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2,000 missing homes: Prices soar in bikeable areas as Portland’s rental shortage deepens

Posted by on September 23rd, 2014 at 12:45 pm

vacancy rate chart

Source: Census. Chart by BikePortland.

As Portlanders puzzle over why local bike, bus and rail transportation has stopped rising, last week’s Census figures show another trend continuing to reshape the city’s population.

New construction in the central city hasn’t come close to relieving one of the country’s harshest rental housing shortages.

For structures built before 1940 — the bungalows and walk-ups built before the age of automotive planning that cover most of the land between the Willamette River, 82nd Avenue, Powell and Lombard, including many of the most bike-friendly neighborhoods in North America — median rents rose 19 percent in the two years from 2011 to 2013, Census estimates show.

Since 2005, when the City of Portland’s population growth began to dramatically outpace its supply of new units, rent in these central-city buildings has risen 47 percent.

“In Irvington, I can pretty much stick a sign in the yard and have it rented within a couple days,” said Shea McGrath, a broker with Carefree Property Management, in an interview Tuesday.

rental hikes 2011-2013

Citywide, median rents rose 9 percent from 2011 to 2013 and 37 percent since 2005. Nationwide, median rents are up 4 percent since 2011 and 24 percent since 2005.

“In terms of the Portland rental market, I don’t really see anywhere the rents are not increasing,” said Nicholas Cook, owner of Sleep Sound Property Management.

There’s little sign that Portland’s rental housing shortage is easing. The metro area’s rental vacancy rate was just 3.1 percent in 2013, its lowest in at least a decade and the second-lowest in the country after San Jose’s.

In fact, the Portland area’s rental vacancy rate in 2013 was the fourth-lowest recorded for any of the country’s top 75 metro areas in any year since 2005, when the Census began tracking the figure.

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Though people who spend time in central Portland sometimes speak as if the city is in the midst of total transformation, Census figures show the smattering of new four-story apartments on Division, Williams and elsewhere are basically a drop in the housing bucket.

The city’s supply of housing units grew by just 1.6 percent in 2011, 2012 and 2013 combined, according to the Census American Community Survey. The estimated number of households in the city, meanwhile, grew twice as fast.

To the extent that these estimates are accurate, that means that if about 4,000 net new households joined Portland in those years, about 2,000 either shacked up with another household or were priced out entirely by rising home costs. Tens of thousands of other households, of course, simply swallowed the big rent hikes; others moved to neighborhoods they might have avoided a few years before.

“They were already starting at kind of a high deficit in housing — a lot of it is kind of backfilling the deficit,” said Cook of the current construction. “I still think that supply is probably going to be less than the amount of people that are moving in.”

After neighbors protested early plans for Overlook Park Apartments, the developer added on-site auto and bike parking spaces and redesigned the building to target higher-income tenants.
(Image: TVA Architects)

Demolitions of old houses aren’t to blame for the rent increase among those that remain: the Census’ estimate for the number of occupied units in pre-1940 structures actually rose slightly from 2011 to 2013, meaning the number of demolitions was statistically negligible. There’s also little chance it’s just a data fluke. The two-year rent increase among old buildings is far beyond the Census’ margin of error.

“It makes the utmost sense to invest in housing along those corridors … I think if we walk away from that vision, that a better city will not result.”
— Jason Miner, 1000 Friends of Oregon

Instead, tenants and housing experts said vacancies are low and rents soaring for all units in neighborhoods close to the region’s two main job centers: downtown Portland and central Washington County.

“People want to live in those kinds of neighborhoods,” said Jason Miner, executive director of the anti-sprawl nonprofit 1000 Friends of Oregon.

In 2005, Portland’s rental vacancy rate was about 9.7 percent, exactly the same as the national rate and in the middle of the pack for U.S. cities. But over the next few years (years that also, for whatever reason, saw a huge surge in local bicycling) people began pouring into the Portland’s area’s rental housing, driving the metro area’s vacancy rate to the lowest in the country in 2009 and 2010. It’s hovered in the top ranks since, as development has failed to keep up with people’s rising desire to live in Portland.

In response, landlords have apparently seen little reason not to continue raising their prices at about twice the national rate, even faster in walkable, bikeable, transit-rich areas that were originally built without cars in mind.

As rental prices in inner Portland neighborhoods have risen, people who can’t afford it are forced further and further away from their jobs. Once that distance goes beyond the 2-4 mile sweet spot for bicycling, other modes — like driving and transit — start to become more competitive.

The City of Portland, meanwhile, is in the midst of a public comment period for its 20-year comprehensive plan, with many Portlanders urging the city to prevent new development during this process and the zoning and parking reforms that are scheduled to follow.

“It makes the utmost sense to invest in housing along those corridors where we’re going to put more frequent transportation,” Miner said. “I think we’re at a real historic turning point where we’re thinking about balking at that vision. And I think if we walk away from that vision, that a better city will not result.”

The first of four public hearings on the comprehensive plan is tonight. You can also comment by emailing psc@portlandoregon.gov with “PSC Comprehensive Plan Testimony” in the subject line.

