HFO's Senior Research Analyst Jennifer Shuch Wins CRE Next Generation Award

HFO's Senior Research Analyst and Multifamily Marketwatch Podcast host Jennifer Shuch has received Connect Commercial Real Estate's 2020 Next Generation Award for the Seattle/Northwest region.

Shuch was one of five recipients in the Pacific Northwest recognized for her talent, drive, and fresh ideas. Connect Media received nearly 500 nominations from readers representing all sectors of the commercial real estate industry.

For Third Month in a Row, Seattle Rents Decline

According to a report in the Rental Housing Journal, rents in Seattle declined for a third straight month in July, dipping 0.9 percent year-over-year. Read more. 

As Pandemic Continues, Landlords and Renters Face Difficulty

Avail, a  Chicago-based company offering landlords tools for do-it-yourself management, released the results of its August 2020 rental and income survey, which revealed both landlords and tenants are concerned about making rent and mortgage payments. Read more. 

HFO Multifamily Marketwatch - Corporate Activity Tax

This week: A special report on the impact of Oregon's new Corporate Activity Tax on owners of multifamily investments in Oregon. Perkins & Co, CPA Trent Baeckl explains new details along with other important accounting news of interest to multifamily owners.

Listen to our latest podcast.

Did Oregon Rent Collections Increase in August?

Multifamily NW Released its August 2020 statewide rental survey this week. The months of May-July included responses from owners and managers of 90,000-100,000 units. August numbers reflect responses for far fewer rentals, totaling approximately 60,000 units. It's unclear whether that or some other reason accounts for data indicating that the percentage of occupied households unable to pay rent on time decreased from 13.2% to 11.1% between July and August. Watch this space for next month's survey. Download a PDF of the survey results by clicking here.  Click on the image below to enlarge.

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Report: Apartment Construction Falls 12% - a 5-Year National Low

New apartment construction across the U.S. is starting to mirror the downward trend following the 2008 crisis, according to a new report from Rent Cafe.

Will Future Affordable Housing All be Government Owned? Where Seattle is Headed on Affordable Housing

Seattle for Growth director Roger Valdez discusses the groups' focus on encouraging more housing and population growth in cities and diversifying housing types.

A Summer 2020 Multifamily Lending Update with AMF Capital

AMF Capital's Steve Wiltshire provides a summer, 2020 multifamily lending update for the Pacific Northwest region.

U.S. Census: Portland Metro Vacancy Rates Fall to 3.2% Q2 2020

Greater Seattle maintained its position as the 7th lowest rental vacancy rate among the top 75 U.S. metro areas with a vacancy rate of 2.1%, down from 3.9% one year earlier.

Portland also remained in the top third with a vacancy rate estimated at 3.5%, a drop from 5.2% in the first quarter and down from 4.1% a year earlier.

U.S. Rental Vacancies Tighten
The average national rental vacancy rate for Q2 2020 was 5.7 percent for multifamily dwellings of five or more units -- down from 6.8% a year earlier, despite continuous delivery of multifamily units throughout the national market.

Year-over-year vacancy rates in the Western U.S. decreased from 4.8% in Q2 2019 to 4.1% 3.8% in 2020.

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U.S. Homeownership Rate Falls
After falling to a 26-year low in 2016, the homeownership rate has rebounded and stands at 67.9%, driven largely by dropping interest rates on home mortgages. Homeownership in the West has increased by 3.3% in the past year to 62.6%.

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One Oregon Landlord Owed More than $1 Million in Back Rent

One Oregon landlord, unable to evict tenants who are not paying rents, told news outlet KATU-TV that he owns 61 apartment buildings, mostly in East Portland and that more than 20% of his renters have not paid rent since March. Some of his tenants have past due rents approaching $10,000 and in total, he is owed close to $1 million. "It's been almost six months since March," he said, "and we can't continue forever. Sooner or later we are going to collapse." Read more.  

