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The Oregonian blames ‘hipster hovels,’ not massive housing shortage, for rising rents

Posted by on September 22nd, 2015 at 5:49 pm

housing and population change

(Data: Census Bureau, Portland Bureau of Planning and Sustainability. Charts: BikePortland.)

In a big new story promoted using its new “watchdog” label, The Oregonian has determined that a wave of new apartments that account for 3 percent of Portland’s housing supply are the best way to start talking about a trend that is rapidly pushing Portland homes out of middle-class reach.

From 2006 to 2014, Census figures show, Multnomah County’s population grew 79 percent faster than its housing supply. The surge of apartments that began to open in 2012 have barely made a dent in the deep shortage that developed during the Great Recession, when housing construction nearly stopped but 10,000 people kept pouring into Multnomah County each year.

In 1,600 well-crafted words about Portland’s housing problems, the newspaper doesn’t find room to mention these facts.

Instead, reporter Jeff Manning and his editors suggest the opposite, writing that the cause of the 41 percent surge in Portland rents is “a real estate gold rush,” exemplified by “hundreds of micro-units” in desirable parts of Portland.

Here’s how an Oregonian editor chose to summarize the accompanying video: “Construction boom transforms Portland, pushes rents to new heights.”

Manning’s piece does mention Portland’s low rental vacancy rates. But again and again, it returns to the implication that Portland’s 10,000 new units can somehow be a cause, rather than an effect, of the rent hikes that have hit nearly all of Multnomah County’s 300,000 housing units over the last few years and are, as the Community Alliance of Tenants warned last week, coinciding with a wave of no-cause evictions.

To his credit, Manning tells the wrenching story of this Portlander’s personal housing crisis:

Colby Gillespie, 63, had every intention of living the rest of his life in his studio in the Sovereign Apartments in downtown Portland. He lived in the building at Southwest Broadway and Madison since 1980 and the $750 monthly rent fit his grocery checker’s budget.

But the new owner of the building had other ideas. In May, Randall Investment Co. informed Gillespie and the residents of the other 43 units that a planned renovation required everyone to be out by the end of the year.

“I have no idea where I’m going to go,” Gillespie said. “I’m really angry. It’s all very cold and corporate.”

Gillespie and his neighbors are suddenly among Portland’s “displaced,” those low- and middle-income locals forced out by the boom. While the big new projects have gotten the headlines, smaller operators have been snapping up dozens of smaller, older apartment buildings.

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There’s no question that Gillespie is a victim of Portland’s awful housing problem. As someone who can deal with $750 a month in rent, he’s not seriously poor; he’s simply working class. In a functional housing market, Gillespie might be uncomfortable but wouldn’t be in major trouble.

But the malfunction that made his eviction profitable — a demand for higher-end housing units that exceeds Portland’s existing supply of higher-end units — isn’t explored.

(Data: Census Bureau.)

There’s been some great journalism coming out of Portland’s housing crisis. Two weeks ago, Portland-based Lee Van Der Voo of InvestigateWest combined shocking anecdotes and little-known public records to document the practices of American Homes 4 Rent, a Wall Street-run company that has used 85 subsidiaries to buy thousands of single-family homes, including 204 in Portland, and rent them out under contracts laced with hidden fees. It was a terrifying illustration of the ways profit-taking companies are milking the housing shortage for cash without creating new housing.

But despite lower-profile stories like this from last week, in which the Oregonian summarized a panel of experts’ perspective as “people are moving back into cities, but supply can’t catch up,” the paper’s marquee coverage not only chooses to neglect Portland’s supply problem. It also talks about the relatively few new units being created as if they’re the cause of Portland’s housing trouble, and it talks about developers as if they’re the only capitalists feasting off the problem.

In today’s Portland, where a home in a walkable, bikeable, transit-friendly neighborhood is just one of the conveniences of wealth, people who get around by foot, bike and transit because it’s affordable are among the worst-hit by our housing crisis. If tomorrow’s Portland is going to be any different, it’ll require journalism that helps point toward actual solutions.

— 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.

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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Allan
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Allan

from the article
“The construction cranes dotting Portland’s skyline mean jobs, tax revenue, and increasing property values. The developers are here because people are moving here, attracted by the vibe, the climate and environment. Portland’s population has jumped by more than 36,000 since 2010.

Under the typical formula used by economists, the city would need 15,700 new units to house that kind of growth. But because so many Portlanders live alone – 35 percent, well beyond the U.S. average – the actual need is significantly higher, city officials say.”

essentially you should put 2 scales on your graph to reflect that more than one person lives in each unit.

Ben Schonberger (@SchonbergerBen)
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Ben Schonberger (@SchonbergerBen)

Strange piece. Fixated on the physical result of the boom (new buildings) and those who develop them, as if they are the cause of rising rents and not the effect. Also curious that the lead anecdote is of a “hipster” living in a “hovel,” but we don’t hear directly from him if he likes it, or if he’s glad to live in a unit that is ~20% cheaper than the city average. He seems happy in the photo.

