Friday, August 30, 2019

Rent Increases in Portland Metro Are Beginning to Pick Up Again

As a large amount of units came online in 2017 and 2018, rent growth in the Portland Metro Area began to flatten. But RealPage reports that Portland area rents are up 3% since last year. While rent growth in the central city has remained relatively flat, suburban markets are seeing rents rise more quickly. In Beaverton and Vancouver, rents are up nearly 5%. While the Oregonian reports that a large number of new apartment units are still on the way, reporter Elliot Njus cautions that development permits in Portland are down due in large part to the city's inclusionary zoning requirement. Read more.

Can a Landlord say "No Guns" in a Rental Lease?

The answer to the question of whether a landlord can prevent guns from being kept in an apartment is considered by author John Triplett in this article from the Rental Housing Journal. Read more. 

Wednesday, August 28, 2019

Seattle's Multifamily Market Boom Continues

Ongoing delivery of new units is not slowing demand for apartments and their steady absorption, according to a new report. Read more.

Tuesday, August 27, 2019

RentCafe: Rents Increases in Oregon Outpace National Average in July

According to RentCafe, month-over-month rent growth in Oregon cities largely outpaced growth nationwide in July. While Wilsonville saw the highest rent growth in Oregon at 1.7%, nationally average rent went up just 0.2% last month. Lake Oswego, which also boasts the most expensive average rent at $1,704 per month, saw average rent increases of 1.3% in July. Beaverton, Bend, Portland, Springfield, and Tigard also saw rent increases of at least 1%. Read more.

Monday, August 26, 2019

Multifamily Marketwatch Podcast - August 26, 2019

This week: while more than 70 percent of economists think a recession will begin in the next two years, its predicted to have less impact on housing; insurers are dropping customers in areas of the west more prone to wildfires--leaving state insurance plans as the only option; and the Department of Housing and Urban Development plans to implement a rule this fall that would make it harder to bring certain discrimination claims under the Fair Housing Act.

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Monday, August 19, 2019

Multifamily Marketwatch - August 19, 2019

This week: Representatives of landlord and tenant groups question the Portland Rental Services Office's use of funds generated by the new rental services fee to pay OneApp Oregon for renter data; economic indicators are causing investors to worry about a potential recession; a report from the Terner Center for Housing finds that impact fees are negatively impacting housing construction in California.

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Wednesday, August 14, 2019

Funding of OneApp Oregon through Rental Services Fee Receives Criticism from Landlord and Tenant Groups

Since the city approved an annual $60 per unit fee on rental housing in Portland last week, critics have come forward questioning a line item in the Rental Services Office budget that funnels $128,000 per year to private company OneApp Oregon. According to the Willamette Week, Multifamily NW executive director Deborah Imse expressed concerns over OneApp's handling of data that landlords are not able to ask tenants for under the Fair Housing Act. She also said that landlords who have used OneApp have found that tenants who have been told they qualify for a unit frequently do not meet screening criteria. Meanwhile, Margot Black of Portland Tenants United, who does not often find common ground with landlord groups, expressed similar concerns. Black does not believe that OneApp has successfully met the needs it sought to address. She is urging the Rental Services Office to be more accountable, and to use its limited funding more wisely. Read more.

Monday, August 12, 2019

Multifamily Marketwatch Podcast - August 12, 2019

This week: The Portland City Council approved an annual $60 per unit fee on rental housing; Oregon Secretary of State Bev Clarno released a report on end-of-budget-cycle spending among state agencies, issuing 16 recommendations to improve transparency in state budgets; the National League of Cities' Housing Taskforce is calling on cities to work together to collect and share data in order to take on the nationwide housing shortage.

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Thursday, August 8, 2019

Minneapolis Rejects Single Family Zoning, But Is It Enough to Improve Affordability?

