The Looming Debt Trap Facing Renters

Growing Homes Together writes that while eviction moratoriums may seem like attractive policy tools to help renters facing prolonged unemployment or reduced income, they will ultimately cause more harm than good. The CARES act helped by providing funds to help keep the rent paid. 

"The most effective way to avert a housing crisis is to keep renters current. To do so will require bipartisan agreement on a stimulus package that includes meaningful rental assistance."

Unfortunately, that time has passed for now -- at least until after the election. Read the post.

Learn more about Growing Homes Together.

Sold! 25 Units in SE Portland

HFO is pleased to announce the sale of Crystal Shores, 25 Units in Portland. Crystal Shores was sold during COVID-19 as HFO was able to finalize the transaction with minimal invasive interaction with tenants. 

U.S. Census: Portland, Seattle Among Cities With Lowest Rental Vacancies

 

Both Seattle and Portland continue to rank among the cities with the lowest rental vacancies. 

Of the top 75 metro areas, Portland ranked #13 with a vacancy rate of 3.7% for Q3 2020, down 1% from one year ago. 

Seattle ranked #15 among the top 75 metro areas, with a 4.2% vacancy rate, down less than one-half percent from Q3 2019.

U.S. Rental Vacancies Tighten

The average national rental vacancy rate for Q3 2020 was 6.4 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.

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Year-over-year vacancy rates in the Western U.S. increased from 4.8% in Q3 2019 to 5.1% in 2020.

U.S. Homeownership Rate Falls

After falling to a 26-year low in 2016, the homeownership rate has rebounded and stands at 67.4%. Homeownership in the West has increased by 1.5% in the past year to 62.1%.

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NAA: Pandemic Policies Creating Conditions for Spread of Rent Regulation

 

The National Apartment Association (NAA) reports multiple factors of concern regarding eviction moratoriums implemented due to COVID-19. It says renters who accumulate large amounts of debt will likely never be able to fully repay. Renter rights advocates are promoting rent regulations to prevent renters from eviction when their rent eventually comes due. 

The NAA expects legislatures to propose rent regulation on an emergency basis, opening the door to more permanent legislative changes including rent freezes and cancellation policies during COVID-19. Read more. 

HFO Multifamily Marketwatch - October 26, 2020

This week: Portland has seen mixed job news with tech and industrial sectors faring better than other industries; Rose city voters still place homelessness at the top of their list of concerns; experts call for electrifying all new building systems to help combat climate change.

Listen to our latest podcast.

Oregon has yet to Distribute Millions in Rental Aid or Forfeit the Money to the Federal Government

The Oregonian/Oregonlive reports that in early Jun the Oregon Legislature's Emergency Board allocated $60 million in federal COVID-19 relief funds for rental assistance. Four months later the majority of that money has yet to reach renters. It must either all be distributed by December 31st or forfeited to Uncle Sam. Read more (subscription required).

HFO Multifamily Marketwatch - October 19, 2020

This week: Washington’s governor extends the state residential eviction moratorium to the end of 2020; the Urban Land Institute reports that trends for 2021 indicate a strong interest in industrial, single-family, and multifamily housing; CityLab reports the shift out of cities during the pandemic may be only temporary.

Listen to our latest podcast.

Olympia Passes Emergency Renter Protections

On October 13, the City of Olympia passed its own additional renter protections. As reported in The Olympian, the council approved an emergency ordinance that bans late fees and sets terms for landlords to offer "reasonable" repayment plans for back rent owed through July 2021. Read more. 

Washington Governor Inslee Extends State Eviction Ban Through December 31, 2020

Washington State Governor Jay Inslee has extended the eviction ban through the end of 2020. He has also made modifications to the prior moratorium. 

The Washington Multi-Family Housing Association summarized the modifications as follows: 

• Explicitly excludes holdover tenants who are not documented on the lease and hold over after a tenant permanently vacates the dwelling, unless the landlord has accepted partial or full payment of rent, including labor, are not protected by the Moratorium. 
  
  
• Requires that an affidavit must be attached to the termination or compliance notice permitted under the moratorium and used to enforce the health and safety issues.  
• Health and safety is clarified to include “any behavior by a resident which is imminently hazardous to the physical safety of other persons on the premises (RCW 59.18.130(8)(a)).”
• Requires an affidavit under penalty of perjury with any notice of sale or notice of occupancy termination.
  
