Governor Tina Kotek Releases Details of $130 Million Budget Package to Reduce Unsheltered Homelessness in 2023

On Thursday, Governor Tina Kotek's office released details of the proposed $130 million to be allocated from the current state budget to help unhoused people and avert further homelessness.

"This spending package will aim to provide immediate relief to at least 1,200 unsheltered Oregonians, prevent nearly 9,000 households from becoming homeless, expand the state’s shelter capacity by 600 new beds, increase sanitation services, and ensure a coordinated, equitable response to the homelessness emergency," according to the release. 

Her initial proposal includes:

• $33.6 million to prevent 8,750 households from becoming homeless by funding rent assistance and other eviction prevention services.
  
  
• $23.8 million to add 600 low-barrier shelter beds statewide and hire more housing navigators to ensure unsheltered Oregonians can get connected to the shelter and services they need.
  
  
• $54.4 million to rehouse at least 1,200 unsheltered households by funding prepaid rental assistance, block leasing at least 600 vacant homes, landlord guarantees and incentives, and other re-housing services.
  
  
• $5 million to support emergency response directly to the nine sovereign tribes in the State of Oregon.
  
  
• $5 million to increase capacity for culturally responsive organizations to support equitable outcomes of the homelessness state of emergency.
  
  
• $2 million to support local communities for sanitation services.
  
  
• $1.8 million to support the emergency response being coordinated by the Office of Emergency Management and Oregon Housing and Community Services.

Read more at State of Oregon Newsroom : NewsDetail : State of Oregon

Biden Administration Moves Towards Renter Bill of Rights

From CoStar reports:

The Biden administration set in motion plans to create a national renter's bill of rights, tapping into a growing trend among states and cities around the country to address rental housing affordability.

In what it calls a "blueprint for a renters bill of rights," the administration seeks to ensure that tenants can organize, without harassment from landlords, to put more conditions on how evictions can proceed and to create leases that are clearer and fairer. 

Read more at CoStar.com

Washington Slates SB 5435 Rent Control Bill for Hearing Friday 1/27 10:30 AM

The Washington Multifamily Housing Association has issued the following alert for apartment owners in Washington. 

Although the bill was just introduced late last week, it is being fast-tracked and has a hearing tomorrow at 10:30 am. 

Owners are invited to participate in the hearing by being present in the committee room and voicing opposition to ensure legislators know that rent control is a failed policy and should not become law in Washington. 

All owners are urged to register against the legislation here. 

If attending in person:
Meet at 9:30 am in the Capitol Building near the Washington State seal under the dome which is up the staircase between the 3rd and 4th floors. 

Hearing: 10:30-11 am. Industry leaders are already lined up to testify.  

SB 5435 applies to both residential housing and manufactured home communities.

• Prohibits a landlord from increasing the rent more than the CPI-U or 3%, whichever is greater, up to a maximum of 7%. Commerce is required to calculate and publish the maximum annual rent increase percentage.
• Contains a VERY complicated "banking" process to carry forward the ability to give an increase later if not given in that year.
• Prohibits a landlord from increasing the rent in the first 12 months of a tenancy.
• "Rent increase" is defined to include any new charges added to a rental agreement that was not identified in the initial rental agreement. For example, new parking, utility, or other charges.
• Requires a landlord that increases rent above the limit to include facts supporting the exemption in the written notice of the rent increase.
• Creates a private cause of action for a tenant to recover actual damages, punitive damages equal to 3 month's rent, and reasonable attorneys' fees and costs. 
• Provides the following exemptions from the maximum annual rent increase limit:
  • Dwelling units that are less than 10 years old.
  • Tenancies for which the landlord is required to reduce the rent to 30% or less of the tenant's income because of a federal, state, or local program or subsidy.
  • If a landlord has paid for improvements to the dwelling unit that cost more than 4 months' rent and the improvements were made during the 12 months preceding the notice of the rent increase, then the landlord may increase rent for the following calendar year by up to 7%, or 4% + the maximum annual rent increase percentage for the calendar year, whichever is greater. 
  • If a landlord is experiencing significant hardship in complying with rent control for the current calendar year due to a disparity between the local costs for providing housing and the statewide costs for providing housing, the landlord may request an individual exemption from Commerce. 

Oregon Remains a Top-10 State for Green Building

The U.S. Green Building Council ranked Oregon 10th on its list of the top states for eco-friendly construction in 2022. 

In 2022, Oregon added 6,066,035 square feet of LEED-certified space, the council notes in a recent blog post. With just over 4.25 million residents, this brings the state in at 1.43 square feet of LEED-certified building space per resident.

"With an economy that was historically based on natural resources, Oregon now boasts a more diverse economy: In urban areas, it has a mix of consumer goods, high-tech manufacturing and services, and in rural areas, it is focused on the agricultural and forestry sectors. We are also seeing more data center growth in some rural areas. 

