Tuesday, April 28, 2020

Q1 Portland and Seattle Rental Vacancy Rates Statistically Unchanged from Year Earlier

Greater Seattle is currently tied with Knoxville, Tennessee for 7th place among top 75 U.S. metro area rental vacancy rates with a vacancy rate of 3.7%. Portland ties Rochester, New York, at 17th with a vacancy rate of 5.2%. Both northwest cities vacancy rates are statistically unchanged year-over-year.

The average national rental vacancy rate for Q1 2020 was 6.6 percent for multifamily dwellings of five or more units -- statistically unchanged 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 4.6% in Q1 2019 to 4.1%.

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U.S. Homeownership Rate FallsAfter falling to a 26-year low in 2016, the homeownership rate has rebounded and stands at 65.3%, up 1.1% from Q1 2019. Homeownership in the West has remained statistically unchanged. 

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Monday, April 27, 2020

HFO Multifamily Marketwatch - April 27, 2020

Harvard’s Joint Center for Housing Studies reports there may be shrinking demand for rentals due to the pandemic; Oregon and Washington governors reveal a framework for gradually lifting stay at home orders, and the Oregon Emergency Board approves $8.5 million in rental support for landlords.

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Harvard’s Joint Center for Housing Studies reported earlier this month that the COVID-19 pandemic could exacerbate a slowdown in rental demand that had already started before business closures began. According to research associate Whitney Airgood-Obrycki, rental demand increased significantly between 2004 and 2016 but started to decline in 2017 and 2018. In 2019, just 400,000 new rental households were formed. Airgood-Obrycki believes that demand will drop further as cash-strapped families double up to afford rent. While the last recession pushed many homeowners into the rental market, this one is hitting service and hospitality industry workers the hardest – groups that tend to already be renters. As of March, RentCafe was already seeing a 22% decrease in searches for new rentals. But while Class A properties are likely to see far fewer applicants for vacant units, the demand for affordable housing is expected to increase substantially. While overall rents may go down, the most vulnerable tenants may find it harder to compete for these units. Also, eviction moratoriums and stay at home orders could discourage some renters from moving in the short term. There may also be a higher-than-normal number of evictions once these orders are lifted, and tenants are expected to pay back rent. Airgood-Obrycki concludes that the impacts of the pandemic will largely depend on its duration and the quality of the policy response to it. Still, in all likelihood, it will exacerbate inequalities already present in the rental market. JCHS – Rental Market Likely Headed for a Slowdown

HousingWire reports that a new rule allows banks to postpone appraisals for residential or commercial properties for up to 120 days after a loan has closed. The law was proposed by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp, and the Office of the Comptroller of Currency. It went into effect on April 17. FHA, HUD, VA, Fannie Mae, and Freddie Mac loans are exempt – the rule only applies to banks that are overseen by the Fed, the FDIC, or the OCC. Loans for new transactions, as well as refinances, are subject to this change. Appraisers have expressed concerns about the rule, especially in cases where a property’s value may drop over the 120 days. With current conditions contributing to higher than usual levels of uncertainty, appraisers believe that such an occurrence is well within the realm of possibility. But regulators believe the rule will expedite the lending process and get money in the hands of businesses and individuals. The new law is temporary – it will remain in effect until December 31, 2020. HousingWire – Banks Can Now Postpone Some Appraisals until 120 Days After a Mortgage Closes

According to calculations by a New York investment analyst, Oregon may be getting the short end of the stick when it comes to Paycheck Protection Program funds. The Paycheck Protection Program is part of the CARES act, which was passed by the US Congress in response to the coronavirus pandemic. Ernie Tedeschi, of Everscore ISI, found that just 42% of eligible payrolls in Oregon were covered by the program, the third-lowest percentage of any state in the nation. Joining Oregon in the bottom three were New York and California, two other Democratic strongholds. Meanwhile, over 79% of small businesses in Nebraska, North Dakota, and Kansas received funding through the program. US Senator from Oregon Ron Wyden has pledged to press the Trump administration on why there were such significant discrepancies between red and blue states, and why Oregon, in particular, received so little. Wyden argues, quote, “Relief Congress passed to help must get distributed fairly without any partisan thumb on the scale.” Tedeschi’s findings were initially published in Bloomberg News. Willamette Week – Oregon Businesses Getting Stiffed by President Trump’s Small Business Relief Program

Both Governor Kate Brown of Oregon and Governor Jay Inslee of Washington indicated last week that while it is still too early to fully reopen businesses and services, they are working on frameworks to slowly ramp-up state economies. A draft of Governor Brown’s framework for “Reopening Oregon” was privately disclosed to the Oregonian last week, though it will not be finalized until the first week of May. Consistently with previous statements from the governor’s office, the draft proposal indicates that the state will not be able to ease restrictions until certain conditions are met, including a decline in the number of new COVID cases and increases in testing capacity and contact tracing. The framework indicates that the first phase, which would not be rolled out until at least late May, would allow some schools, youth activities, restaurants, gyms, personal services, religious gatherings, and non-emergency medical procedures to recommence. It would still require that people in at-risk groups stay at home and that all Oregonians minimize non-essential travel, and work from home where possible. But public health officials in the Portland area are less optimistic than Brown’s office appears to be – Dr. Jennifer Vines emphasized the need for continued social distancing to keep outbreaks localized. At the same time, Health Authority director Patrick Allen warned against operating in a “halfway place” that could cause a resurgence of the disease. Meanwhile, Governor Inslee announced that his stay-at-home order will not be lifted by May 4, the date he initially set in his executive order. But he did indicate that if the number of new cases continues to drop, he may begin to lift restrictions on elective surgeries, outdoor recreation, and construction activity. Like Brown, Inslee argues that the state cannot start lifting restrictions unless there is a significant increase in testing and contact tracing. He also advocates for more resources for mental health and homeless services.

As of April 27, low-income families in Portland can begin applying for $250 Visa gift cards to cover expenses. The City has allocated $1 million for cash assistance - $200,000 will go toward the gift cards, while the rest will be given to 19 local nonprofits that will provide up to $500 per household within their networks. The nonprofits serve a number of vulnerable communities, including people with disabilities, homeless residents, immigrants, refugees, domestic violence survivors, at-risk youth, and communities of color. In order to apply for the gift cards being distributed by the Portland Housing Bureau, residents must show how they have been impacted directly by the COVID pandemic. This can include job loss or a cut in hours worked, missed work due to childcare needs, increased childcare expenses, or having to take care of yourself or a relative who is sick with the virus. Only those who made 50% or less than the area median income prior to the state of emergency are eligible. On the scale provided by the City, this includes individuals making less than $30,800 per year, or 4-person households making under $43,950 per year. Applications are being accepted by 211info. Oregonian – Portland to Give $250 Gift Cards to Low-Income Families to Help with Expenses

The Oregon Legislature’s Legislative Emergency Board met last Thursday to vote on over $30 million for coronavirus response efforts. While more funding is likely to be available after the May 20 revenue forecast is released, the funding allocated in this session will come from the current two-year general fund and lottery budget. Among the eleven agenda items, the committee voted on were $12 million in rental assistance for people experiencing a loss of income. The support also includes hotel vouchers for homeless residents and $10 million in small business assistance for businesses with no more than 25 employees. Both of these items were approved with unanimous votes. Of the $12 million allocated for rental assistance and emergency shelters, $3.5 million will go toward hotel vouchers for homeless residents and farmworkers in need of quarantine. In comparison, $8.5 million will go to landlords on behalf of tenants who are unable to pay rent. The $8.5 million will be distributed to local jurisdictions based on a preset formula that takes into account both total population and level of need. Renters who make less than 50% of the area median income will qualify for these subsidies. House Republican Leader Christine Drazan asked whether this threshold will take into account lost wages since the crisis, or whether only those who made 50% AMI before business closures will be eligible. A legislative staff member indicated that these details will be determined in contract negotiations with continuums of care. The $10 million in business assistance will be distributed by predetermined agencies, which some of the members of the committee pointed out are primarily located along the I-5 corridor and in Bend. Local governments will have the ability to match these funds through existing emergency programs, and Speaker Kotek believes the total amount available will be close to $15 million. For all of the agenda items, the specifics will have to be hammered out by state agencies and the groups charged with distributing the funds. While a handful of committee members expressed concerns over this, all were in agreement that emergency actions are needed to ensure people and businesses across the state are provided with essential financial resources. Northwest Apartment Investor Blog – Oregon Legislative Emergency Board Approves $8.5 Million in Rental Assistance

