,031 acres for urban reserves until April 13th. The inclusion of the hamlet of Stafford in the designated acreage has caused objections from the cities of Tualatin, Lake Oswego, and West Linn. If certified, the acreage would be open to development for the next 50 years. The Home Builders Association of Metropolitan Portland and Stafford Land Owners Association have endorsed the Metro Council's plans. Read more.

Friday, March 17, 2017

Using ADUs to Ease Housing Crunch

After last week's report that the permitting rate for Accessory Dwelling Units (ADUs) is reaching the rate for single family homes, it appears as if private and public groups are trying to use this new trend to help ease the housing crunch in Oregon.

According to the Willamette Week, Oregon lawmakers are considering a bill that would allow for construction of ADUs on land zoned for agriculture (HB 2937). Opponents have expressed concerns that the housing will not truly be affordable, and will likely be used for short term vacation rentals rather than permanent housing.

The Willamette Week also reports that Multnomah County is offering to build ADUs in the backyards of homeowners on the condition that they are used for 5 years to house homeless residents. After that time, homeowners would be able to use those units at their discretion, and would receive the added value of an additional unit on their property.

The Portland Business Journal reports that former head of the PDC Patrick Quinton is starting a company called Dweller, which will install prefabricated ADUs on land leased from homeowners, and would also pay the owners a portion of the rent collected from tenants. Dweller will take care of the permitting process and partner with Living Room Realty for sales and marketing.

Thursday, March 16, 2017

Commissioner Eudaly Plans Changes to Rental Housing Deposits

Portland Commissioner Chloe Eudaly announced she plans to call for reform of rental housing deposit regulations and is considering:

(a) limiting the deposit amount;
(b) requiring that it be held in an interest-bearing account; and
(c) clarifying the definition of reasonable wear and tear.

In an article published in today's Portland Tribune, Eudaly claims to have set up a stakeholder committee meeting of landlords, tenants and housing advocates. Upon learning of the commissioner's plans, Multifamily NW -- the state's largest association of housing providers -- asked Eudaly's office to be allowed to participate. The request was declined. Sources report Eudaly's stakeholders have already held one of three planned meetings to discuss the issue prior to recommending reforms.

Tuesday, March 14, 2017

HFO-TV: A Portland Economic Update with State Economist Christian Kaylor [Video]

Oregon state economist & research analyst Christian Kaylor gives a 2016 year end economic update for the Portland, Oregon metro area. Click to watch.

Multifamily Marketwatch - March 14, 2017 [Podcast]

Two apartment buildings in Portland's Sellwood and Moreland neighborhoods become the first proposed under the city's new inclusionary zoning law.

Check out this episode!

Portland's Active Lifestyle Attracts Employers, Developers

National apartment market research company Axiometrics recently reported on the phenomenon of above average rent growth in cities with "active lifestyles." Portland is named along with cities such as Denver, Minneapolis, Atlanta, Salt Lake City, and Orlando as one of the top destinations for this type of activity. Because people are more likely to choose to live in "active lifestyle" cities, employers tend to relocate to such areas as a way of attracting top talent, positioning lifestyle as an amenity. This also keeps rents above the national average, which attracts investors and developers. Read more.

Monday, March 13, 2017

HFO Multifamily Marketwatch - February 28, 2017

HFO begins its weekly Multifamily Marketwatch podcast as Portland landlords take city hall to court over the relocation ordinance.

Check out this episode!

HFO Multifamily Marketwatch - March 7, 2017

Oregon state legislators hold their first public hearings at the capitol on whether to allow local jurisdictions to enact rent control.

Check out this episode!

Friday, March 10, 2017

Bend's UGB Controversy, Resolved Through Thorough Planning & Patience

In an Op-Ed in the Daily Journal of Commerce, lawyers Edward Sullivan and Carrie Richter discuss the long, complicated process through which Bend has finally expanded and rezoned its Urban Growth Boundary. The new UGB adds 2,380 acres, which is less than what was proposed in 2010. City planners are reconciling the need for substantially more housing with that more constrained space by rezoning to allow for more density and infill, and identifying nine "opportunity areas" for housing within the UGB. According to Sullivan and Richter, this plan could not have been achieved without the willingness of planning participants to engage with each other in a thorough and thoughtful process. Read more.