With this diversity in economy, we see more construction to support commercial growth throughout the state, with multifamily residential projects in more densely populated urban areas. This growth presents opportunities for developers and architects to add LEED-certified buildings across the state."

Read more at www.USGBC.org 

Washington Center for Real Estate Research: Statewide Rent Growth Registers at 5.1%

The recently released University of Washington Fall 2022 Apartment Market Report indicates apartment rent growth in Washington tapered off, falling nearly 1.2% in the fourth quarter after high growth rates over the previous 18 months. 

"The current statewide annual rate of rent growth is 5.1%; this means that average rent levels for the 3rd quarter 2022 were 5.1% higher than those for the 3rd quarter 2021. The annual rate as of the 2nd quarter  2022 was 9.2%, while each of the preceding three quarters (3rd quarter 2021 through 1st quarter 2022) recorded annual rates close to 11%."

Rents declined about 1.4% in the Puget Sound region and were stable in the rest of the state. Vacancy rates edged upward to between 5.2 and 5.5 percentage points. According to the report, counties demonstrating the highest rent growth were Skagit, Walla Walla, Grant, and Clark. 

Washington Fall 2022 Apartment Market Report

Download the full report for more details. 

Legislative Report: Oregon needs 544,000+ housing units by 2042

It has gone largely unreported that the Oregon state legislature received an update on the state’s housing needs just before Christmas. The report estimated a total statewide need of about 554,000 units by 2043, of which 110,000 units are due to underproduction.

Some highlights from this 51-page report:

• While nearly every state is experiencing underproduction, Oregon’s outcomes are among the worst. 
• Measured as a share of housing stock, Oregon ranks 4th in the country for housing under production just behind California, Colorado, and Utah. Washington ranks as the nation’s 5^th worst.

The document provides an introduction to the housing crisis, followed by recommendations to:

1. Plan for what’s needed
2. Build what’s needed where it’s needed
3. Commit to working together with urgency

Under these three top-tier goals are the following recommendations:

• Shifting focus to leading with production
• Streamlining urban growth boundary amendments
• Emphasizing housing production strategies
• Establishing production targets and equity indicators
• Committing sustained and coordinated investment
• Reinforcing housing choice for all
• Establishing a coordinated governance structure
• Continue state and regional policy action

More can be found on the website here: https://www.oregon.gov/lcd/UP/Pages/OHNA.aspx. 

Oregonians Spend More of Their Income on Rent Than Most U.S. Renters — but not as Much as Californians

Using data from the U.S. Bureau of Economic Analysis and the U.S. Department of Housing and Urban Development, moving experts with Forbes Home conducted a study that found Oregonians spend an average of $1,284 on rent. 

With an average monthly income of $5,133, that means renters in the state are spending more than 25% of their income on rent each month.

Oregon came in ninth on the list of the states with the highest percentage of their income spent on rent. Hawaii led the group, with 42.06% of income spent on rent on average, followed by California at 28.47%. 

Read more at KOIN.com.

Building Materials Price Growth Slowed in 2022

After rising more than 35% since the onset of the pandemic, the cost of building materials used in residential construction declined in 2022, according to the National Association of Home Builders. 

"The producer price index (PPI) for inputs to residential construction less energy (i.e., building materials) rose 8.3% in 2022 (not seasonally adjusted) according to the latest PPI report — less than one-half the increase seen in 2021."

via EyeOnHousing.org

Read more at EyeOnHousing.org.

Washington Residents: Tell Senate Housing Committee Members You Oppose SB 5197

The Washington state legislative session is off to a fast start with another bill that affects our industry.

This Friday, January 20th, the Senate Housing Committee will consider SB 5197, a bill that will change eviction notice forms and modify certain eviction processes. The Washington Multi-Family Housing Association shared the resources below to show why, although there are a few positive changes included in the bill, on the whole, it is bad for our industry, and to help Washington apartment owners and investors take action.

If you live in Washington, take a moment to sign into the legislative record and let the Senate Housing Committee members know that you oppose this legislation.

The lawmakers you vote for need to hear your voice. When you speak up, it helps them understand the true impact the legislation has on the people they serve and represent.