Bloomberg Businessweek reported last week on the adoption of the Minneapolis 2040 plan, which ended single family zoning in the city. While single family buildings are still permitted, now duplexes and triplexes can be built in these neighborhoods as well. Since the passage of the new zoning code, the state of Oregon passed its own ban on single family zoning in cities throughout the state (HB 2001). But while many Minneapolis homeowners believe that the 2040 plan will lead to the destruction of established neighborhoods, developers argue that the new rezoning does not go far enough. Steve Cramer of the MPLS Downtown Council estimates that developers will need to spend $3 billion in order to make up for a decade of underbuilding in the city, as well as an additional $1.3 billion per year to keep up with population growth. Duplexes and triplexes will not enable developers to efficiently bring enough units to market to meet demand. Read more.

Wednesday, August 7, 2019

Portland City Council Approves $60 Per Unit Annual Fee for Rental Housing

The Portland City Council voted this morning to approve a $60 per unit annual fee for rental housing, which will provide funding for the Rental Services Office. Commissioner Fritz was the only Commissioner of the four present to vote against the fee (Commissioner Hardesty was absent). Fritz indicated that she would have voted in favor of this fee last year, prior to the passage of recent local and statewide regulations impacting landlords. She also believes the flat fee structure is regressive, and that mobile home parks should have been exempted.

The city council passed the fee over the objections of landlords, who testified a week earlier that the charge was a tax that would be passed on to renters since all the services it supports were for renters. Read more. 

Multifamily Marketwatch Special Edition: Greater Portland, Inc.

HFO Partner Greg Frick discusses the challenges of recruiting businesses to Portland in the current environment with Larry Holt, Vice President for Greater Portland, Inc. Greater Portland Inc. provides support and services to companies seeking to relocate or expand in the Portland metro area.

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Monday, August 5, 2019

Developer Switches Lloyd Condo Development to Market Rate Rentals

The Oregonian reports that mere weeks before the slated opening of a 162-unit seven-story condo building in the Lloyd District, its developer has flipped it to market-rate apartments as the result of sluggish demand. Read More.

Despite Ongoing Construction, Seattle and Portland's Rental Vacancy Rates Remain Among Nation's Lowest

Greater Seattle has the nation's 6th lowest rental vacancy rate while Portland ranks 11th.

The U.S. Census Bureau reports that second-quarter 2019 rental vacancy rate for the Portland/ Vancouver/ Hillsboro metro area was 4.1%, a drop of 0.7% from one year earlier.

Seattle/Tacoma/Bellevue's metro area vacancy rate was listed at 3.3%, down 0.8% from a year ago.

The nation's lowest rental vacancy rates, by metro area:

  1. Cleveland, OH - 1.5%
  2. San Jose, CA - 2.0%
  3. Columbus, OH - 2.2%
  4. Boston - 2.9%
  5. Allentown-3.2%
  6. Seattle/Tacoma/Bellevue - 3.3%
  7. Akron - 3.6%
  8. Riverside, CA 3.7%
  9. North Port, FL - 3.9%
  10. Rochester, NY 4.0%
  11. Portland/Vancouver/Hillsboro - 4.1%
  12. Denver - 4.4%
  13. Salt Lake - 4.4%
  14. L.A. 4.5%
Average National Rental Vacancy Rate

The average national rental vacancy rate for Q2 2019 was 6.8 percent for multifamily dwellings of five or more units -- no change from one year earlier, despite continuous delivery of multifamily units throughout the national market.

Year-over-year vacancy rates in the Western U.S. decreased, from 5.1% to 4.8%.

Click to Enlarge

U.S. Homeownership Rate Falls
After falling to a 26-year low in 2016, the homeownership rate has rebounded but fell slightly over the past year to 64.1%. Homeownership in the West has also decreased from 59.7% in Q2 2018 to 59.3% in June 2019.
Click to Enlarge

Multifamily Marketwatch Podcast - August 5, 2019

This week: An Investigation by The Oregonian uncovers plans to use funds from the recently passed clean energy tax to purchase and rehab affordable housing; the New York Times questions why developers are seen as the bad guys rather than as central to a solution in the fight for more housing.

Listen to our latest podcast.