The Oregon Occupational Safety and Health Division announced that it will begin conducting spot checks of workplaces to evaluate whether they are complying with coronavirus safety measures. According to the Daily Journal of Commerce, Oregon OSHA received 2,887 COVID-related complaints between March 2 and April 12, more than the total complaints typically received each year. Many of these complaints were from workers on large construction sites, who allege that social distancing practices are not being followed. On one job site, a worker with COVID symptoms was told he could be fired for not reporting to work. OSHA plans to conduct on-site inspections of 12 workplaces to ensure safety regulations are being followed. OSHA intends to prioritize investigations of employers that it deems most likely to continue failing to comply with the new safety rules.
DJC – Officials Starting to Check Out Oregon Workplaces

Finally, the LA Times reports that the high cost of building affordable housing in California is increasing at the same time that the demand for affordable housing is set to skyrocket due to the impacts of the coronavirus. The LA Times interviewed developer Ginger Hitzke, whose 10-unit affordable housing project in Solana Beach is now estimated to cost nearly $1.1 million per unit, making it the most expensive affordable housing project in the state. When Hitzke first proposed the plan in 2009, it was an 18-unit building that was expected to cost around $414,000 per door. In 2010, Hitzke was asked to reduce the size of the building and then waited four years for the City Council to approve the project. The City Council’s approval required Hitzke to build an underground garage with 53 parking spots under the 10-unit building. Over the next four years, she battled two separate lawsuits filed by a neighboring condo association. In 2019, construction costs increased again, bringing the price per unit to $1,073,214 and causing a funding gap. In December 2019, the state pulled its funding from the project because construction had not yet started. In March, Hitzke informed the City she wanted to back out of the development agreement. The City had promised the affordable, family-sized units to residents who had lost their homes in 1992 after a local motel was demolished. These residents were promised new housing by 1999, but many are still waiting. As business closures and layoffs continue due to the ongoing pandemic, the competition for the small number of affordable housing units is expected to increase dramatically. But California’s history of delaying and adding to the cost of affordable housing has kept the supply of these units artificially low. Governor Newsom has begun work on simplifying the process for developers to get funding for affordable housing, but this will do little in the short term to help vulnerable renters. They may find themselves without a place to live by the end of the year. LA Times – Affordable Housing Can Cost $1 Million per Apartment in California. Coronavirus Could Make It Worse

Where Major Candidates for Portland Area Elected Offices Stand on Housing

By Jennifer Shuch, HFO Research Analyst

As Oregon’s May 2020 primary approaches, a large number of local, regional, and national candidates have entered the race with housing as a top priority. Housing affordability, both for renters and homeowners, has become a flashpoint in political debate throughout the country.  Rent growth in Portland has begun to slow due to new units coming online. An increasing number of households are rent-burdened--defined by the U.S. Department of Housing and Urban Development (HUD) as spending more than 30% of household income on rent.

At the national level, public housing investment is well below historical levels. But the candidates vying for the Democratic nomination have all unveiled plans aimed at tackling affordability issues. Former VP and presumptive nominee Joe Biden has a policy calling for $640 billion in investments aimed at helping renters and homeowners.

In the Portland mayoral race, Mayor Wheeler’s reelection may hinge on whether city residents are as enthusiastic about his housing record as he is. An additional three city council seats are also up for election. Most hotly contested is the position held since 2017 by Chloe Eudaly, who campaigned on a platform focusing primarily on issues such as tenant rights and rent control. Metro —a government entity charged with overseeing regional planning, parks, and some major entertainment venues in Portland’s three-county metro area—passed a $652.8 million housing bond in 2018. Metro will ask voters again in May for up to $250 million for homeless services funding. There are currently three races for open Metro Councilor seats.

In light of all this, we have compiled an overview of candidates’ positions on housing issues in races for the City of Portland, Multnomah County, Metro, and the Democratic nominee for U.S. President.

City of Portland

Mayoral RaceTed Wheeler is up for reelection as Portland’s Mayor. Among his 18 competitors are leading contenders Sarah Iannarone, Teressa Raiford, and Ozzie Gonzalez. Both Iannarone and Gonzalez have released housing plans, while Wheeler’s website mainly touts what he sees as his most significant accomplishments so far.

On his website, Mayor Wheeler claims that he has more than doubled shelter capacity in the city, prevented 7,000 households from falling into homelessness, helped 6,000 people connect with transitional housing services, and built over 800 units of affordable housing.  His office has also touted the city’s progress in exceeding its housing bond goals of creating or preserving 1,300 housing units. So far, however, of the 1,424 bond-funded units, only two complexes with 314 total units are open and occupied as of March 2020.  While Wheeler’s campaign website emphasizes what the Mayor has accomplished over the last four years, it does not indicate what his plans are for the future if he’s re-elected. And there are differing opinions as to the validity of the Mayor’s claims.

Of Wheeler’s plethora of challengers, both Sarah Iannarone and Ozzie Gonzalez have released housing proposals, and Teressa Raiford limits herself to commenting on demolition and displacement in her platform statement. Iannarone’s housing plan calls for a five-year plan to end the housing state of emergency, which has been in place since 2015. She argues that the city needs a task force to assess housing inventory and resident needs. That city leaders must use this information to solve the problems that are persisting in the city’s housing market. Iannarone also calls for increased communication between city bureaus, nonprofit organizations, and private sector stakeholders. Her plan addresses the city’s taxation system – she advocates for recalibration to eliminate inequities between East Portland and other parts of town, as well as land value and real estate transfer taxes. Iannarone’s housing proposal also focuses on eviction prevention and tenants’ rights. She argues in favor of a tenants’ bill of rights, including the right to organize, and she believes that the city should fund the rental registration system and track eviction rates. Iannarone is in favor of using tourism tax revenue to create a rental subsidy reserve, and advocates for relegalizing SRO’s throughout the city. She is the only candidate calling for a moratorium on the development of self-storage facilities in mixed-use zones, centers, and corridors. She also seeks the reduction of costs and red tape for small-scale building projects.

Like Iannarone, Ozzie Gonzalez advocates for collaborating with stakeholders to tackle housing issues. His housing plan calls on the city to partner with managers, developers, and real estate firms to establish a housing inventory system. Gonzalez’s strategy focuses on development-side issues – he would like to see more incentives for producing a variety of housing types and an emphasis on transit-oriented development. He also believes the city should find new uses for vacant units.

While Teressa Raiford does not have a comprehensive housing proposal, her policy statement, which she calls The People’s Platform, calls for a moratorium on urban redevelopment. She believes demolitions should await the coming together of communities to decide what should be saved or replaced. She pushes back on “demolition, rezoning, and redevelopment,” which she believes serves only “big investors, large corporations, and the high-income earners.”

The Oregonian Endorsed Ted Wheeler for re-election in its Op-ed on Sunday, April 26th.