This bill:

• Permits virtual testimony (PRO)
• Requires a show cause hearing regardless of whether the tenant responds (CON) This is already required in many counties and increases the cost of eviction actions where the tenant refuses to participate in the process to resolve their nonpayment of rent issue.
• Permits the tenant an extended period of time reinstate the tenancy (CON) This increases attorney fees and creates uncertainty in the eviction process outside of the courtroom and very likely will lead to Writs being served inadvertently for lack of communication by local Sheriff’s departments.
• Removes requirements to limit additional provisions (CON) Under the current programs, this costs the state more money because we cannot address nonpayment of rent when it happens but have to wait six months to serve a notice. Additionally, rental assistance programs require us to provide a notice served on a tenant OR a Summons and Complaint in order to access funding. This is a reasonable restriction on rental assistance program overreach into the rental contract that addresses the issues before the court and makes all parties whole.
• Removes 3 pay or vacates / reinstatement (CON) This was an agreement made in 2019 that has never been fully implemented and creates a TPP entitlement requiring the State to pay rental assistance regardless of appropriation.
• Strikes reference to the Eviction Resolution Pilot Program (PRO)

Visit the Washington State Legislature website to sign into the legislative record with a position of “con.”

Busting the "Greedy Landlord" Myth

While there are certainly slumlords out there, the National Apartment Association (NAA) has shared an infographic that helps show how many, if not most, are simply small business owners trying to stay afloat. 

Only 9 cents of every $1 of rent are returned to owners as profit, NAA reports, noting that these owners are themselves small businesses and rely on this revenue to make ends meet, or are investors, which includes public pensions and 401(k) plans on which many Americans rely.

Of the remainder, 38 cents of every $1 pays for the mortgage on the property, 11 cents are spent on capital expenditures, 10 cents cover payroll expenses, and 15 cents go to property taxes.

"From supporting 17.5 million jobs to the dollars reinvested into apartment communities to ensure quality living for more than 40 million residents, and through paying property taxes that finance schools, emergency services and other local needs to investor returns that include public pensions and 401(k)s, a rent payment is much more important than one might otherwise realize."

Check out the full infographic with more details at Explaining the Breakdown of One Dollar of Rent | National Apartment Association (naahq.org)

Inbound Moves to Oregon Outpaced Outbound Moves in 2022

The total number of people moving to Oregon slightly outpaced those moving away in 2022, according to Allied's migration map. The company's client data shows fewer people moved nationwide in 2022 compared to 2021, and in Oregon, 52.1% inbound residents outpaced 47.9% outbound. 

The Phoenix-Mesa, AZ metro area was both the top departure point and destination for those moving to or from the Portland-Vancouver metro. Inbound movers came from Phoenix-Mesa AZ, Los Angeles-Long Beach, CA, Albuquerque, NM, Chicago, IL, and San Diego, CA. Outbound movers headed to Phoenix-Mesa, AZ, Denver, CO, Boise, ID, Houston, TX, and Los Angeles-Long Beach, CA.

Overall, Alied's top inbound cities nationally in 2022 were: 

• Tucson
• Sarasota
• Charlotte
• Austin
• Nashville

And the top outbound cities were: 

• New York City
• Anaheim
• San Diego
• Chicago
• Riverside

Allied.com/migration-map

U-Haul's client data found Texas, Florida, South Carolina, North Carolina, and Virginia to be the top-five growth states in 2022. Oregon ranked 22nd on the list. U-Haul's top cities moved to were: 

• Ocala, Fl 
• Sacramento-Roseville, CA
• Madison, WI 
• Palm Bay-Melbourne, FL
• Auburn-Opelika, AL

Read more at allied.com/migration-map and uhaul.com

In 2023, a Turbulent Market Creates Challenges & Opportunities for Multifamily Investors

Prepare for more interest rate hikes as the Fed continues trying to reduce inflation, warns Multi-Housing News in a recent article quoting numerous industry sources. The Fed funds target rate may reach up to 5.25% over the next 12 to 18 months before they reduce rates, and economists say a brief recession is likely in early 2023.

More bad news for the nation's housing crisis — "Higher interest rates and volatile capital markets are creating increasing challenges for affordable housing developers and will result in fewer units breaking ground in 2023."

But one person's loss is another's gain, as some multifamily investors are prepared to take advantage of opportunities as loans come due and property owners face other economic issues. The number of discounted (or distressed) properties on the market is expected to increase throughout 2023 and into 2024 as loans mature and interest rate caps expire.

Read more at MultiHousingNews.com.

Multifamily loans top $2 trillion for the first time

The national volume of multifamily loans outstanding increased to more than $2 trillion in Q3 2022, the first time that's ever happened, according to data and analytics firm Trepp. 

"That volume was up $170.8 billion, or 9.3% from last year. However, that increase wasn't driven solely by the government-sponsored enterprises Fannie Mae and Freddie Mac; their volume had increased by $106.1 billion.

The rest of the increase largely was the result of a 17.6% rise in the inventory of multifamily loans on the books of banks and thrifts, to $657.1 billion; the 19.2% increase in securitization vehicles' inventory, to $83.3 billion; and the 8.1% increase in the volume held by life insurance companies, to $189.3 billion."

 

Read more at Trepp.com