Thursday, August 1, 2019

$60 Per Unit Fee Will Go to Second Reading before City Council

At yesterday's City Council meeting, Mayor Wheeler presented a plan developed in conjunction with the Housing Bureau that would assess a $60 per unit fee on rental housing in the City of Portland in order to fund the Rental Services Office. The $60 per unit fee is designed to rise with inflation, as well as additional program costs as needed. The Mayor, Shannon Callahan, and a number of people who gave testimony acknowledged that in the future significantly more funding will be needed in order to build the expanded rental registration system. If it passes, the fee will be due with taxes in April 2020 - it is retroactive, with the effective date set at January 1, 2019.

Callahan explained to the Commissioners that the fee would be used to fund the Rental Services Office. Among the office's plans for the next few years are a mediation services pilot, expanded education and training services, and enhanced data collection. The office intends to provide more streamlined support for renters.

Commissioner Fritz asked for clarification on the rules for exemption from the fee - she inquired as to whether the Housing Bureau considered tying the fee to the rent a unit charges rather than to whether it is a specifically regulated affordable unit. According to Callahan, there is no way to know what market rents are without the data collection system the city hopes to set up within the next few years. Fritz also wanted to know if mobile home parks, where rents are some of the lowest in the city, would be exempted. Matthew Tschabold, equity manager of the Housing Bureau, confirmed that mobile home parks are considered rental dwellings and would not be exempt from this fee.

Tschabold indicated that the "stick" to get landlords to comply with the registration system is a civil penalty that under local law can be up to $500. While he does not believe that a $500 fee would be imposed for landlords who fail to pay a $60 fine, he acknowledged there could be be some cases where a person may have a number of outstanding fees, in which case a higher fine might be warranted. Commissioner Fish suggested that the Council and Housing Department iron out an appropriate penalty for noncompliance.

During the public testimony portion of the hearing, twelve people spoke - six in favor, and six against. The first person to speak was a landlord who explained that the cost would likely end up getting passed to renters. He also read from an email between a friend of his and an unnamed member of City Council, in which the City Council member agreed that they too would be inclined to raise rents due to the fee. Commissioner Fish interrupted him for a polite back and forth in which the Commissioner asked that if any of his words or actions worked to "demonize" landlords, he would like to be directly called out on it. Commissioner Eudaly agreed that it is not her intent to demonize landlords. The broker and apartment owner who testified directly after pointed out that 90% of the Rental Services Office's activities support tenants, but the cost burden is being pushed on to landlords.

Other property owners who testified against the fee pointed out that while on its own would not be unreasonable, in conjunction with other legislation recently passed at the local and state level it represents a last straw. Landlords are already spending money on legal advice in order to implement the new tenant screening and security deposit ordinances, as well as relocation fees required by the city and state. Chris Nguyen of Commerce Properties argued that the confluence of extra costs are reducing funds available for unit maintenance.

For those who testified in favor of the law, it seemed that specific aspects of the proposed registration system will benefit tenants immensely. Nico Serra of Real Choice Initiatives shared their story of trying to find an ADA accessible unit that could accommodate their wheelchair after a bike accident. The Mayor confirmed he is working to put forward a proposal to provide accessibility and price range data as part of the enhanced rental unit registry in the Fall. Serra confirmed that this information would be incredibly beneficial to those who have struggled to find ADA compliant apartment units. Sarah Iannarone, Katrina Holland, and Margot Black all testified in support of the fee, also largely due to the benefits they believe will come from better data collection about rentals in the city.

The ordinance will now go to a second reading before the City Council. A date has not yet been set.

Sold! 21 Units in SE Portland, Oregon

HFO is pleased to announce the sale of this 21-unit asset in the popular Sellwood neighborhood of SE Portland. This mixed-use building was completed in 2014 and includes three fully-leased ground-floor retail spaces and 21 apartments. The building is elevator served and includes five secured parking spaces. Previously listed unsuccessfully by a national firm, HFO used its extensive market knowledge to communicate the special nuances of the opportunity and identified an experienced out-of-state private equity buyer.