Portland City Council

Portland City Council Position No. 1, is currently held by Commissioner Amanda Fritz, who is vacating her seat. Of the nine candidates, Carmen Rubio, Candace Avalos, and Timothy DuBois are the only candidates that have put forth housing plans.

Carmen Rubio is assumed to be the front runner due to the large number of endorsements she has received from local elected officials. Rubio advocates for coordinating with state, regional, and federal partners to address housing affordability, and investing in homeless prevention and anti-displacement measures.  She argues that the city needs to increase density if residents want better transit and more affordable housing options, and she stresses the need for data-driven solutions to the city’s problems. In a survey conducted by Portland Tenants United (PTU), Rubio did not commit to advocating for an end to the statewide ban on local rent control policies. While she did not explicitly back the state law, she argued that she would need to be sure that increased rent restrictions would not reduce the availability of affordable housing.

Candace Avalos believes the city should fully fund rental assistance programs and collaborate with service providers to support people who may be on the verge of homelessness. She advocates for an innovation hub dedicated to finding new ways to build affordable housing without subsidies. Avalos also believes that the city should incentivize building affordable housing ‘at scale’ and advocates for streamlining the permitting process. Like Sarah Iannarone, she calls on the council to fully fund the Office of Rental Services, which oversees the rental registration program.  Unlike Rubio, Avalos has committed to overturning the state preemption of local rent control policies. Avalos argues that local jurisdictions must be allowed to use whatever tools may help keep residents housed.

Tim DuBois believes the city should do more to increase housing diversity and build more housing near transit and job opportunities. He also argues for a streamlined and expedited permitting process.

The Oregonian Endorsed Cermen Rubio for election in its Op-ed on Sunday, April 26th. 

Portland City Council Position No. 4 is also up for grabs this year, with incumbent Chloe Eudaly facing challenges from former Mayor Sam Adams as well as professor and prior public servant Mingus Mapps, Keith Wilson and four other candidates. Eudaly defeated incumbent Steve Novick in 2016, mainly by gaining the support of housing and tenants’ rights advocates. During her time as a commissioner, she has advocated for rent control and increased tenant protections. Eudaly’s staff devised the recent FAIR ordinances governing rental applications and safety deposits. As of March, Eudaly has not released a housing policy platform to indicate her priorities should she be re-elected.

Former Mayor Sam Adams has received an endorsement from Smart Growth Oregon, and his housing plan reflects the idea that more housing is needed at all affordability levels to make up for years of underbuilding between 2010 and 2018. While Adams supports the Residential Infill Plan, he believes that the city should also increase density along arterials and near transit stops. He also argues for expediting the permitting process for both affordable and market-rate projects. Adams’s goal, should he be elected, is to bring all stakeholders together to build a long-term plan to determine which type of housing is needed, and who should build it. He also wants to re-evaluate current design rules to make sure they meet city goals. Adams also intends to conduct regular surveys of renters and property owners to track affordability, rent increases, and demographic information, as well as property ROI and the amount an owner invests in updates and maintenance.  Adams is also in favor of ending the state preemption on local rent control laws and allowing local jurisdictions to establish individual policies.

Mingus Mapps has released plans on housing and homelessness, both of which emphasize the need for new housing units at a variety of income levels. His Ending Homelessness and Housing First proposal calls for a ban on price gouging in the rental market, as well as an additional 1,500 units of permanent supportive housing. He also believes the city should increase funding levels for short-term rental assistance to keep people in their homes when they may be experiencing temporary setbacks.  In his Affordable Housing for All plan, Mapps advocates for fee reductions, streamlining, and faster inspections to increase development activity in the city. He also argues that the city should protect renters’ rights and increase housing density.  In his public appearances, Mapps has argued that the City Council has neglected to bring all interested parties to the table to find the best solutions for housing and homelessness issues. In an interview with HFO, Mapps  agreed that the city has weaponized housing policy, and made it harder for smaller landlords to operate. He believes the city should do more to understand the consequences of policy decisions.

Also running for Position 4 is Keith Wilson, a University of Portland Business School graduate, world traveler, and President of Portland-based trucking company TITAN Freight. His housing plan focuses on the need for more housing units in the city. He advocates increased flexibility to allow for more SRO, micro, and cohousing units. He also argues for the conversion of single-family homes to multi-generational and multi-family residences and the reduction of development fees.
While an additional four candidates are running for Commissioner Eudaly’s seat on the City Council, none of these contenders have released a housing proposal.

The Oregonian Endorsed Mingus Mapps for election in its Op-ed on Sunday, April 26th. 

Portland City Council Position No.2. Commissioner Nick Fish passed away suddenly in December. Since then, 13 candidates have filed. Of those candidates, four have housing policy details outlined on their campaign websites, while an additional two mention housing but do not discuss the details of their housing plans. Loretta Smith, who ran against Commissioner JoAnn Hardesty in 2018, is the highest-profile contender in this race. In her brief list of city priorities, Smith states that she will address homelessness through increased supportive services and affordable housing.

Sam Chase, who has been the Metro Councilor for District 5 since 2013, touts his involvement in the creation and passage of the Metro housing bond as a major highlight of his career.  Chase’s housing plan includes implementing a plan originally championed by Nick Fish to create 2,000 permanent supportive housing units for homeless residents. He also believes the city should invest in creating new affordable housing, particularly in transit corridors, with infrastructure already in place to support these new units. He also believes that jurisdictions within the Portland Metro Area should be required to build adequate shelter beds and affordable housing.  Chase is in favor of lowering the rent increase threshold that triggers the relocation assistance requirement in Portland and overturning the statewide prevention on local rent control policies.

Another frontrunner in the race is Julia DeGraw, progressive organizer, and director of nonprofit lobbying organization PDX Forward. DeGraw’s housing plan, which she calls Housing for All, argues that developers have too much influence on city policy. She believes housing is a human right, and the city should fully fund rental assistance programs as well as the Rental Services Office and build profoundly affordable housing throughout the city. She also argues that the city should go further in outlawing no-cause evictions and do more to enforce recently passed tenant protections—DeGraw advocates for redirecting subsidies to affordable housing projects and community land trusts. Like Candace Avalos, she believes the city should set up an innovation hub to come up with new ideas for producing affordable housing. She also urges the city to explore a vacancy tax.

Also running is a longtime tenant advocate and former head of Portland Tenants United (PTU), Margot Black. Black advocates for lifting the state ban on rent control so that the city of Portland can enact what she refers to as ‘real’ rent control policies. She also advocates for increased tenant protections, including universal eviction defense, and a collective bargaining process for rental agreements. In addition to increased tenant protections, Black is in favor of a ‘housing wage for all’ and argues that the city should improve accountability for public and affordable housing providers.

Both Jeff Lang and James Davis’s proposals focus primarily on homelessness and include big ideas for turning under-utilized city sites as campuses for homeless residents. Jeff Lang argues that the city should turn the Veterans Memorial Coliseum into such a school, including dorms with locking doors, a medical clinic, teaching facilities, and offices for local nonprofits.  Meanwhile, James Davis argues that Concordia University, which will shut down at the end of the Spring semester in 2020, should be purchased by the city and operated as a housing-first project.  Both Lang and Davis also argue that the city should allow for a wider variety of housing types, including co-ops, SROs, tiny home villages, and intentional communities. Davis believes the city can facilitate this by creating a public bank for nontraditional lending.

The Oregonian Endorsed Sam Chase for election in its Op-ed on Sunday, April 26th. 

Other Local Elections

While candidates in the Portland City Council and Mayoral races are prioritizing housing, candidates in other local races have not yet released housing plans. The vast majority of candidates running for Multnomah County and Metro Council positions have not released many details on how they will address the region’s most pressing issues. But with Metro planning to release housing bonds and homeless measure funding to cities and counties throughout the region, how these candidates propose to address housing needs may become more critical than ever.