— The Real Estate Beat is a regular column. You can sign up to get an email of Real Estate Beat posts (and nothing else) here, or read past installments here. This sponsorship has opened up and we’re looking for our next partner. If interested, please call Jonathan at (503) 706-8804.

NOTE: We love your comments and work hard to ensure they are welcoming of all perspectives. Disagreements are encouraged, but only if done with tact and respect. BikePortland is an inclusive company with no tolerance for discrimination or harassment including expressions of racism, sexism, homophobia, or xenophobia. If you see a mean or inappropriate comment, please contact us and we'll take a look at it right away. Also, if you comment frequently, please consider holding your thoughts so that others can step forward. Thank you — Jonathan

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oregon1119wattsAlan 1.0Michael Andersen (News Editor)oregon111 Recent comment authors
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Todd Hudson
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Todd Hudson

Expecting median income-affordable real estate within “2-4 miles” is unrealistic in a city that has been successful in attracting hordes of new residents from all over the country. That ship has long since sailed.

However, there are several neighborhoods just beyond that that are still affordable for median earners to rent/buy. Montavilla, Madison South, Fo-Po, Cully, and Parkrose are good examples. These are areas that are bike-able to downtown.

spare_wheel
Guest
spare_wheel

>Expecting median income-affordable real estate within “2-4 miles” is unrealistic in a city that has been successful in attracting hordes of new residents from all over the country. That ship has long since sailed.

The ship has sailed because NIMBY portlanders are blocking construction of new multi-unit buildings in areas that historically allowed construction of multi-unit housing.

spare_wheel
Guest
spare_wheel

“It makes the utmost sense to invest in housing along those corridors where we’re going to put more frequent transportation,”

The poors can live on arterial corridors while the neighborhoods of “real citizens” are downzoned into homogeneous and exclusive enclaves of wealth.

Peter W
Guest

I don’t have time right now, but someone should look at trends related to household size:

“That means that even as about 4,000 net new households joined Portland, about 2,000 either shacked up with another household or were priced out entirely by rising home costs”

(Which was it? Are people actually making more efficient use of the existing housing stock? Or are they leaving?)

dan
Guest
dan

Looks like it’s time to build that ADU 😉

Tall Steve
Guest
Tall Steve

“the Census’ estimate for the number of pre-1940 structures actually rose slightly from 2011 to 2013”

Huh? So we built more pre-1940 houses that we demolished in the last couple years? How is that possible?

dan
Guest
dan

I don’t think anyone would argue that our society in general as well as individuals values money over human rights. Welcome to capitalism! The alternative seems to be some form of communism, however, which hasn’t ever really worked that well.

Scott H
Guest
Scott H

Supply and demand has been around for at least thousands of years.

rachel b
Guest
rachel b

I just wish everyone would find another “It Girl” city. Portland’s like the puppy Lenny “loved” to death.

Dwaine Dibbly
Guest
Dwaine Dibbly

Look at all of the surface parking lots downtown. The City should start taxing them to give the owners some motivation to develop those properties.

John Liu
Guest
John Liu

I’d like to get myself calibrated. What does this group consider to be “affordable for median income households”? Is it total housing cost = 30% x median household income $59K / 12 = $1,450/mo, so maybe $1,300 for rent, after deducting $150/ mo utilities, for a family to rent a 2 bedroom? Is that the rent that we’re looking for in the central city?

Matti
Guest
Matti

maccoinnich
I suppose your family goes back ten generations in Oregon?
Recommended 0

Non-sequitor snark award.

Buzz
Guest
Buzz

Let’s face it, Portland’s a boom town right now and the bicycle scene, stagnant as it is, is part of the problem.

daisy
Guest
daisy

Do things like AirBnB take potential long-term rentals out of the market because homeowners can easily make more from them as short-term rentals?

Peter R.
Guest

I live in Hillsboro, 9 miles from my job in Beaverton, I have a 0.8 mile walk or bike ride to MAX. I usually ride to the train stop and that is my morning commute. Then at night I ride the 9 miles home. Lately I have been riding my bike both ways as daylight starts to wane.
This to me is the ultimate transportation. I live out on the edge of the urban growth boundary, I paid a pretty sweet price for a lot more house than inner PDX would have given me and I get to go to work and not use my car. I think I qualify as one of the success stories that regional planners are hoping for. Orenco is 1 mile from my house, and access to 26 is about 2 miles.
I don’t believe that the bike is the only answer. I am a truly multi-modal transportation user. Since we moved in in February, I have driven to work once to make a trip East after.
I know there are many anti-MAX/Transit sentiments on this site, but I find it very convenient for my needs.
Throw Nike traffic into part of my route and a bike ride takes 35-40 minutes, while MAX takes about 25-30. Driving takes some of my co-workers 35+ minutes to go the same distance.
While I don’t have a desire to live inside of inner PDX, all I can say is that for a very short increase in distance, we have a lot lower mortgage for the given size house we have.
Rents are way lower out our way too, and with all the new units being tossed up around Orenco area, I can see in a couple more years things getting a bit pricier, but as others have already stated, this is a supply and demand situation. We’ve got a lot of employment in the area and a lot of people who want to live close to work, amenities and transit options.