Thursday, March 9, 2017

Apartment Industry Releases Letter Calling for Regulatory Reform

WASHINGTON, D.C. — Statement from the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) on the apartment industry's letter in support of the Trump administration's commitment to regulatory reform:


March 9, 2017
The Honorable Donald J. Trump, President

Dear President Trump:

We are writing on behalf of the members of the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) who represent the $1.3 trillion apartment industry and its nearly 39 million residents. We applaud your efforts to overhaul the federal regulatory landscape and reduce the burdens felt by American businesses of all types in complying with a profusion of unnecessarily costly and complex regulations. We believe that some federal regulations strayed from their intended purpose and instead stifled innovation and hampered economic growth at a time when our nation continues to recover from the worst recession since the Great Depression.

The multifamily sector is under increasing pressure to meet booming demand across the country. Experts believe this trend will continue, if not increase, due to a host of factors including demographic change and evolving consumer preferences. Our industry, and particularly apartment owners and developers, must balance a wide array of concerns regarding project viability, regulatory cost and compliance at all levels of government. While many regulatory hurdles and costs, such as impact fees, continual environmental reviews and antiquated zoning processes, are within the purview of state and local policymakers, there are a wide array of existing federal regulations that contribute to making housing less economically feasible to develop.

We believe that regulations must have demonstrable benefits that justify the cost of compliance and that federal agencies should be aware that broad-stroke regulations often have disproportionate effects on industries that serve as key drivers of our economy. Excessive regulation and compliance uncertainty result in costly mandates that divert resources from the production and operation of multifamily housing. The apartment industry faces a flood of regulations from a wide range of federal agencies including the Department of Housing and Urban Development (HUD), the Environmental Protection Agency (EPA), Department of Labor (DOL), Occupational Safety and Health Administration (OSHA), and the Department of Energy (DOE).

Given your great interest in removing regulatory barriers to development and growth, NMHC/NAA would like to highlight some of the specific federal regulations that slow or prevent development of housing that is affordable, challenge otherwise legitimate business practices designed to ensure safe and decent housing for residents, decrease access to capital and make it difficult to transfer family-owned businesses from one generation to another. The regulations outlined in the attached document, while well-intentioned in nature, have negatively impacted the development and management of multifamily housing at a time when our industry strives irelessly to address the shortage of housing for American families. We urge the Administration to pursue reforms or rescind these regulations.

We appreciate the opportunity to share the multifamily housing industry’s view on the importance of regulatory reform. We look forward to working with you and your Administration towards our shared goal of building housing that is affordable to more Americans and spurring continued economic growth across the country. Please call upon us if we can serve as a resource to you in this regard.

Douglas M. Bibby
National Multifamily Housing Council

Robert Pinnegar
President & CEO
National Apartment Association

The Honorable Michael Pence, Vice President
The Honorable Gary Cohn, Director, National Economic Council
The Honorable Mick Mulvaney, Director, Office of Management and Budget

Tuesday, March 7, 2017

"On Balance Harmful" - Evaluating Second Generation Rent Control

In a new post in City Commentary, economist Joe Cortright delves into the academic literature that is used to justify the implementation of rent stabilization policies. Frequently cited scholars such as Anthony Downs, Michael Lewyn, and Richard Arnott have all expressed doubts about the efficacy of rent stabilization policies, even as they have asserted those policies may be less harmful than hard rent caps. Lewyn in particular notes that while so-called "temperate" rent control policies do not appear to have an adverse impact on supply, they also don't have much of an impact on rents. In 2003 Arnott directly addressed those who use his research to promote rent control, stating in The Swedish Economic Policy Review that rent stabilization policies "have been on balance harmful, especially when account is taken of the political difficulty of removing rent controls when they are only temporarily justified." Cortright also expresses concern that the bills currently being debated in Oregon, HB 2001 and HB 2004, do not have mechanisms in place to stop cities from enacting more harmful forms of rent control that do restrict supply. Read more.