  
• Explicitly permits communication between the landlord and tenant for “customary and routine communications,” including:  
• Communications that reasonably notify the tenant of upcoming rent that is due, 
• Provide notice of community events, news or updates, 
• Document a lease violation without threatening eviction, or
• Otherwise consistent with the order. 
  
  
• Permits advance notice of a rent increase that is already specified by the terms of the rental agreement (i.e. automatic annual increase in the rental amount and previously (pre-February 29, 2020) included in the rental agreement), but the rent increase does not take effect until the order expires, or any extension of this order expires. Any notice regarding this provision cannot include any threatening or coercive language including threats of eviction.

Read the full proclamation here.

A Roundup of Eviction Ban Regulations in Oregon, Multnomah County

 

Multifamily NW has created a roundup of temporary eviction bans in a handy chart that indicates where state and Multnomah county laws overlap or have differing requirements. Read more. 

Surprise! Seattle, Portland, Among Top Destinations for Millennial Renters

Another report, this one by Rent Cafe, ranked the top 15 cities that Millennials show they want to live in over the past five years, based on over 38 million rental applications.

Read more.

CDC Answers Rental Owner Questions About its Eviction Moratorium

 

The CDC has issued responses to some frequently asked questions by rental owners, which were requested by the National Apartment Association. 

Among other items, the clarification indicates the burden is on the lease holders to complete and sign a declaration and provide a copy to their housing provider.

Read more. 
Read the HHS/CDC responses in full.

Landlords being Squeezed Between Tenants and Lenders

With federal assistance ended, landlords are likely to exhaust savings and fall into debt themselves. 

This article, from the Associated Press provides context: 

Shad Elia, who owns 24 single-family apartment units in the Boston area. He says government stimulus benefits allowed his hard-hit tenants to continue to pay the rent. But now that the aid has expired, with Congress unlikely to pass a new package before Election Day, they are falling behind

"We still have a mortgage. We still have expenses on these properties," he said. "But there comes a point where we will exhaust whatever reserves we have. At some point, we will fall behind on our payments. They can't expect landlords to provide subsidized housing."

Read the full article.

HFO Multifamily Marketwatch - October 12, 2020

Rents drop in 41 of the nation’s 100 biggest cities; Portland’s Residential Infill Plan is praised by an affordable housing expert, and the national council of state housing agencies predicts $34 billion will be owed in back rent by January 2021.

Listen to our latest podcast.

An Update on the Vancouver, Washington, Clark County Economy

HFO Partner Greg Frick discusses the SW Washington economy in this exclusive interview with Washington State Regional Economist Scott Bailey.

HFO-TV: Our Exclusive Housing Issues Interview with Mingus Mapps - Portland City Council Candidate

HFO Partner Greg Frick and Portland City Council Candidate Mingus Mapps engage in a thorough discussion about Portland's housing issues, along with other important current issues.

Rents Drop in Nearly Half of Top 100 Markets

Apartmentlist.com reports that rents have dropped in a number of U.S. Cities, including Portland. Read more.  HFO research anticipates more granular information on the state of the Portland metro area marketplace with the release of the October 2020 Apartment Report from Multifamily NW, and a fall 2020 report from the University of Washington Rundstadt Center for Real Estate. 

HFO Multifamily Marketwatch - October 5, 2020

This week: Oregon’s Governor extends residential eviction moratorium to the end of 2020; The Portland City Council dissolves the unreinforced masonry workgroup; Rent café reports that more old buildings than ever are being turned into apartments.

Listen to our latest podcast.

National Council of State Housing Agencies Estimates Renters Nationwide Will Owe $34 Billion in Back Rent by January 2021

 The National Council of State Housing Agencies released a report last week that estimates that by January renters nationwide could owe up to $34 billion in back rent due to the pandemic. An estimated 8.4 million households could face eviction proceedings at the beginning of the year if Congress fails to provide additional relief to renters. 71% of those households make less than $50,000 per year. An additional report released by the Pew Research Center finds that a quarter of adults are struggling to pay their bills, a third have had to dip into their savings or retirement accounts, and one sixth have borrowed money from friends or family to get by. Roughly a third of low-income adults told Pew researchers that they have struggled to cover their rent or mortgage payments since the beginning of the pandemic. Read more.