Seattle Eviction Moratorium Extended to December 31, 2020

Seattle Mayor Jenny Durkan has extended the city's eviction moratorium on apartment renters, nonprofits and small businesses through December 31, according to the Seattle Post Intelligencer. Read more.  A video report is available on Seattle's King-5 News.

Residential Infill Project Adopted by Portland City Council with 3-to-1 Vote

 

The Portland City Council voted this morning to adopt the Residential Infill Project (RIP) after five years of planning, debate, and amendments. Amanda Fritz was the lone "no" vote against the project, citing concerns about infrastructure and displacement. Commissioners Hardesty and Eudaly, along with Mayor Wheeler, discussed the racial history of exclusionary zoning and the need to open up neighborhoods to a wider variety of residents. As adopted, the RIP will allow up to four units to be built on nearly every single family lot in Portland. Up to 6 units can be built on these lots if half are reserved for those making 60% MFI. A video of the Commissioners' statements and vote on the plan is available, and you can read more about the plan here.

National Missed Housing Payments Reach 33% in Early August

In the highest non-payment for housing since April, The Rental Housing Journal reports that data from Apartment List indicates a full one-third of renters missed payments and failed to make full payments on time. According to the report, late and unpaid housing bills are accumulating, putting a strain on families. Over 20% of renters and homeowners owe more than $1,000. Read more. 

As reported here on July 20th renters in roughly 100,000 apartment units surveyed in Oregon had been holding fairly steady in rent payments through July, with between 13-15% of householders behind on rent. Watch this space for August survey numbers from Multifamily NW when they are available next week.

Regional Agencies Dedicating $29 Million in Rental Assistance to COVID-Impacted Households

According to a press release from the City of Portland dated August 6th, the Portland Housing Bureau, the Joint Office of Homeless Services, the Multnomah County Department of County Human Services, and Home Forward will be distributing $29 million in renter assistance to COVID-impacted households over the next several months. $25 million of this assistance will come from the federal CARES Act. The agencies hope this will help at-risk renter households when the eviction moratorium expires after September 30th. $11.3 million will be distributed through community partners as part of the Short-Term Rent Assistance network; $5.5 million will be distributed via 211info; $4.5 million will go to affordable housing providers who partner with PHB; and $1 million will be distributed through Worksystems. BIPOC households will be prioritized. Read more.

Rentcafe: Almost 25% of Renters Now Think They Will Never Be Homeowners

Is owning a home and all the maintenance and upkeep required still the American dream? A recent survey by Rentcafe has found that nearly one-quarter of Americans aren't so sure. Millennials appear to be the generation most likely to want to buy. Read more. 

Did You Know? The City of Portland Implemented Revised Administrative Rules for Tenant Screening and Security Deposits on July 29th.

The City of Portland's new screening and security deposit regulations took effect just five months ago on March 1, 2020.

Rental owners face a slew of proposed permanent changes that have taken effect already on an interim basis. It was July 29th when the Portland Housing Bureau released its interim rules--which became effective the same day.

The proposed permanent rules for applications and screenings, as well as security deposits, are available online. However, if you just want to read the interim rules, which are the same as the proposed permanent rules without the redlining to indicate the difference, you can find current rules for application and screenings here, and security deposits here.

Multifamily NW has posted a summary of these changes on its website which is reposted here.

Training: Multifamily NW will have webinar training on August 11th, 18th, and 20th (scroll to the bottom of this post for links to training information). 

Testimony on these changes is being accepted by the city through September 30th and information on how to submit that is included at the bottom of this post.

Fair Access in Renting (FAIR) Ordinance: New Interim Administrative Rules

On July 29, 2020, the City of Portland released new interim Administrative Rules, effective immediately upon release. The purpose of the interim Administrative Rules is to provide additional guidance and clarity as to the intent of the code and rule language. The guidance below impacts how Landlords manage applications and screening and security deposits under the FAIR Ordinance and are to be read in addition to the linked FAIR Ordinance Code Changes enacted by City Council on July 22, 2020. The Forms Committee has already directed the necessary changes to the Multifamily NW Forms Collection.