Rethinking Housing: Commodity vs. Investment

The New York Times reported on a study by economists Ed Glaeser of Havard and Joe Gyourko at the Wharton School that examines what would happen to housing prices if we thought of housing as a commodity rather than an investment. The idea behind this shift in thought is that instead of seeing a period of rapid price growth as a "recovery," prices would remain more stable, allowing for improved mobility and lowered barriers to entry for young buyers. The study also examines the impact of land-use regulations, which in many cities have drastically inflated prices. A recent estimate by economist Chang-Tai Hsieh from the University of Chicago puts the negative impact of local land-use regulations at $1.5 trillion per year. The authors conclude that thinking of housing as a commodity and eliminating land use and design regulations that artificially drive up prices could lead to significantly lower prices in many of the most expensive cities in the United States. Read more.

Thursday, March 2, 2017

Housing, Jobs and Affordability: The Current State of Portland, Oregon's Economy

The negative effect of our area's tremendous population and economic growth is a lack of affordable housing. State of Oregon economist Christian Kaylor, who focuses exclusively on the study of Portland's economy, offers an update on our economy.

Will Multifamily Permits Fall Off a Cliff in Portland?

The U.S. Census Bureau's permits for multifamily properties are in for 2016. They show a record number of apartments permitted, at 7,014 -- still below the previous 20-year high water mark of 7,200 permits issued in 1997.

The number of permits issued in January 2017 was a whopping 857. Due to the implementation of inclusionary zoning requirements by the City of Portland effective February 1st, that number are anticipated to fall significantly for an indefinite period, at least within the city limits of Portland.

Wednesday, March 1, 2017

Public Hearing for Oregon Rent Control Bill Set for Thursday, March 2nd

Lawmakers will have a public hearing for a bill that would outlaw no-cause evictions and lift the statewide ban on rent control Thursday March 2nd. On Tuesday, economist Eric Fruits testified before a House Human Services and Housing Committee meeting in Salem. He stated that rent stabilization policies would lead to a "self-inflicted housing shortage." Stephen Barton, director of the Berkeley Housing Department, argued that rent control reduces forced displacement, though it has not brought rents down in the Bay Area. Reducing displacement can also lead to a mismatch of supply and longer commutes as people stay in apartments that no longer suit their needs. Read more.

Panel of 41 U.S. Economic Experts: "Rent Control has Negative Impact on Quality and Quantity of Affordable Housing"

A panel of 41 economists from across the U.S. assembled as part of the Initiative on Global Markets at the University of Chicago Booth School of Business say rent control doesn't work.

In survey results posted February 7, 2017, 82% of the panelists disagreed or strongly disagreed with the following statement: "Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them."
  • Economist David Autor, associate head of the MIT department of economics, said "Rent control discourages supply of rental units. Incumbent renters benefit from capped prices. New renters face reduced rental options."
  • Economist Judith Chevalier of Yale, former editor of the American Economic Review, wrote "Rent control will have similar effects to any price control."
  • Economist Aaron Edlin of Berkeley wrote: "Rent control lowers incentives to invest and increases incentives to hold underoccupied rentals."
  • Economist Michael Greenstone, former Chief Economist for the Council of Economic Advisers, in Chicago wrote: "Great if you are lucky enough to get one of those apartments! Bad for all others. The worst policies apply to new construction."
  • Economist Caroline Hoxby, director of the economics education program at Stanford wrote: "Rent controlled units do not end up in the hands of low-income people. Rent control discourages landlords from creating modest priced units."
  • Economist Edward Lazear, of Stanford and chair of the President's Council of Economic Advisers (2006-2009), wrote: "Even in the short run, rent control induces owners to move property to other uses, misallocate the property, and substitute non-price allocations."
  • Economist Cecilia Rouse of Princeton and former member of the President's Council of Economic Advisers (2009-2011) wrote: "While well intended, theoretically they also likely limit expansions in supply and improvements in quality."
  • Economist Nancy Stokey of Chicago and former Editor of the Journal of Political Economy (2003-2007) wrote: "The planets are lined up here: theory and evidence point in the same direction."