Multnomah County Commissioner District 3
Jessica Vega Pederson, who is running for Multnomah County Commissioner in District 3, has released a housing statement (not a plan). Pederson plans to work with community organizations to build coalitions with local government agencies, including Multnomah County, to address homelessness and affordable housing. She also believes the county should operate as a “one-stop-shop” for connecting residents with housing and social services.

Metro Councilor District 3
Gerritt Rosenthal has released a statement arguing that Metro should do a better job of evaluating data and listening to residents and developers when determining whether to expand the urban growth boundary. He also supports Metro’s housing bond.

Metro Councilor District 5
Two candidates for Metro Councilor in District 5 answered PTU’s survey about rent control and tenant protections, though they have not put out comprehensive housing plans. Candidate Cameron Whitten is in favor of lowing the statewide rent cap but doesn’t believe local jurisdictions should be able to set individual rent control policies, arguing instead for a stronger relocation ordinance in the city of Portland.  Candidate Chris Smith disagrees with Whitten, arguing that housing stability is a crucial part of planning for climate-related investments. Smith believes cities and other local jurisdictions should be able to establish regulations that help keep people in their homes.


Friday, April 24, 2020

National League of Cities Recommends Local and Federal Rental Assistance

The National League of Cities published an article by staffers Lauren Lowery and Natasha Leonard, who argue that cities should establish rental assistance programs for renters impacted by the COVID-19 pandemic. They suggest that cities use some of the increased funding from the CARES act that is being directed to Community Development Block Grants and Emergency Services Grants in order to fund rental assistance programs. Lowery and Leonard warn that without this assistance, low income and other vulnerable renters could face an "eviction cliff" once emergency orders are lifted. Hillsboro, OR is mentioned in the article as a city that has already allocated some funding to rental assistance - $100,000 of the Washington County city's $1.1 million crisis funding package is dedicated to helping renters. Read more.

Thursday, April 23, 2020

Oregon Legislative Emergency Board Approves $8.5 Million in Rental Assistance

The Oregon Legislative Emergency Board met last Thursday to vote on over $30 million for coronavirus response efforts. The board unanimously approved $12 million for rental assistance for people experiencing a loss of income and hotel vouchers for homeless residents. Of this, $3.5 million will go toward hotel vouchers for homeless residents and farm workers in need of quarantine, while $8.5 million will go to landlords on behalf of tenants who are unable to pay rent. The $8.5 million will be distributed to local jurisdictions based on a preset formula that takes into account both total population and level of need. Renters who make less than 50% of area median income will qualify for these subsidies. House Republican Leader Christine Drazan asked whether this threshold will take into account lost wages since the crisis, or whether only those who made 50% AMI prior to business closures will be eligible. A legislative staff member indicated that will be determined in contract negotiations with continuums of care. 

Wednesday, April 22, 2020

Landlords Bracing for Potential Financial Hit in May

The Daily Journal of Commerce reports that while most landlords in the Portland area saw the bulk of their tenants make rent payments in April, many are bracing for more to skip rent in May. According to HFO's Greg Frick, the majority of landlords saw between 8% and 15% of renters miss a payment, but in some buildings that percentage was closer to 30%. So far, this does not appear to be concentrated in specific neighborhoods  according to Frick, "it's all over the map." At the same time, transactions are largely on hold as banks shift their focus to small business loans. Read more.

Tuesday, April 21, 2020

Contact Your Congressional Representatives and Demand Protection for Apartments

The National Apartment Association (NAA) requested industry assistance in calling the critical services of apartments to our nation's congressional representatives.

It is imperative that Congress pass relief targeted relief to the rental housing industry and fix a number of problems in the CARES Act.

Please contact your Member of Congress and demand they protect apartments!

Our Congressional representatives need to:

  • Create an emergency rental assistance program for those who are impacted by the COVID-19 crisis and struggle to cover housing expenses.
  • Better tailor the CARES Act eviction moratorium provision and safeguard owners’ ability to effectively manage their communities.
  • Allow more housing providers access to mortgage forbearance and ensure fairness and flexibility in its terms. 
  • Provide financial assistance for property-level financial obligations such as property taxes or insurance payments and extend credit to multifamily mortgage servicers.
  • Expand the Small Business Administration’s Paycheck Protection Program to include all multifamily businesses.

A recently introduced bill would suspend rent payments. This is NOT what we need! 

Congress Needs to Protect Apartments! 

City of Portland to Provide Limited Funding for COVID-19 Emergency Household Stabilization Fund

The City of Portland will provide up to $250 per household from a $1 million emergency fund on a first-come-first served basis beginning 10 am on April 27th.

Individuals will need to provide proof of loss of employment income, dependent care or other hardship as a result of COVID-19 and be earning no more than 50% of the area median income. 

Individuals can obtain more information and apply beginning 4/27 at this link.

Monday, April 20, 2020

US Supreme Court Denied Petition to Appeal Seattle First-Come First-Served Law

The US Supreme Court announced Monday that it would not hear an appeal of a Washington state supreme court decision upholding a Seattle law that requires landlords to process tenant applications on a first-come, first-served basis. Seattle-based landlords sued after the law was passed in 2017 - a King County judge sided with the landlords, but in 2019 the Washington supreme court upheld the law. Because the US Supreme Court declined to hear the case, the law will stand. Read more.

HFO Multifamily Marketwatch - April 20, 2020

Reports indicate that 80 to 84 percent of Oregonians paid their April rent on time; Governors of West Coast states joined together in creating a framework for reopening the economies, and researchers are wondering whether the pandemic could end the nation’s big-city rent bubble.

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The National Multifamily Housing Council conducted a survey of property owners and managers in Oregon, finding that the majority of Oregon renters are still paying their rents. While nationally close to a third of renters were unable to make rent payments, in Oregon, over 80% of tenants were able to pay some amount of rent in the first week of April. As of the second week of April, 84% of Portland-area renters were able to pay their rent, according to data aggregator RealPage. Oregon’s 7% decline in the number of households paying rent was the smallest in the nation. Arizona, Texas, and North Carolina also saw relatively small increases in nonpayment of rent. According to RealPage chief economist Greg Willett, the states that have fared the best so far have relatively small retail and hospitality sectors. While some property owners had feared renters would skip April payments due to state and local eviction moratoriums, this scenario has mostly not played out. According to the Rental Housing Alliance of Oregon, most landlords who own more than 4 units saw just 10 to 15% of tenants skip rent payments. But 30% of landlords who rent only one unit had tenants who were unable to make a rent payment this month. Many of these small landlords are the least prepared to weather a sudden drop in income. And questions remain about whether this trend will continue into May – the longer many tenants are unemployed, the less money they will have to put toward rent payments. OPB – Data Show Majority of Oregon Renters Paid April Rent. Oregonian – Vast Majority of Portland Tenants Paid April Rent Despite Economic Fallout from Coronavirus 

Facing a record number of unemployment claims, Oregon’s Employment Department is struggling with an outdated computer system that has been producing a large number of errors and delaying payments. While the state of Oregon was given $86 million in federal funding to upgrade its computer system in 2009, the timeline for the upgrade was ultimately extended to 2025. Since the COVID-19 pandemic began, one in eight Oregonians has lost their jobs. The federal stimulus package included increased funding for unemployment benefits. Still, many Oregon residents who have tried to apply have struggled to get through the state’s system and begin receiving benefits. According to the Oregonian, workers in the state could lose out on a total of over $100 million. Many applicants have been rejected erroneously, and the state has failed to waive the waiting week for unemployment benefits because the system is unable to handle the surge in volume. Over the past three weeks, the employment department has processed 134,000 new claims, but there are an additional 130,000 still left to prepare, with new ones coming in every week. And those applicants who call with questions face the frustration of not getting through or average hold time of two hours. The state’s computers date back to the 1980s and 90s, and the employment system was built with a programming language dating to the 1950s. Although the state received money for upgrades in 2009, the modernization project did not kick off until 2016. According to the Oregonian, initial delays were due to mismanagement under former Governor Kitzhaber. It is not clear what—if anything—the state plans to do to fix these issues in the near term. Oregonian – Oregon’s Antiquated Computers Could Cost Laid-Off Workers More than $100 Million in Benefits 