Terry D-M
Guest
Terry D-M

Selfishly, If anyone needs a nice one bedroom upper flat in a bike-able neighborhood…I happen to have an empty one we need to rent…comment and I will get it and get back to you.

On the main subject, every property in the city zoning R5 or higher should be allowed to not only duplex, but have an ADU as well. All R5 or higher should be allowed one “granny flat” of less than 60% of the square footage of the primary home AND an ADU. Allowing for garage conversion/rebuilds including second story studies above these decrepit garages…wherever they lay on the property lines…..would instantly open up 10,000’s of derelict structures to be torn down and replaced with housing with very little impact on neighborhood character. You could then Cooperatively own the property in kind without sub-dividing. Hence both the primary home owner, and the “Garage ADU” occupant could gain equity long term.

We need to think creatively if we are going to add housing without completely demolishing all of our current housing. We can do both…save the character of our “lower density” neighborhoods AND increase density in a sustainable manner….as long as we do not use the typical “everything is disposable” American attitude.

Trashing whole blocks of old housing in favor of multiplexes just for the sake of density is not sustainable, nor politically palatable…we need to be creative.

Jake
Guest
Jake

This is a great and fascinating subject. And enjoy reading everyone’s angle on it. Thanks Michael.

davemess
Guest
davemess

Seems like there has been very little discussion of employment on this thread (granted it’s about housing). To me employment is one of the keys. The city needs to make more employment centers in Portland (I think they are trying to start doing this with proposed chances to the Comp. plan). Relying on most employment in downtown and Washington County, is not going to spread the density around the city, it’s just going to created the bullseye, decreasing price -type housing marking we currently have.

Rather than just building more closer to our current main job center, we can shorten people’s commute by moving their jobs closer to more affordable places that they want to live.

Alan 1.0
Guest
Alan 1.0

I’d like to see more “urban centers” thrown into the mix. The talk I’m getting from Portland these days is about densifying inner East side residency (everything from ADU to high-rise) and extending alternate transpo modes (trolley, LR, maybe/sorta bikes and e-bikes) to support the current downtown. Well, if the problem is getting residences close enough and commute times short enough to jobs to reduce car dependance, then putting biz/job infrastructure close to residences works at least as well as vice-versa. The Lloyd district is an example, but maybe not as good as it could be. While adding lots of residences (good), its job-base also draws heavily on residential areas which are already pretty close to downtown, not so good at moving jobs closer to residences. Instead, if the sort of density planned for Lloyd was done at, for example, Gateway and Lents, both the opportunity for density and the proximity of jobs to residences are greater. Even at a smaller scale–4 to 6 story vs. Lloyd’s 40 story–human-powered urban fabric and “20 minute neighborhoods” then become a reality.

No, I don’t expect existing political conditions to support that.

See Leon Krier’s work for visualized and built examples.

Matt
Guest
Matt

This story is just another in a string of signs that are all telling me it’s time to leave the Portland area. I’m a 3rd gen Portland area resident and I’ll never afford to live in the close-in Portland neighborhoods where I enjoyed my youth carelessly riding and skateboarding around. I’m not willing to go so far into debt for 30 years to do so, even if it means a higher quality of life (walking, biking, and skateboarding around). It just does not make sense.

We rented in Sellwood in the late 90’s and early 00’s when the cost of a fixer upper there was in the mid-$200K (and I thought that was a lot back then). Now people are paying $300K in Sellwood to tear down houses for new construction and new rentals are fetching $3 per sq foot (per month). I’d rather spend my $ on private school for my kid, or experiences that we can have as a family, than on a house closer to downtown Portland. For now it’s a 12 minute drive into downtown the one time a week I need to go there.

Middle of the Road guy
Guest
Middle of the Road guy

You should give all of your stuff away…..unless you value it, of course.

Middle of the Road guy
Guest
Middle of the Road guy

Sounds like it is time to rent my 1920’s Craftsman and buy a smaller place downtown.

Spiffy
Guest
Spiffy

“2,000 missing homes”

There’s nothing in the story about those missing homes.

oregon111
Guest
oregon111

what a joke – losers move here from the midwest – just to ride their bicycles in the rain – and COMPLAIN about prices – when they are the ones jacking up the rents…

go back to the midwest – losers

oregon111
Guest
oregon111

has the price of rent gone down yet???

didn’t think so — what are you going to do when you are too old to work at killer burger?

as I-5/I-205/I-84 turn into all-day parking lots, the demand for inner city housing grows — it will soon be as expensive as san francisco for inner neighborhoods — median of 3500 for a 2 br apt

we are not that far away — actually, we are about 1/2 of that right now — give it about 6 years and see how close we are to 3k per month apartments

oregon111
Guest
oregon111

san fran now up to 4k for a 2br apt, portland not far behind…

i’ll be glad when critical mass can no longer afford to live here