See more details on the question and results, and learn more about the Initiative on Global Markets by clicking here. 

Tuesday, February 28, 2017

What Prevents Middle-Income Housing from Being Built?

A Shelterforce blog post explores the roadblocks to developing housing geared toward middle-income residents, and concludes that a combination of artificial production caps, NIMBYism, and regulations result in projects simply not penciling out in city neighborhoods where rents are typically lower. The result is more luxury units being built in inner core areas compared with workforce housing throughout the city. The problem of neighbors opposing new "cheap-looking" housing is especially acute, and results in "upscale" design standards that keep middle-income housing out of many neighborhoods. The post includes a map from a ULI report on inclusionary zoning that shows the areas of Portland where development projects are economically feasible. Read more.

Monday, February 27, 2017

Lender Update: Mortgage Equities Northwest is now McBride Capital

HFO is pleased to share the news that Mortgage Equities Northwest -- co-sponsor of HFO's events, newsletters and information for multifamily owners in the Pacific Northwest -- has changed its name to McBride Capital.

The Mortgage Equities Northwest name served the company well for seven years as it increased loan volume from $38 million to over $100 million. The company expects to surpass $200 million in loan closings for 2017 and looks forward to providing the same exceptional service and leadership under its new name.

New contact information may be found at www.mcbridecapital.com. Take special note that the company also frequently updates its rates page.

McBride Capital also announced $15.55 million in loan closings under the new company name: 226-unit Brighton Park Apartments and 44-unit Brooktree Apartments in Salem.

Friday, February 24, 2017

Rising Interest Rates, High Home Prices Will Keep Portland Renting in 2017

Reports from CoStar, the Portland Tribune, and the Portland Business Journal this week indicate that a variety of forces are likely to keep Portland residents renting. CoStar's analysis of the effect of rising interest rates suggests that an increase in the cost of borrowing could cause many households to hold off on buying. In December, the Federal Reserve indicated it would raise rates three times in 2017, and has indicated that the next increase could be fairly soon.

Meanwhile Windermere Real Estate's chief economist, Matthew Gardner, believes that while first time home buyers may attempt to enter the market in 2017, the supply of owner-occupied homes in the Portland metro area is so low that there may be nothing for them to buy. In his Portland Business Journal article he states that in Multnomah county alone, 7,493 owner occupied housing units are needed. Surrounding counties are similarly low on supply. He forecasts that Portland's above-average price growth will not be slowing anytime soon, due to lack of inventory.

Finally, the Portland Tribune reported this week that according to HSH.com, the average buyer in Portland needs a salary of $70,000 to afford a home. That is an increase of 7.5% from one year ago. The median home price in Portland is $354,700, and the median monthly mortgage payment is $1,654. The 2015 median annual income in Portland was $63,850.

Wednesday, February 22, 2017

Portland's Low Vacancy Rates the Biggest Threat to Renters

Portland for Everyone recently reported on Portland's new ordinance requiring landlords to pay relocation costs after no-cause evictions or rent increases greater than 10%. They argue that this ordinance could cause additional problems for renters due to the lack of housing supply in Portland.

Their fears are echoed by an unlikely ally: Portland Tenant United's Margot Black. Black argues that low vacancy rates mean landlords can afford to be more selective, and penalties for no-cause evictions could make it even harder for low-income tenants to find housing.

"Supply is also the answer" to the housing crisis, says Black. Portland's vacancy rate has been below the national average since 1986, with the exception of a brief period in 2004. At the same time, Multnomah County has not built enough units to keep up with population growth.

HFO is pleased to see that Margot understands the importance of increasing supply, and hopes that tenant groups and governmental bodies will do more to encourage development of affordable housing.

 Read more.