The Portland Business Journal reports that Portland-area home sales are grinding to a halt, causing real estate brokers to worry they are returning to Recession-era levels of lost commissions. Year over year, new home listings were down 27% nationwide in the first week of April. Portland fared slightly better with a 20% decline in new listings. Meanwhile, San Francisco has seen a 36.4% drop, while New York has seen new listings decline by 56.6%. The Business Journal estimates that the Portland area’s 3,300 real estate agents are experiencing a total loss of $738,100 in commissions each day. Month over month, new listings are down 13%. But even as industry experts see data points mirroring the last Recession, there are some essential differences. Skylar Olsen, director of economic research at Zillow, points out that the supply of housing units was deficient going into the pandemic. As businesses start to reopen and the economy recovers, the housing market should be able to bounce back. Portland Business Journal – Sellers Yank Portland Home Listings as Real Estate Agents Scramble to Offset Billions in Lost Commissions

The Governors of Oregon, Washington, and California announced that they are forming a “Western States Pact” to coordinate the lifting of stay-at-home orders and reopening of state economies. The governors did not provide a timeframe for when these orders would be lifted. However, they indicated they are working on shared metrics to determine when it will be safe to slowly start reopening schools, businesses, and other services. Parameters include hospital surge capacity, supplies of personal protective equipment, testing availability, and ten days with no deaths. The governors agree that there will not be a sudden reopening of all businesses and services, but a more gradual lifting of restrictions based on recommendations by public health experts. State leaders agreed to consult each other in addition to local experts before making any decisions. Willamette Week – Oregon, Washington and California Form Pact to Jointly Reopen States from COVID-19 Stay-Home Orders

The Seattle Times reports that while the elderly may be most susceptible to the health impacts of COVID-19, the economic consequences are hitting young people the hardest. In Washington, 37% of residents between the ages of 18 and 29 have been laid off or lost a job, while 48% have had hours reduced or have experienced a pay cut. These are the highest numbers of any age group – 26% of 30 to 44-year-olds have been laid off, and 29% have experienced a pay cut, while 20% of 45 to 64-year-olds have been laid off and just 19% have had a reduction in pay. 51% of young adults surveyed expect to need help covering rent payments over the next few months, while just 8% of seniors plan to require the same assistance. 53% of young people also believe they will struggle to pay for necessities like food and medication. Those making under $50,000 per year, including a large number of young people, are the most likely to need assistance as business closures continue. Seattle Times – Washington Young Adults Are Getting Slammed Financially by Coronavirus Crisis, New Survey Shows

According to the leaders of Portland-area nonprofits, the homeless population in the region is experiencing a humanitarian crisis. The Joint Office of Homeless Services is working to open temporary outdoor shelters that serve different groups within the homeless community, providing meals, and overseeing the implementation of social distancing practices. 45 residents will be able to live at each campsite, where they will have access to portable bathrooms and handwashing stations. Local nonprofits, including Blanchet House, Free Hot Soup, the Free Lunch Collective, and the Portland Rescue Mission, are responsible for providing hot meals at the campsites. Blanchet House has seen a sharp rise in the number of people, particularly women, who cannot afford food but who are not experiencing homelessness. Executive Director Scott Kerman estimates that Blanchet House is providing between 9,000 and 10,000 meals every week. Along with ensuring access to meals and a place to sleep, the Joint Office of Homeless Services has been handing out crucial supplies to help unhoused residents. So far, the office has distributed over 2,500 blankets, over 1,600 gallons of water, 324 sleeping bags, nearly 1,900 hygiene bags, 4,000 ID cards, and 27,000 bottles of hand sanitizer.
Portland Tribune – Amid COVID-19, Portland Homeless Facing “Humanitarian Crisis”

Unlike in other cities grappling with the effects of the ongoing pandemic, rents in Seattle are continuing to rise. In March, rents were up 0.5% month over month, and it appears that some local landlords are raising the rents for tenants who have not suffered a loss of income to make up for declining revenues. Washington officials have not prohibited rent increases, but according to the Attorney General’s Office, some rent increases may be illegal under the state’s consumer protection law. Colleen Melody, who leads the AG’s civil rights division, indicated that her office has received many complaints from people who have been put in situations that require them to violate the state’s stay at home order. Some of these complaints have been related to rent increases. Because many tenants have no option to move currently, some of these rent increases could violate the state’s Residential Landlord-Tenant Act, according to AG Bob Ferguson. The Rental Housing Association of Washington has advised its members that raising rents in the current environment is not “best practice.” Chris Salviati of Apartment List was surprised to see rents in Seattle continue to grow. Because demand for new apartments was down approximately 15% by mid-March, he expected landlords to lower prices. Brett Waller of the Washington Multifamily Housing Association believes that the impacts of the pandemic may not yet be visible in the data. In essence, an increase in the median rent may instead be related to new higher-priced luxury units coming online. Seattle Times – Coronavirus Has Cost More than 100,000 People around Seattle, their Jobs. So Why Aren’t Rents Going Down?

Finally, NBC News reports that while some experts believe the COVID-19 pandemic may burst the bubble for apartment rents in major cities nationwide, others argue that the demand for housing will still be there.  David Shulman of UCLA’s Anderson Forecast believes rents will inevitably fall as incomes drop. Even if demand remains strong and the housing supply is low, the vast majority of renters will be unable to pay the sky-high rents that have become common in major cities like New York and San Francisco. But Whitney Airgood-Obrycki of Harvard’s Joint Center for Housing Studies believes that along with a decrease in rents, major cities are also likely to see a construction slowdown in the coming months. Still, there could be a small increase in supply as AirBnB hosts convert their units into long-term rentals. But Aaron Carr of New York’s Housing Rights Initiative points out that as vulnerable renters lose jobs in the service and hospitality industries, the country’s social safety net is inadequate to prevent a rise in homelessness. Despite temporary local interventions, eventually, there will be a rise in evictions and foreclosures. However, it is not yet clear what the longer-term impacts on the housing market will be. NBC News – Coronavirus Economy Could Burst America’s Big-City Rent Bubble

Friday, April 17, 2020

WA Gov. Jay Inslee Extends Eviction Moratorium, Freezes Commercial and Residential Rents

Governor Jay Inslee announced Thursday that he is extending the state's eviction moratorium for an additional seven weeks. In addition, his order bans residential rent increases as well as commercial rent increases on businesses impacted by the COVID-19 pandemic. Washington Attorney General Bob Ferguson told the Seattle Times that rent increases during a public health emergency could violate the Residential Landlord Tenant Act and Consumer Protection Act. Governor Inslee is also prohibiting landlords from collecting late fees or other charges for nonpayment of rent, or charging rent for units that are inaccessible to tenants, such as seasonal or college housing. State Rep. Andrew Barkis of Olympia expressed disappointment over the governor's order - he has been working to gather support for a measure that would provide increased rental assistance to tenants. Read more.

Monday, April 13, 2020

HFO Multifamily Marketwatch - April 13, 2020

This week: Experts warn that states may not have the legal power to forgive rent or mortgage payments; Multnomah County chair Deborah Kafoury weighs changes to the county’s eviction moratorium, and nearly a third of renters in the U.S. don’t make rent in April.