Scott H
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Scott H

It seems like the Oregonian is trying to alienate what little audience it might have left. Let me know how that business strategy works out for you O.

Adam Herstein
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Adam Herstein

What do you expect from the conservative Oregonian? They’re pandering to their “those darn young people” attitude of their reader base.

soren
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soren

A hit piece on hipsters, renters, and micro-apartments from the conservative billionaire-owned Oregonian?
Shocking!

Hello, Kitty
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Hello, Kitty

So, let’s see…

The graph shows roughly 85,000 new residents, 35% of whom live alone, (assuming everyone else lives with a single other person, which is the worst case) means demand for 85000 * .35 + 85000 * (1 – /.35) / 2 new units = 57375 new units. We’ve permitted 50,000 units, so we’re really not that far behind in terms of raw numbers.

I suspect what’s really at play here is that the newcomers have more money (either because they have it, or because they came for a good paying job), which is driving up demand for higher end units, which is causing less expensive places to upgrade chasing higher rents.

And that is what’s causing the displacement of lower-income renters that we see.

I really doubt a shortage of 7000 units across the city would, in itself, drive rents nearly as high as they’ve gone.

Champs
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Champs

The people who keep making apologies are almost invariably people who own their homes and/or happen to be profiting from the current state of affairs.

You can use basic economics can explain the issue, but they’d be just that: basic. There is more than a little nuance to these points of equilibrium or pretty curves of supply and demand. That’s the problem with new construction in Portland: these luxe new homes bend the curve.

I know what you get for $1500/mo. in Portland. They’re not especially big, but they have community spaces for neighbors you hate, pet wash stations for a dog you don’t own, car parking spaces you have no use for, and a bike storage room with all the security of a cable lock. Take a step down to $1300/mo. and suddenly most aren’t worth a grand, relatively speaking. Then again, what choice do you have?

Endo
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Endo

I still don’t see what the big deal is with rising rents. TFor every new million dollar home and luxury apartment building that gets built here the city gets a new source of tax revenue. The more rent gets collected here the more taxable income the state gets. That money can (and should!) be used to build awesome new bike infrastructure. We can’t have world-class bike infrastructure if the tax base is too poor to pay for it.

Kiel Johnson (Go By Bike)
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kiel johnson

What about the fact that we require new buildings to have space for cars but not low income (over even regular income) folks? We need lots of new buildings and we need tools to regulate rents for people like we do car spaces.

bjorn
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bjorn

There are at least 4 vacant homes 2 of which are completely unrecoverable within 2 blocks of my house. The city needs to start foreclosing on abandoned homes and selling them to developers so they can be torn down and replaced. There is a huge hidden inventory of homes that banks are sitting on because they don’t want to acknowledge the losses on their balance sheets.

JonM
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JonM

So, some observations:

“In 1,600 well-crafted words about Portland’s housing problems, the newspaper doesn’t find room to mention these facts.”

Okay, so the Oregonian author failed to mention these facts…so what? Do these facts fundamentally contradict the story?

You would expect the author here to now turn to explaining why these facts contradict the Oregonian story…but he doesn’t.

Instead, relying merely on the power of assertion, the author here simply says, “Again and again, Manning’s piece returns to the implication that Portland’s 10,000 new units can somehow be a cause, rather than an effect…”. Again, you’re left with the impression that the author here will now tell us why Manning is wrong.

But, he doesn’t, again…instead, the author here chooses another assertion, this time via an appeal to authority:
“as the Community Alliance of Tenants warned last week, coinciding with a wave of no-cause evictions.”

Well, if this “Alliance” warns us, it must be true…

Further, the author here writes, “There’s been some great journalism coming out of Portland’s housing crisis. Two weeks ago, Portland-based Lee Van Der Voo of InvestigateWest combined shocking anecdotes and little-known public records”

Wow, the always reliable and always representative “anecdote”.

Notice, too, that the author here claims that these properties that are subject of the InvestigateWest analysis are rented out on agreements with “hidden fees”. I notice that the article the author here links to does not include the word “hidden” at all. We see new fees being charged, but the InvestigateWest analysis does not characterize these as “hidden”. I want to give the author here the benefit of the doubt and believe that he is not intentionally characterizing InvestigateWest’s work, but, when viewed in the anti-landlord context of this article here, I have to conclude that the author here is intentionally and irresponsibly misrepresenting what InvestigateWest has found.

The relevant section from InvestigateWest:
“Longer-term tenants, however, noted a distinct change when American Homes 4 Rent took over: some rents went up dramatically. Lawn maintenance ceased. Several observed a steady creeping of fees. The company expected them to pay for plumbing problems and other maintenance. And American Homes 4 Rent does not provide pest control. Some residents said they struggle with rat infestations.”

