The Good (The Portland Rental Market)
This is an unprecedented rental market, perhaps one of the best of all time. Demand for rentals continues to outpace supply, both in Portland and outlying areas. The vast majority of our industry partners are experiencing vacancy factors of 3% or below, with rent rates continuing to escalate. With the strong job market, robust in migration, and the rate of home ownership declining; the need and demand for rental housing is exceptionally high. Low vacancies and rising rent rates are putting pressure on tenants and policy makers alike, while developers are scrambling to meet the need. The Portland area remains one of the strongest apartment markets in the country for effective rent growth and institutional investors are aggressively seeking opportunities here.
Portland’s economy continues on the upswing. Jobs are increasing at a pace that we haven’t seen since 2005; about 4 percent annually as of the summer. This ranks us as the second fastest-growing large metro area in the nation, trailing only San Jose.
Given the current construction levels for apartments versus demand from population growth, coupled with a shortage of around 5,850 units, the apartment market will likely remain a landlord’s market for at least the short term future. We do not expect vacancy rates to approach 5% for at least the next 12 to 18 months and possibly longer.
The Bad (Tenant Advocacy)
Tenant attorneys, judges and legislators are making every attempt to protect tenants from developer and landlord evictions in order to renovate buildings. Property managers are awash in new laws, rules, regulations and interpretations of new rules.
In order to balance the battles a bit, our many landlord associations have banded together like never before. InterWest management personnel have become extremely active in industry associations and government committees.
Landlord/Tenant Laws were revised in 2015 in various ways. Our landlord & tenant coalition negotiated on multiple subjects with a lot of give and take. We increased the types of fees assessed to tenants, changed requirements for renter’s insurance, clarified pass-through of various government service charges, increased discrimination penalties, took care of various housekeeping issues and detailed rental assistance from multiple governmental and charitable agencies.
In December, a Multnomah County judge ruled that the forms used by landlords for the purpose of posting and mailing notices lacked “particularity” with regard to the description of the posting location for the tenants. Apparently, just stating “the entry door to the rental office” where they pay rent every month was no longer “particular” enough. These forms and procedures have been in place for 14 years and now the tenant attorneys have something new to lick their chops over. Multifamily NW put out a rental addendum and added appropriate language to the Rental Agreement within weeks of this inexperienced judge’s ruling. We have chosen not to battle over this ridiculous ruling and just adjust and move on.
The Ugly (Housing Emergency)
Midway through this last year, a housing crises was declared. The respective city councils for both Portland and Vancouver decided to enact ordinances specific to their own city limits. Another layer of landlord/tenant rules are born and forms and procedures get changed to accommodate these proclamations.
On September 28th the City of Vancouver enacted 3 new ordinances. These extended the notice periods for the end of tenancy notices and rent increases plus extended “source of income” as a Fair Housing protected class.
On October 14th the City of Portland enacted their own brand of justice. They extended all end of tenancy notices to 90 days advance notices. They required 90 days’ notice to raise rents more than 5% in any one-year period and they set penalties of 3 months of rent, actual damages, attorney fees and costs for any violations of the new ordinances. Yes, 3 months of the rent amount plus these costs. Tenant attorneys have lined up at the feeding trough.
There is an unprecedented level of quickly enacted changes during what is viewed as crises management in the metro area rental market. Judicial and legislative advocacy is requiring all landlords to develop a strong strategy to be flexible and nimble in this environment. There has never been a clearer need to have a solid property management firm in your corner. We will continue to fight the good fight and bring the most powerful weapon to bear on your behalf—- good, old-fashioned common sense.
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Your Professional Property Management Firm Since 1984