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.
Sincerely,

Douglas M. Bibby
President
National Multifamily Housing Council

Robert Pinnegar
President & CEO
National Apartment Association

cc:
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.