New City Program Offers Northwest Portland Building Owners Bike Parking Subsidies

 A new program launched by the Portland Bureau of Transportation (PBOT) will provide up to $5,000 for bike parking equipment to owners of residential, commercial, or mixed-use building in the Zone M parking district. Interested building owners can fill out a form and conduct an on-site meeting with PBOT staff. PBOT will provide up to $5,000 toward the purchase of the equipment. Once the building owner has installed it, they retain ownership. Read more.

Portland City Council Quietly Dissolves Unreinforced Masonry Work Group

 

by Aaron Kirk Douglas
HFO Marketing Director

After a long history of stops, starts, and missteps, the City of Portland dropped its attempts to mandate seismic retrofits of Unreinforced Masonry (URM) buildings at a City Council meeting Wednesday.  

Even before 2015, the City Council had assembled a task force that sought to force owners of unreinforced masonry buildings to retrofit during the middle of a Council-declared housing emergency.

2018
The mandate forced URM owners into a quandary. They had to decide whether to tear down and/or rebuild when the City was offering no financial support or incentives for making the retrofits. While the proposed timeline was relatively long (about 15 years) for retrofits, the mandate nearly ended many banks' willingness to finance lending on URM properties in Portland. 

In June of 2018, rather than adopting the seismic retrofit mandates, the City Council decided to study the issue for another year. Then, in September of 2018, they ordered URM owners to post signage by March 1st notifying people entering URM buildings that it would be unsafe in an earthquake. Warnings of a URM owner lawsuit in November of 2018 and a protest by the NAACP in January of 2019 did nothing to persuade the council against moving forward with its placard requirement. 

Instead, the city announced enormous fines for failure to post the signage. 

2019
In February of 2019, in response to the filing of the previously threatened lawsuit against the City of Portland, Federal Court Judge John V. Acosta issued a 60-day injunction on the URM signage requirement. Soon after the injunction, the City of Portland mailed letters to URM owners ordering compliance with the placard order. 

Shortly after, in April 2019, Judge Acosta ruled the City of Portland had violated the restraining order and required it to send a letter of retraction to the owners. A hearing began May 14 on the lawsuit for a preliminary injunction. 

On May 21, 2019, following the City Attorney's closing argument at trial, the Judge was unimpressed with the City's reasoning for the placards. On May 30, 2019, he issued a preliminary injunction against the City. Subsequently, Judge Acosta ordered the City of Portland to pay attorney's fees--ultimately amounting to $350,000--and mandated that the placard ordinance be repealed and ordering that Mayor Ted Wheeler and Commissioner Jo Anne Hardesty appear in Federal Court if the City Council failed to repeal the law by October. 

The City's "Official List"
Throughout the process, a complicating factor was the city's compilation method of its official list of URM buildings. 

During the two-day trial in 2019, URM building owners learned in testimony exactly how buildings ended up on the City's "official" list:

• From 1990 to 1993, the City of Portland had three Portland State University students conduct the survey throughout three summers. 
• The students were not the same each summer and conducted their official survey on foot. 
• The areas only included downtown, and the exact perimeter is unknown
• The city did not survey buildings on the east side, Multnomah Village, St. Johns, or other areas
• The students eyeballed a building and checked a box. 
• Students did not realize that the list would be used 27 years later as the City of Portland's official URM list, nor did they know that by accidentally checking the wrong box, they could impact real people. 
• They had no significant training for the job, and there was no field manual. 
• Their work was "spot-checked" by an actual engineer.
• The project had no budget.

Challenging a building's placement on the list by the PSU students' untrained eyes came with a high price. In February of 2019, McMenamins legally challenged the fact that its Crystal Ballroom was on the URM list because it had already completed seismic upgrades. McMenamins eventually won, but not without spending thousands of dollars on attorney's fees. 

2020
In May 2020, the City of Portland removed its list of URM buildings from the Internet. 

In October, the City officially disbanded the URM Task Force. Now Portland's URM owners are contemplating whether to file suit over the existence of the list itself. They rightly fear that it could be trotted out once again as an "expert and definitive list," which could lead to yet another court battle and the dissipation of even more public tax dollars as reimbursement for plaintiffs' attorney fees.