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Earlier this month, industry group Multifamily Northwest warned the state legislature against the Portland City Council’s recommendation that the state pursue rent and mortgage forgiveness. While on its face, Portland’s proposal appears to help landlords who are seeing an increasing number of tenants unable to pay their rent, the group warned that mortgage forgiveness would have more significant economic impacts. Along with their mortgages, building owners are also worried that they will be unable to pay property managers, maintenance workers, or utilities, and property taxes. Meanwhile, Linda Navarro of the Oregon Bankers Association warns that the call for mortgage forgiveness does not include plans for how banks would be able to accomplish this. Commissioner Eudaly believes that rent and mortgage freezes are necessary to protect landlords, renters, and small businesses, and to prevent more giant corporations from buying foreclosed properties in a repeat of the 2008 recession. But experts argue that the state does not have enough power over national banks to convince them to suspend mortgage payments. Furthermore, forgiving rent and mortgages is likely illegal under federal law. Gregg Colburn, assistant professor of real estate at the University of Washington, believes that the most realistic solution would be for federal and state governments to provide rental assistance directly to tenants. But tenant advocacy groups are unhappy with this idea. In essence, Portland Tenants United suggests that instead of burdening tenants with complex application processes, landlords should apply for funding like other small businesses. OPB – Could a Rent Freeze Work in Oregon? Landlords, Experts Are Skeptical

The Clark County Council sent a letter last week to Governor Inslee asking that the state lift its ban on construction. Unlike other counties in Washington, a significant portion of Clark County’s sales tax is related to construction activity. The county’s proximity to Portland means that many residents cross the border to shop tax-free, and the sudden slowdown in construction due to the governor’s order is having an outsized impact. The Council voted 4 to 1 to send the request to Inslee’s office – Councilor Temple Lentz was the only county council member to vote against it. The Council points out that construction activity has not stopped in Oregon, and argues that workers could return to construction sites as long as safety guidelines are in place. But in Oregon, OSHA has seen a significant increase in reports from construction workers claiming that social distancing guidelines are not being followed. Still, with the city of Vancouver facing a $30 million drop in revenue from sales taxes, utility taxes, and rec center fees, Clark County leaders are hoping that a reversal of the construction ban will allow the county to get back on its feet. OPB – Clark County Asks Gov. Jay Inslee to Lift Construction Ban 

Oregon Public Broadcasting reports that small businesses hoping to get relief from the federal CARES Act have been hitting some unexpected roadblocks. The CARES Act includes a $349 billion Paycheck Protection Program that provides forgivable loans to businesses that retain or re-hire workers. Matt Swihart, who owns Oregon-based beer company Double Mountain Brewery, was informed by his bank that they would not accept his application because he is not the sole owner of his business. This setback left him scrambling, aware of the ticking clock, and fierce competition from other companies in similar financial positions. According to OPB, Wells Fargo reached its $10 billion lending cap by Sunday the 5th, just two days after the application period opened. And while the federal government issued guidelines shortly before the application period began, it did not prohibit banks from creating their own restrictions on the program. Many banks have done this to lower the number of applications they process. Matt Jacobson, who owns four Portland-area businesses, has found the application process to be opaque. Jacobson would like to hire back the 170 workers he was forced to lay off, but he has been frustrated by the lack of a standardized process. So far, he has submitted one application online as well as two paper applications. Also, some smaller businesses are worried they will be unable to compete with those that employ more workers – companies with up to 500 employees are eligible for the loans. Those that have submitted applications are now left to sit and wait – in some cases, banks have explicitly told applicants not to contact them with inquiries. OPB – Northwest Businesses Fight Confusion and the Clock to Get Emergency Loans

When Multnomah County issued its eviction moratorium, it included a requirement that tenants inform their landlords by the first of the month that they will be unable to pay rent. Now, County Chair Deborah Kafoury is weighing changes to the language of the moratorium to give tenants more time. The state moratorium instructs tenants to inform their landlords “as soon as reasonably possible.” Kafoury has received feedback from tenants who have been unable to reach their landlords or property managers, and she believes the county should adopt the state’s language to give renters more flexibility. The county board of commissioners could vote on the change as soon as this week. Oregonian – Multnomah County May Give Renters More Time to Notify Landlords They Can’t Pay rent

The Amherst Marketing Company, a data and research-focused financial services firm, released a report estimating that nationwide, between $7 and $12 billion per month in rental payment assistance will be needed to assist hourly workers who’ve been laid off or had their hours cut. The Amherst report points out that there are around 42.8 million renter households in the U.S., and the median income of these households is just over $40,000 – slightly more than half of the median income for owner-occupied homes. Over 46% of renter households in 2018 were paying more than 30% of their income on rent, while a quarter was spending more than half their income on rent. Workers in the leisure and hospitality sector are likely to be hit the hardest by COVID-19 related business closures, but retail, manufacturing, and construction workers will also be heavily impacted. The range in the amount of funding needed reflects uncertainty around how many households will require assistance. Amherst estimates that in a “base case” scenario, 15% of renter households will be impacted, requesting $7.1 billion per month in rental payment support. In a “stress scenario,” however, 26% of renter households would be affected, requiring $12.2 billion in rental payment support. If closures continue for three months, Amherst estimates that between $20 and $35 billion in aid will be needed. The report also warns that need will be concentrated in some areas, like Las Vegas and Miami, which are mainly dependent on entertainment and tourism. Amherst Market Company – Coronavirus: Don’t Forget America’s 43.8 Million Renters

In a town hall hosted by the Portland Business Alliance last week, Multnomah County Chair Deborah Kafoury warned that outside of Portland, Multnomah County may not receive any funds from the federal CARES Act. While the county is in charge of coordinating the public health response in the region, the federal stimulus package appears to shortchange counties where there is a city with more than 500,000 residents. Multnomah County is one of 26 across the nation that could receive no federal funding for this reason. While Portland will still receive CARES Act funds, county-level public health officials will be left without federal assistance, as will smaller Multnomah County cities like Gresham, Troutdale, and Fairview. Portland is estimated to receive $100 million through the CARES Act, while the state is expecting $1.25 billion, and TriMet will get $196 million. Kafoury stated that she is working with the state’s congressional delegation to get this problem sorted out. Along with the public health response, Multnomah County is also in charge of administering other social services that are increasingly important as business closures and layoffs continue. Portland Tribune – Kafoury: Multnomah County Might Not Get Federal COVID-19 Funding 

Facing a potential $100 million loss in revenue, the City of Portland is laying off 950 workers and is considering borrowing money through revenue bonds for COVID-19 relief efforts. The revenue loss is due in large part to business closures and the nationwide drop in travel. According to city tourism officials, demand for rooms at Portland hotels has decreased by 80%. Tourism and lodging taxes are a crucial revenue stream for the city – without guests booking rooms, city hotels are not paying these taxes. Meanwhile, the Parks Department is suffering from lost revenue due to the closures of community centers, pools, and gyms. A significant number of the 950 laid-off workers were seasonal workers in the parks department, and roughly 200 had not yet started their jobs. While the city is expecting around $100 million from the federal CARES Act, it is unclear what guidelines will be in place for spending that money. City economist Josh Harwood warns that if stay-home orders persist beyond June, the city could be facing much more severe challenges. To raise money to fight the pandemic amid an economic crash, the City Council may sell $100 million in revenue bonds. The bonds would not require an immediate increase in taxes, but the city would likely need to use revenues from property taxes and fees to repay them. Oregonian – Portland Officials Cut More than 950 City Jobs, Face Potential $100 Million Budget Hit Due to Coronavirus. Portland Tribune – Portland May Borrow $100 Million to Fight COVID-19

