Is New Apartment Construction in Portland Starting to Slow Rent Growth?

Jeremy Raglin

By PDX People

PORTLAND, ORE. – Is new apartment Construction in Portland Oregon starting to slow rent growth? The good news is that the answer to this question is yes, at least for some neighborhoods, and that’s a welcome relief since Portland Oregon rents have gone up by at least 60% since 2010 so any decrease in rent will be good news for renters.

A Wild West Rental Market

There’s no denying that the Portland Oregon rental market has been much like the Wild West in recent years as many renters have had to take apartments sight unseen, or be ready to sign for a rental property the moment that they tour the unit.

Thankfully, things are changing for the Portland Oregon rental market, and after years of being a market that’s been dominated by owners, it’s now slowly turning into a renter’s market thanks to a coming flood of new apartments that are slowly opening up in the area.

Yes, the increase in supply is a good thing; renters in Portland Oregon finally have the opportunity to shop around for the best deal for the apartment that they want to live in rather than having to accept a rental property sight unseen or be willing to move into a rental property that’s in a less than desirable neighborhood.

“There still are people who will apply on the spot, but I also see people who will call in and say this is my first of six appointments today,” said Megan Crosby, portfolio director for apartment developer Urban Development Partners. “They’re shopping the market.”

That increased competition is finally — albeit gently — putting the brakes on the explosive rent growth that has pushed up costs nearly 60 percent since 2010, according to the real estate data firm Axiometrics. – Source

Rent Growth Still Has Exceeded Wages

There’s no doubt that having more apartments to choose from is definitely a good thing but Portland Oregon rents have gone up nearly 60% since 2010 (Source Axiometrics) and with rents exceeding wages, the Portland Oregon rental market still has a long way to go before anyone can consider it to be an affordable rental market once again.

What are rental properties renting for in the Portland Oregon area? Thanks to recent data from Multifamily NW, we know that the average one bedroom apartment is now renting for $1,094 per month while some apartments in the urban core are renting for as high as $1,200 per month.

More Rental Units Brings More Competition Among Owners

With the Increase in apartment construction across the Portland Oregon area, there is hope that having more new apartments on the scene is going to be a positive thing

and increase competition among owners and investors who own older, vintage buildings within the area.

Renters are reporting that some owners of older vintage buildings are offering prospective tenants move in incentives that are similar to what tenants would find with newer buildings, and these incentives / offers are giving renters more options to choose from for the first time in years rather than them having to settle for the first apartments that they find.

Many Neighborhoods in Portland Are Still Considered to Be Unaffordable

Even though we are seeing more rental units constructed across Portland Oregon, many neighborhoods in the area are still considered to be severely rent burdened and unaffordable.

What make a rental unit unaffordable? Although you may think that your rental unit is not unaffordable, the reality is that social scientists agree that if you’re spending more than 30% of your income on rent, this would classify your rental unit as being unaffordable.

Right now, 1 in 4 Portland Oregon Renters are currently paying more 30% of their income on rent every month and what’s even worse is that many renters are paying up to 50% of their income on rent each month.

Thanks to recent data from oregonlive.com we know that some of the most unaffordable neighborhoods in the Portland Oregon area include the following:

Centennial (north of Division), Portland

In this working-class East Portland neighborhood, nearly half the homes are rentals, and 57 percent of those households spend more than half their income on rent.

Median income: $38,846

Poverty rate: 33 percent

Median rental housing cost: $982 per month

North Clackamas Park, Milwaukie

This middle-income neighborhood is made up mostly of homeowners, but 26 percent of the homes are rentals. Of those, a clear majority — 57 percent — spend more than half their income on rent.

Median income: $69,773

Poverty Rate: 6 percent

Median rental housing costs: $1,538 per month

Lents/Powell Hurst-Gilbert, Portland

About 38 percent of the homes in this Southeast Portland neighborhood are rented, and 56 percent of those households devote more than half their income on rent.

Median income: $33,658

Poverty rate: 30 percent

Median rental housing costs: $978 per month

Bridle mile, Portland

Only 22 percent of the housing units in this Southwest Portland neighborhood are leased, but 47 percent them use more than half of their income on rent.

Median income: $98,026

Poverty rate: 8 percent

Median rental housing costs: $1,054 per month

Centennial (south of Division, west of 162nd), Portland

Most households here — 53 percent — are rented, and 47 percent of those households spend more than half their income on rent.

Median income: $28,843

Poverty rate: 45 percent

Median rental housing costs: $959 per month

Powell Valley, Gresham

This neighborhood near Mount Hood Community College in Gresham is about one-third renter-occupied. About 46 percent of the rental households spend more than half their income on rent.

Median income: $65,185

Poverty rate: 21 percent

Median rental housing costs: $1,112 per month

Source