Applications and Screening

Clarification was provided in the following areas:

Advertising

• Notice Requirements. When advertising, Landlords are required to make disclosures about accessible dwelling units, the date applications will be accepted, screening criteria, and, in cases of advertising for multiple units, additional information about such things as number of units available, size of units and pricing. This rule was further expanded to state that all published advertising must have the above disclosures, including but not limited to: outdoor signage such as sandwich boards or banners, flyers, printed materials, audio recordings, video media, or online platforms. This information can be provided directly or by providing an address, website address, internet link, or other method of communicating to prospective Tenants.
• Publishing Notices. If a Landlord publishes multiple notices at different times or though different methods for the same availability of the same dwelling unit, the open application period (when Landlord may begin “accepting” applications) must be at least 72 hours after the initial notice.

Changes in Availability of Unit
During the application process, in the event, a unit is no longer available due to a vacancy being filled, or because a Landlord no longer wishes to rent the unit, the following apply:

• Landlords may refuse to process applications because a unit is no longer available. When this occurs, Landlords are not required to provide written communication to Applicants accepting, conditionally accepting or denying the Applicant, perform an individual assessment, or grant an appeal to the Applicant.
• If the unit is no longer available, but an Applicant has been screened, or their application has otherwise been processed, Landlords must provide written communication of a denial but not perform an individual assessment or grant an appeal to Applicant.

Optional changes to Application Language
Landlords may, at their discretion, include the following items in applications. Inquiries as to whether an Applicant is a current resident or has been a resident of Landlord in the last 365 days (applicable to owners of multiple properties in the City of Portland). Landlords may refuse to process the application of an Applicant who has “repeated and verifiable” violations of the rental agreement within 365 days of the application submission date.

“Repeated and verifiable” means:

• At least 3 violations have occurred within 1 year, and the most recent violation occurred within 365 days before the Applicant’s submission date;
• The Tenant received notice of each of the 3 violations in writing at the time each violation occurred. None of the 3 violations was dismissed, cured or resulted in a general judgment for the Applicant before the Applicant submitted the application; and
• The Landlord provides the Applicant with copies of the notices referenced above.

The Ordinance has been amended to remove the word “dismissed” underlined above (as violations can’t be “dismissed”) and explaining that the word “cure” underlined above is defined in ORS 90.392. Specifically, for-cause notices for a material violation of the rental agreement giving 30 days to vacate (but 14 days to cure the violations) cannot be used as the basis to deny applications if the for-cause notice was “cured” per the notice.


Disability-Related, Reasonable Modification Requests

• If an Applicant requests a reasonable modification of the property that is denied by a Landlord, the Applicant must first be provided two successive 24 hour periods to request alternative modifications before the denial is finalized. If no reasonable modification can be made, the Applicant, if otherwise eligible, can accept the dwelling unit without the modification.
• The Interim Rule clarifies that the 24 hour period begins to run for each of the two successive periods when a Landlord sends a notice to the Applicant denying the request for modification.

Approval of Applications Reviewed on Appeal
Applicants have 30 days to appeal denied applications during which time they may correct, refute, or explain negative information forming the basis for the denial. The interim rule addresses how to handle Applicants with appeals that have been granted, but that the unit applied for is no longer available.

