Sold! 8 Units in Beaverton, OR

 

Congratulations to HFO broker Lee Fehrenbacher and the rest of the HFO team on the sale of eight-unit Pierson Place Apartments in Beaverton, OR. 

Harvard Joint Center for Housing Studies: Multifamily Starts Hit 30-year High of 470,000 Units in 2021

The Harvard Joint Center for Housing Studies has released its annual report, The State of the Nation’s Housing 2022, available for download here. The report details and examines nationwide housing trends and their causes, this year predicting that record levels of multifamily construction starts will provide some relief for tenants facing historic-high rents. However, the report authors note, surging costs for necessities like food and gas will continue to put pressure on renter households. 

• 
  470,000 Multifamily Unit Starts: Multifamily starts reached a 30-year high of 470,000 units in 2021, and the rapid pace of production continued in early 2022, with starts totaling 124,000 units in the first quarter — the highest first-quarter reading in any year since 1986. Multifamily construction has now topped 350,000 units for eight straight years, after hitting that mark only twice in the previous quarter-century. 
  
  
• +25% Multifamily Permitting: After declining by about 2% in 2020, housing activity in core counties rebounded 17% in 2021, including a 25% jump in multifamily permitting.
  
  
• 15.4 Months to Complete: Impacted by global supply chain disruption, on average, multifamily structures took 2.1 months to start and 15.4 months to complete, on pace with the previous two years but also tied with the all-time high.
  
  
• 11.6% Rent Growth: Typical asking rent for new multifamily units stood at $1,740 per month in 2021, well above the $1,080 affordable to the median renter. After a brief dip in 2020, rent growth in the professionally managed segment hit a record 11.6% at the end of 2021 and remained at that pace in the first quarter of 2022. This was the largest year-over-year increase in two decades and more than three times the 3.2% average annual rise in the five years preceding the pandemic.

Download the full report at JCHS.Harvard.edu/state-nations-housing-2022.

Portland, Seattle, and Olympia Metro Rents Among the Highest in the Nation

According to the most recent available rent data from the U.S. Census Bureau's American Community Survey, the Portland-Vancouver-Hillsboro, OR-WA, Seattle-Tacoma-Bellevue, WA, and Olympia-Lacey-Tumwater, WA metro areas are among the top 50 regions with the highest rents in the nation. 

The Center Square published an analysis of the data showing the Portland metro area at 29th on the list, the Seattle metro at 14th, and the Olympia metro at 38th. 

Read more at TheCenterSquare.com.

 

Sold! 20 Units in Vancouver, WA

 

Congratulations to HFO brokers Greg Frick, Todd Tully and the rest of the HFO team on the sale of 20-unit Creekside Manor in Vancouver, WA. 

Oregon Ranked 9th-Best State Economy

WalletHub has listed Oregon ninth on its 2022 list of the best and worst state economies, falling slightly from eighth on the list in 2021. 

The company's rankings are determined by examining 28 key indicators of economic performance and strength, from GDP growth to startup activity to the share of jobs in high-tech industries. 

However, Oregon ranks behind Washington for best overall performance in the Pacific Northwest. While Oregon performed well in terms of potential innovation, coming in at seventh nationwide, the state fell to 15th in sub-rankings for economic health and 23rd for economic activity.  

Oregon's 2022 WalletHub Rankings

• 1st nationwide for exports per capita
• 11th for the percentage of jobs in high-tech industries
• 11th for change in nonfarm payrolls
• 16th for startup activity, and 
• 25th for unemployment rate

Source: WalletHub

Sold! Six Units in Portland, OR

 

Congratulations to HFO brokers Jack Stephens and Stephen Wendt and the rest of the HFO team on the sale of the six-unit property at 6839 N Fessenden Street in Portland, OR. 

NMHC: Multifamily Well-Positioned Amid Rising Interest Rates

The National Multifamily Housing Council (NMHC) reports that apartment cap rates decreased to a record low of 4.7% in the first quarter of 2022 as rent growth reaches historic levels. 

NMHC notes cap rates are likely to rise if the Fed triggers a recession by aggressively increasing rates in an attempt to control inflation.

"Investors should look to whether apartment rent growth continues to outpace inflation. Apartments’ typically shorter lease terms are uniquely positioned to re-price rents during inflationary periods to offset rising costs (including the rising cost of capital due to higher rates)."

Read more at NMHC.org 

Eight Oregon Metros Set to Eliminate Minimum Parking Requirements

Driven by efforts to address the statewide lack of housing and slow the effects of climate change, Oregon is set to adopt new permanent land-use rules in July that will do away with minimum parking requirements for homes and businesses in the eight most populous metro areas, the Oregonian reports. 

"In both Oregon and California, eliminating minimum parking mandates is seen as a way of encouraging compact, climate-friendly communities that address severe housing shortages by making it easier, safer, and more affordable to live and work without a car."