Finally, the New York Times reports that after 31% of tenants missed rent payments in April, landlords are worried about what will happen as these conditions persist. The Times interviewed Bruce Brunner, a landlord in Minneapolis, who has heard from over 18% of his 130 tenants that they have lost their jobs or had their hours cut. He is working with these tenants to create payment plans and is using security deposits as a stopgap. He has also made an effort to inform his tenants of state and federal assistance programs. But Brunner is keenly aware that this problem will not get better any time soon. All landlords, from mom-and-pops to nonprofits to large corporations – are struggling to deal with the fallout from COVID-19 related business closures. In the last week of March and the first week of April, 10 million people nationwide filed for unemployment – in many states, even that assistance is being delayed due to the high volume of applications. On top of the massive number of tenants who are suddenly unable to afford their rent, many others are choosing to move out. College students are moving in with their parents, while some laid-off workers are choosing to live with friends or family members. In many cities across the country, the strong demand for apartments seems to be evaporating. Meanwhile, some tenants who had the money to pay April rent looked at their finances and realized that if they did so, they would be completely broke within a matter of weeks. Still, others are striking in solidarity with less privileged neighbors. The National Low Income Housing Coalition is pushing for $100 billion in subsidies for tenants, and the National Multifamily Housing Council has also been working to convince the federal government to expand aid to renters. Diane Yentel of the NLIHC worries that if renters do not receive assistance, many naturally occurring affordable housing units will be purchased by investors who may remove vulnerable tenants. N.Y. Times – 31% Can’t Pay the Rent: “It’s Only Going to Get Worse.”

Thursday, April 9, 2020

Fed Announces Additional TALF Measures – Includes CMBS

On April 9, 2020, the Federal Reserve announced additional measures to support the economy amounting to as much as $2.3 trillion in liquidity. Among their actions, the Term Asset-Backed Securities Loan Facility (TALF) will now include legacy commercial mortgage-backed securities (CMBS) as eligible collateral. Eligible CMBS securities must have been issued prior to March 23, 2020, while securities related to other asset classes are only eligible if they were issued after this date.

According to Lisa Pendergast, Executive Director of the CRE Finance Council, “The acceptance of existing CMBS securities is an important step in the recovery of our market and economy as the $4.5 trillion commercial real estate market represents some 18% of GDP, and thus will play an important role in the U.S. recovery from COVID 19. We know that TALF 1.0 had an immediate and positive impact on restoring stability to the CMBS market and that the recovery in the secondary market was imperative in order to restart CMBS lending and issuance.”

TALF Specifics for CRE
The TALF term sheet specifies the following for the commercial and multifamily real estate loan/securities markets:
  1. The underlying credit exposures for CMBS must be to real property located in the United States or one of its territories; 
  2. CMBS securities related to single-asset single-borrower (SASB) and commercial real estate collateralized loan obligations (CRE CLOs) are not eligible at this time. 
TALF provides three-year loans to investors of CMBS and other eligible collateral. Haircuts and other terms can be found on the Fed’s website

CREFC will continue to work with the Federal Reserve and Treasury to update them of the status of our markets and highlight the benefits of adding new issue CMBS, SASB CMBS, and CRE CLOs. To that point, CREFC will be sending a letter to the Federal Reserve and Treasury this morning advocating for the inclusion of CRE CLOs into TALF.

Wednesday, April 8, 2020

Multnomah County Chair Deborah Kafoury Weighs Changes to Eviction Moratorium

The Oregonian reports that Multnomah County Chair Deborah Kafoury is weighing changes to the county's eviction moratorium to bring it more in line with the state moratorium. Currently, the county's eviction moratorium requires tenants to alert their landlords on or before the first of the month if they are unable to pay rent. But the county has received feedback from community members who were unable to contact landlords or management companies prior to the first of April. The statewide order states that tenants must contact their landlords "as soon as reasonably possible." County officials are working to change the language to better reflect state guidelines. Read more.

Tuesday, April 7, 2020

National Apartment Industry Seeks Additional Support for Residents, Rental Owners and Operators

The National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) called on lawmakers today to act, requesting financial assistance to the nation's 108 million renters and the 17.5 million workers the industry supports.
Read their joint letter to Congress here. 

Oregon Sees Some Rent Growth in March, but Impacts of COVID Not Yet Reflected in the Data

RentCafé published its March rent report for Oregon. Many parts of the state are continuing to see modest year over year rent growth, but rents in the coming months are likely to see more of an impact from the COVID-19 pandemic. Year over year, Oregon City saw the strongest rent growth at 7.4%, followed by Bend (6.5%), Albany (6.2%), and Milwaukie (5.8%). In Portland, rents grew 3.2% year over year. Lake Oswego, still the most expensive city in the state for renters, saw the smallest year over year increase at 0.9%. Read more.

Federal Government Doles out $2 Trillion Stimulus for COVID-19, Multnomah County May Get $0

The Portland Tribune reports that although Multnomah County has been leading the charge against COVID-19 in the Portland area, the stimulus package may exclude it from funding. Read more.

Monday, April 6, 2020

The Multifamily Lending Environment During COVID-19 with AMF Capital Director Tim Steele

HFO has a video chat with AMF Capital Director Tim Steele for the latest on the Multifamily lending environment. 

Multi-Housing News: U.S. Renters May Need $12 Billion in Monthly Support

In a story this morning, Multi-Housing News summarizes report information from Amherst.

"Renters across the U.S. may require $7 billion to $12 billion each month in temporary assistance over the next three to six months as the coronavirus puts a deep freeze on the economy," according to a new report by data and analytics firm Amherst Capital Management.

HFO Multifamily Marketwatch Podcast - April 6, 2020

Renter and landlord anxiety abound after business closures due to COVID-19; CityLab reports that rent strikes may significantly impact the pension funds of first responders, and governor Mike Inslee of Washington clarifies rules for in-person interactions for real estate transactions.

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As the first of the month approached last week, a large number of renters across the country knew they could not afford to pay their rent. Workers in the service industry and the arts have been hit particularly hard by mass business closures, but all industries have been impacted to varying degrees. A significant number of renters are hourly workers, many of whom have seen their hours cut without the benefit of paid time off. According to the Seattle Times, some landlords expect 50% of their tenants to miss payments this month, and according to the Labor Department, 6.6 million Americans applied for unemployment assistance in the last week of March. In light of this, local newspapers, including the Seattle Times and the Portland Mercury, have published advice columns for renters who may need to work with their landlords to get through this unusual event. The Seattle Times advises those who can pay their rent in full to do so to avoid a more massive bill in the future. The Times also advises tenants to contact their landlords in writing, work together to draft a payment plan if possible, and stay in touch throughout the month to set expectations for May. Late last month, the Washington Multifamily Housing Association urged its members to waive late fees and month to month fees and to work with tenants to create payment plans. The group has also been advocating for an increase in funding for rental assistance programs, and mortgage forbearance for property owners. In Portland, city leaders are calling for financial assistance for renters and homeowners grappling with a substantial decrease in income. Mayor Wheeler and Commissioners Eudaly, Fritz, and Hardesty wrote a letter to state and federal officials demanding, quote, “forgiveness of all residential and commercial rent and mortgage payments for the duration of this emergency.” Governor Brown issued a 90-day eviction moratorium for commercial tenants, but like the residential eviction moratorium, rent will continue to accrue for businesses that are unable to pay. Seattle Times – As Rent and Mortgage Payments Come Due, Washingtonians Wonder How They’ll Afford Survival During Coronavirus; Seattle Times – How to Talk to Your Landlord about Rent if Coronavirus Closures Have Affected Your Paycheck; Oregonian – Portland Officials Call for Waiving Rent, Mortgage Payments Due to Coronavirus