• Applicants must be prequalified for any rental opportunities at Landlord’s properties at the same or lower rental rate for three months following the approval date.
• Applicants cannot be subject to additional screening, and Landlords must waive all screening fees for three months following the approved appeal. Applicants under these circumstances may be required to certify in writing that no conditions have materially changed from those described in the Landlord’s approved application.
• If a Landlord has prequalified Applicants through the appeal process, the Landlord must notify those Applicants of any available units for which they are prequalified before offering the units to the general public.
• The Landlord must issue the notification to the prequalified Applicant by email, phone, or certified mail, as provided on the application or subsequently updated by the Applicant.
• Prequalified Applicants must be given at least 48 hours after delivery of the notification by email or phone, or receipt of the notice by mail to respond and declare intent to enter into a rental agreement before a Landlord can offer the unit to the general public. Notifications must include the date and time the Landlord must receive the response and declaration of intent from Applicants. If there are multiple Prequalified Applicants, the offers must be made in order of appeal submission dates. Landlords are not required to rent to Prequalified Applicants responding after the deadline.
• Once notices of dwelling unit availability are published, Prequalified Applicants must submit an application and are subject to the general application process as outlined in the Ordinance, but will not be subject to screening fees or additional screening.

Security Deposits - Clarification was Provided in the Following Areas

Definition of “Termination Date”

• Within one week following the termination date, the Landlord must do a walk-through “Final Inspection” of the dwelling unit at the Tenant’s option, to document wear and tear. The Tenant does not need to be present but must be given at least 24 hours’ advance written notice of the Final Inspection.
• “Termination Date” has now been defined as the date the tenancy terminates, and the Landlord takes possession of the unit.

Condition Reports

• Landlords must provide Tenants with the Condition Report on the first day that the Tenants may take possession of the unit (first day of the lease). Tenants have 7 days to complete the form noting any damage.
• Unless Landlord disputes what is noted on the Condition Report and the Tenant and the Landlord jointly obtain third party validation of the condition of the dwelling unit, the Tenant’s description on the Condition Report is the baseline to be used for any future deductions from the security deposit. “Third-party” must be neutral, not a friend or family member of Landlord or Tenant.

Tenants are now required to participate in the validation process in good faith, but the Interim Rules do not specify any consequences for the Tenant for failure to do so.

Upcoming Training through Multifamily NW

Webinar training with Leah Sykes, Partner at the law firm of GreenspoonMarder LLP

Cost
Members: $45.00
Non-Member $60.00

Dates, Times, and Registration Links

Tuesday, August 11th, 10-11 am 
Fair ordinance Update webinar
https://www.multifamilynw.org/events/fair-august-update

Tuesday, August 18th, 10-11:30 am
Application and Screening Rules webinar
https://www.multifamilynw.org/events/fair-august-update

Thursday, August 20th, 10-11:30 am
Security Deposit Update webinar
https://www.multifamilynw.org/events/fair-security-deposits-august

This update is not intended as legal advice. Please obtain the advice of an attorney for any policy change or decisions regarding residential and commercial landlord-tenant matters.

Testimony/Comments

Testimony may be submitted via email, fax, letter, or at the public hearing (details below). Written comments or testimony must be received by September 30, 2020, and must include a first and last name to be considered. 

Email: RentalServices@portlandoregon.gov

Fax: 503-823-2387

Mail:

PHB c/o FAIR Administrative Rule Testimony

421 SW 6th Ave, Suite 500

Portland, Oregon 97204

Testify at the online public hearing:

FAIR Rules Hearing

Tuesday, August 11, 2020

3:00 - 5:00 pm

Click here to register to attend the Zoom meeting and/or to testify live

Some Things Landlords Can Do in These Difficult Times

Oregon attorneys provide tips and advice for landlords in Oregon [many tips also apply to Washington] in this article published by the Rental Housing Journal.

The article analyzes the power of tenant groups, the value of getting out in front with your mortgage lenders, setting up payment plans now, and other ways to help yourself in the event no financial assistance or laws protecting property owners are forthcoming.

Multifamily Outlook: More Pain on the Way

With the pandemic continuing to spread and additional federal funds to help uncertain, the second half of the year could mean pain ahead for rental housing and challenging times for apartments, Yardi Matrix says in their summer multifamily outlook.

Rents are falling as COVID-19 weighs on the multifamily rental housing industry, and “more pain” is coming, the report says. Read more.