The article cites a Parking Reform Network study that found the cost of building individual parking spots starts at $20,000 for surface lots and can surpass $60,000 for underground garages. This cost is absorbed into the costs of building homes or businesses and is passed off in rent, and land is devoted to parking that could instead be used to build more desperately needed housing. 

The new rules are part of a greater effort dubbed Climate-Friendly and Equitable Communities rulemaking that was launched following an executive order by Gov. Kate Brown instructing state agencies to slow greenhouse gas emissions and address the affordable housing crisis. Under these rules, Oregon's eight most populous metros — Portland, Salem-Keizer, Albany, Corvallis, Central Lane, Bend, Middle Rogue, and Rogue Valley — to 

"change their local transportation and land use plans to do more to ensure Oregonians have more safe, comfortable ways to get around, and don’t have to drive long distances just to meet their daily needs. The rules also aim to improve equity, and help community transportation, housing, and planning."  

These changes, the Department of Land Conservation and Development explains, "ask cities to designate climate-friendly areas and to allow people to build taller buildings providing more housing."

Read the Oregonian's coverage at OregonLive.com, and download more information about Climate-Friendly and Equitable Communities rulemaking at Oregon.gov.

JPMorgan Chase 2022 Midyear Commercial Real Estate Outlook

 JPMorgan Chase Head of Commercial Real Estate Al Brooks published his mid-year outlook for multifamily real estate this month, noting that rising single-family housing prices and mortgage rates have led renters to stay in their homes longer. 

“Performance metrics remain tight, with asking and effective rents posting near-record highs in the first quarter of 2022. The new record is 8.1% effective rent growth in the third quarter of 2021 — more than three times the prior record of 2.4% set in the third quarter of 2001.” 

Brooks also notes that demand for workforce housing is likely to remain strong as demand for affordable housing trails national supply. 

"There can be upfront costs to modernize dated apartment units. However, the demand for these units may outweigh those minimal costs."

Read more at JPMorgan.com. 

Seattle | Bellevue | Everett: New Lease Rates up 23.5%

RealPage analytics reports that although inflation is casting doubt on the U.S. economy, the red-hot rental market continues unabated. "Rent growth reached another record high in May, as did renter incomes," the company said. 

With the largest rent increases in pricier class A and B apartment units, new lease rate changes (trade outs) are rising fast. Renters renewing leases in the same unit continued to see big discounts compared to new renters.  

Markets with the steepest rents for new tenants are:

1. Miami - 34.2%
2. New York - White Plains 32.6%
3. Fort Lauderdale - 30%
4. Tampa - ST Petersburg - 26.9%
5. Orlando 26.7%
6. San Diego - 25.5%
7. West Palm Beach 25.1%
8. Nashville - 23.7%
9. Seattle-Bellevue-Everett 23.5%
10. Newark-Jersey City - 23.5%

Sold! 10 Units in Salem, OR

 

Congratulations to HFO broker Adam Smith and the rest of the HFO team on the sale of the 10-unit multifamily property at 810-828 14th Street NE, Salem, OR 97301!

Washington Multifamily Marketwatch - Seattle Mayor's Veto of Council Ordinance

Seattle Mayor vetoes City Council's attempted overreach into landlord's private business information; Rents are up as the housing market cools a bit, but Washington state remains tops in rankings for best places for millennials and pretty much anyone else.

Check out this episode!

Washington Multifamily Marketwatch

Seattle Mayor vetoes City Council's attempted overreach into landlord's private business information; Rents are up as the housing market cools a bit, but Washington state remains tops in rankings for best places for millennials and pretty much anyone else.

Check out this episode!

Seattle Mayor Vetoes Proposed Regulations for Rental Owners

Seattle's Mayor Bruce Harrell vetoed a City Council plan to require landlords to provide financial information on their rental units to a research institution. The plan was estimated to cost between $2 and $5 million with no identified funding source in a year when Seattle is facing a budget shortfall.

In his veto letter to the City Council, the mayor attached a detailed letter from James Young, the Director of the University of Washington Center for Real Estate Research which stated in part, the following:

"As someone who has spent their career collecting and analyzing house price and rent data, the goal of collecting highly granular rental and vacancy data is laudable. However, my concern is that the legislation as drafted will not yield the level of quality of data the City requires. This is because the legislation lacks two key data collection elements crucial to success. These are: 

1. The program needs to be voluntary. A mandatory program presents a high risk that incomplete or inaccurate data will be provided, which would, in turn, lead to inaccurate results.
   
   
2. The entity collecting the data matters. Owners are concerned about the disclosure of commercially sensitive business information that could adversely affect their businesses. If owners do not trust the organization collecting rental and vacancy data, then they will not participate. These concerns revolve around keeping data confidential and aggregating data in ways that do not allow for the identification of business interests. If required to participate, then landlords would have the incentive to not provide accurate information with subsequent inaccurate results."