The Oregon State Legislature had planned to convene a special session the week of March 31st to address the impacts of the COVID-19 pandemic, but on Monday lawmakers from both parties agreed to hold off. Senate President Peter Courtney argued that it was the Governor’s job to call a special session. Governor Brown has indicated she is waiting to learn more about the impacts of the recently passed federal stimulus package. Courtney believes Brown may also be waiting for the May 20th state tax revenue forecast to be published. Governor Brown expects the state to receive around $1.2 billion in federal aid from the $2 trillion stimulus bill. Oregon House Republican Leader Christine Drazan believes that the federal funds may be enough to cover the needs of Oregonians in the near term, allowing the legislature time to assess whether additional spending will be necessary. Senate Republican Leader Herman Beartschiger believes Governor Brown has been able to address the emergency adequately with executive orders, eliminating the need for the legislature to act quickly. The choice to delay the session may also be related to the age of the state lawmakers – many are older or in high risk categories, and Brown has not indicated she plans to use a disaster declaration to allow legislators to vote remotely. Oregonian – Senate President: Oregon Legislature Won’t Hold Special Session on Coronavirus This Week

In response to questions generated by his lengthy stay at home order, Governor Inslee of Washington has issued guidance for the real estate industry clarifying rules for face to face interaction. The Governor issued a one-page memorandum on March 27th allowing real estate and mortgage activity to continue but prohibits in-person meetings with a handful of exceptions. While the memorandum states that, quote, “most transactions are for residential properties,” the rules appear to apply to commercial transactions as well. Under the new guidance, in-person meetings are only allowed when necessary for a client to view a property or sign documents; real estate open houses are prohibited; on-site activities like viewings, appraisals, and final walk-throughs must be organized by appointment, and no more than two people may be on-site at a time, with social distancing maintained throughout the appointment; all other aspects of the transaction must be performed remotely. The offices of real estate agents, appraisers, escrow officers, property inspectors, and other related professionals may remain open but social distancing measures must be taken, and work should be done remotely when possible. State of Washington – Memorandum: Real Estate and Mortgage Guidance
The City of Portland announced new details for its cash assistance programs for businesses and low-income families. The city voted to establish a $2 million grant and loan program for small businesses impacted by COVID-19 two weeks ago, and last week opened up the application system for these businesses. An estimated 200 businesses could receive grants between $2,000 and $10,000, amounting to a total of $1 million. An additional $1 million in no-interest loans will be awarded, though an application period has not yet been set for these loans. The city also plans to give 2,000 low income households up to $500 in cash assistance. These cash payments are intended to be a stop gap for families who are awaiting money from the federal stimulus package. The Portland Housing Bureau will be administering the assistance program for families, and she urges interested residents to call 2-1-1 for more information. Housing Bureau Director Shannon Callahan expects the cash assistance to go toward urgent household needs including rent, food, and medication.  Oregonian – Portland Announces Coronavirus Aid Programs for Small Businesses, Low-Income Families 

In the run up to April 1st, when the first rent payments were due since the pandemic-related closures and layoffs began, tenant and low income housing advocates were calling on the HUD to make tenant income adjustments to ensure voucher recipients could still make on-time rent payments. Under the recently passed stimulus bill known as the CARES Act, HUD programs were awarded $12 billion, including $1.25 billion for the Housing Choice Voucher Program, $1 billion for project-based rental assistance, and $685 million for public housing agencies. But tenants relying on income-based programs may not be helped by this additional funding unless the HUD lowers the amount they are expected to pay out of pocket for rent each month. The National Alliance of HUD Tenants, National Housing Law Project, and National Low Income Housing Coalition are asking the HUD to recalibrate what tenants are required to pay in light of mass layoffs. These groups are also advocating for the HUD to set the minimum rent tenants could be expected to pay to $0. While the groups still believe tenants should be required to document increased needs, due to the urgency of the situation they are asking that the HUD recalibrate rents first and seek for documentation later. The HUD did not act in time to meet the April 1st deadline, and it is not clear whether the department plans to recalibrate before rents are due in May. Shelterforce – HUD Urged to Make Tenant Income Adjustments Automatic by April 1

At a Mayoral debate on March 31st, challengers to Mayor Ted Wheeler argued that city officials should be doing more to help residents in the midst of a global pandemic. The debate was held virtually and hosted by the City Club of Portland. Candidate Ozzie Gonzalez argued that the city is not doing enough to reach residents whose primary language is not English. Meanwhile, Teressa Raiford believes that giving $500 to 2,000 low income families across the city is just a drop in the bucket compared to what is needed. She advocates for the city to give $1,000 to all residents making under $75,000 per year. She also cautions that the eviction moratorium will not help renters in the long term, especially when the back rent comes due in six months. To this end, Sarah Iannarone proposed a rent amnesty program that would keep back rents from piling up during the emergency. Wheeler acknowledged that the city may not be doing enough to help every Portlander, but he is proud of recently passed programs for small businesses and believes that the aid from the federal government will help the city do more in the future. But while Wheeler argues that the city should stay the course and continue building on work that has already been done, his challengers believe that larger scale change is needed.  Oregonian – Portland Community Needs More Support amid Coronavirus Outbreak, Mayoral Challengers Say

As construction work continues in Oregon despite a statewide stay at home order, the Oregon Occupational Safety & Health Agency has received a staggering number of safety complaints from workers alleging that social distancing practices are not being followed. The week of March 23rd, OSHA received 1,152 COVID-19 related complaints. In the first three weeks of March OSHA received just 67 complaints, and in a typical year the agency generally sees around 2,000 complaints. Many of those received at the end of March were from workers in the construction industry. While the industry was not shut down by the Governor’s order, construction companies are required to follow social distancing rules. But workers in the industry argue that there are a number of tasks on job sites that require closer contact. These activities range from lifting heavy objects to reading blueprints. One complaint pointed out that when workers eat lunch, they are frequently crowded into shacks. A supervisor on an apartment project said that there is only one hand washing station on the site, and the hand sanitizer in the portable toilets was not replaced when they were last serviced. The supervisor raised his concerns with a senior manager, who verbally acknowledged that social distancing was all but impossible on construction sites. Ben Basom, spokesman for the Pacific Northwest Regional Council of Carpenters, argues that much of the work being done currently is not essential, especially the work being done on offices where all of the employees are currently operating remotely. Willamette Week – Oregon’s Construction Industry Is Chugging Along Like It’s Still 2019. Some Workers Say That’s Dangerous

Finally, CityLab published an article by reporter Kriston Capps arguing that while rent strikes and debt jubilees may sound like a good idea during a global pandemic, they may do more harm than good in the long term. Capps points out that it is not just fringe or anti-capitalist groups calling for rent strikes as millions of Americans find themselves out of work – larger organizations like ParentsTogether have joined the call for Congress to suspend rent, utility, and mortgage payments until the crisis subsides. While some groups believe landlords should see the loss of rent as the flip side of their investment gamble, others like ParentsTogether believe if the federal government forgives mortgages as well as rent it could be a win-win for everyone. But Carol Galante of the Terner Center for Housing Innovation at UC Berkeley points out that this is an oversimplification of the problem. Commercial mortgages are frequently securitized and packaged into bonds, which are sold to investors like pension funds for teachers, first responders, and other public servants. Capps also points out that a debt jubilee may not be legal – banks and investors would likely argue that it amounts to an unconstitutional “taking” of private property under the 5th Amendment. Capps argues that in light of this, the best option for the federal government would be to put money directly in the hands of renters to ensure that rent continues to be paid. Kathleen Engel of Suffolk University acknowledges that giving money to renters that will ultimately go straight to landlords and investors may not be the most appealing option, but the solution to this systemic problem is more and better federally subsidized housing, which would require larger-scale and longer-term changes than could be accomplished in time to help vulnerable renters. CityLab – The Problem with a Coronavirus Rent Strike