Oregon Minimum Wage Hike July 1 Alters Affordable Rents

The Oregon Housing Blog reports that as of July 1, there are upcoming rent changes allowed under Oregon's new minimum wage. 

• Rents for full-time minimum wages will increase from $26-$52 per month depending on the area within the state.
• Within the City of Portland, the highest full-time minimum wage affordable rent is $1,023 at 40% of income rent standard or $767 using the 30% of income standard.
• For urban areas the lowest affordable rent is $650.

The Oregon Housing Blog is written by Tom Cusack, former field office director for HUD in Portland. Visit Oregon Housing Blog for more. 

Census Data Shows Pandemic-Related Declines in Big City Populations

U.S. Census Bureau population estimates released late last month show eight of the 10 largest cities in the U.S. saw population declines in the first year of the pandemic. 

Despite not ranking in the top 15 in 2019, San Francisco led the way in 2021 with a loss of almost 55,000 residents, or 6.3% of its 2020 population.

Images via www.census.gov

However, experts interviewed by the Daily Journal of Commerce note the recent data fails to capture those who have returned to urban areas in the past year as cities and workplaces reopen. Brookings Institution demographer William Frey is quoted as saying he believes the population losses in most of the largest U.S. cities from 2020 to 2021 have been “short-lived and pandemic-related.” 

Read more at Census.gov and DJCOregon.com.

Sold! 7 Units in Portland, OR

Congratulations to HFO brokers Lee Fehrenbacher and Greg Frick and the rest of the HFO team on the sale of the seven-unit multifamily property at 1223 NW 24th in Portland!

HFO Named CoStar Power Broker for 16th Time in 22 Years

HFO Investment Real estate has been named one of CoStar's 2021 Power Brokers in the Portland metro area, receiving the award for the 16th time in the company's 22-year history. The company was first recognized by CoStar for being a leading local dealmaker in 2006. 

CoStar, the leading provider of commercial real estate information, analytics, and online marketplaces, awards their annual Power Broker Award to professionals and firms who closed the highest transaction volume of commercial real estate deals in their respective markets.

Congratulations to the HFO team!

Sold! 100 Units in Gresham, OR

Congratulations to HFO broker Tyler Johnson and the rest of the HFO team on the sale of 100-unit Trailmark Apartments in Gresham, Oregon!

Residential Infill Project Update - More townhomes, Six-Plexes, and Other High-Density Housing

Last week, the Portland City Council unanimously approved updates to the city’s Residential Infill Project, allowing more types of housing to be built on lots originally zoned for one home and setting new rules for building configuration and maximum size.

The original bill passed in 2019 effectively ended single-family zoning in large Oregon cities, allowing duplexes, triplexes, fourplexes, and “cottage clusters” to be built on parcels previously reserved for single-family houses in cities with more than 25,000 residents and allowing duplexes in single-family zones as in cities with at least 10,000 residents.

“It’s not adequate to our current housing shortage and displacement problems, but it’ll make these problems easier to solve both in the short and long term,” Michael Andersen, a senior researcher with the sustainability think tank Sightline Institute, tells The Oregonian. “It’s not going to make homelessness disappear in 2023, but it is going to reduce homelessness in 2050. And it’ll make all of our problems less difficult in 2022.”

Residential Infill Project Updates Effective July 1st

Developers can build:

• High-density multifamily housing — such as two, four or six-unit plexes — in a single structure
• Cottage clusters, or multiple small homes that share a common outdoor space
• Townhomes, or separate, often multi-story homes that share a structure with other units

Read more of The Oregonian's coverage at OregonLive.com.

Sold! 19 Units in Portland, OR

 

HFO is pleased to announce the sale of Church Street Commons in Portland, OR. Congratulations to HFO brokers Jack Stephens, Lee Fehrenbacher, and Greg Frick and the rest of the HFO team!

Sold! 62 Units in Beaverton, OR

 

HFO is pleased to announce the sale of The Huntley Apartments in Beaverton, OR. Congratulations to HFO brokers Rob Marton, Greg Frick, and Tyler Johnson and the rest of the HFO team!

Moody’s Analytics Chief Economist: U.S. Housing Market has Peaked

Mark Zandi, chief economist at Moody’s Analytics, told Fortune magazine last week that the U.S. housing boom has ended, and we have entered a "housing correction." 

"In terms of home sales, they're falling sharply. Housing demand is coming down fast. Home price growth [will] go flat here pretty quickly; we will see [home] price declines in a significant number of markets," Zandi says. 

This "correction" will result in flat annual home price growth over the next year, the top economist predicts. Fortune notes this would be the intentional result of mortgage rate hikes meant to decelerate inflation by ending the housing boom and slowing construction. While the article reassures readers homeowners are better off financially than in 2008 and we won't face another foreclosure crisis, it provides analysis of which markets are "overvalued" and will likely see home prices drop between 5%-10% over the next year, or 10%-20% in the event of a recession. 

Read the article and view the state-by-state map of where regional home prices are overvalued at Fortune.com.