Hmmm, no conclusion that there are hidden fees. In fact, there’s not even the implication of such hidden fees.

The author here may disagree with AH4Rs management model, but there’s no need to misrepresent what InvestigateWest has found.

And is the drama really necessary?
“It was a terrifying illustration of the ways profit-taking companies are milking the housing shortage for cash without creating new housing.”

“Terrifying”?

No. Terrifying is what ISIS is doing to Christians in Iraq. Terrifying is Assad lobbing primitive chemical munitions against rebels and civilians alike. Terrifying is not having your rent increase and having to take on more maintenance responsibility for the home you rent.

You see, this is the problem with language and a direct result of what we saw during the Bush years with the evil of Hitler being minimized so people could condemn Bush as the new Hitler and the evil of real torture (amputation, for example) being minimized so people could condemn stress positions as torture.

The author here really doesn’t have much to get on with in his anti-landlord screed so he resorts to anecdotes, appeals to authority, and dramatic language.

JonM
Guest
JonM

Wow…this is bad…so the author here not only misrepresent’s InvestigateWest’s analysis by falsely claiming “hidden fees”, he also mischaracterizes the Oregonian article he cites later in his article:
“But despite lower-profile stories like this from last week, in which the Oregonian summarized a panel of experts’ perspective as “people are moving back into cities, but supply can’t catch up,”

Huh?

If you actually read the article he links to, we see the author there summarizes out four major points:

“People are moving back into cities, but supply can’t catch up”
“The panel’s consensus: rent control and inclusionary zoning don’t work”
“The ‘elephant in the room,’ according to one panelist? Parking requirements’
“What about NIMBYs?”

Why doesn’t the author here acknowledge these other three? Because at least one, the parking issue, and perhaps another, rent control and inclusionary zoning are two important themes to BikePortland commenters. It’s clear that BikePortland commenters prefer rent control and affordable housing inclusion rules. The article the author here links to contains information asserting that these are failed concepts. Maybe I am being unfair to the author here, but it sure appears he’s pandering, at best, and, at worst, dishonest.

9watts
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9watts

“Gillespie and his neighbors are suddenly among Portland’s ‘displaced,’ those low- and middle-income locals forced out by the boom.”

We who can’t bring ourselves to ever say ‘enough,’ acquiesce to this kind of displacement of (relatively poorer) folks who’ve been living here all along by (relatively wealthier) folks still to come. Why is this o.k.? Why can’t we bring ourselves to pick up the conversation that Alternatives to Growth Oregon started 17 years ago? http://www.agoregon.org/page34.htm

Mike Quiglery
Guest
Mike Quiglery

Relax everybody. The Big One will solve all these problems, probably for decades.

George H.
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George H.

“Colby Gillespie, 63, had every intention of living the rest of his life in his studio in the Sovereign Apartments in downtown Portland.”

Assuming you can spend the rest of your life in a rental unit and assuming the rent won’t change is the very definition of a poor life choice.

Lenny Anderson
Guest
Lenny Anderson

What’s missing in the O piece and in the above discussion is stagnant incomes here and throughout the USA since the Great Recession. Part of that is due to the continued attacks on both private and public unions. Organized labor played a large role in rise of wages in the 30’s/40’s and 50’s. It was great to see that the new apartments being built at the east end of the Burnside Bridge by Andersen Construction employing union workers! Speaking of that lovely bridge…When will it get a “road diet,” and we get big wide bike/ped promenades on both sides?!?
Meanwhile we just got to keep replacing vacant lots, parking lots, etc. with more housing for all income levels. And get ready for Cully, Gateway and Lents to be the next “Big (and affordable) Things!” Enjoy the ride, we could be Detroit.

JF
Guest
JF

Isn’t the real news here that someone actually still reads The Oregonian? I didn’t know that thing still existed.

But seriously, the tone of all of this reporting seems to be that everyone is entitled to a really nice close-in apartment in a desirable location at an affordable price. That isn’t a concept that exists anywhere. There are lots of places I would love to live that I just can’t afford. That is called “life.” You live in the best place your circumstances allow, which may not be in inner North East Portland.

Paul
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Paul

Average rent for a 2 bedroom in August 2015 for some west coast cities:

Seattle: $2481
Portland: $2270
San Francisco: $4812
San Jose: $3163
Los Angeles: $3527
San Diego: $2466

Could be worse I suppose.

Joe Clement
Guest
Joe Clement

We may be in a housing shortage, but nothing raises the rent except landlord/owner’s decision to. That decision may be motivated by things mostly out of their control, like rising taxes or utility or maintenance costs, but again and again we hear that rent-hikes are a matter of “what the market will bear”. Rent increases are clearly are decision to extract more wealth out of the population. That landlords/owners take advantage of the market is the elephant in the room for most coverage. The rent is how much a landlord charges, not in most cases how much it costs. While there may be other reasons to build more multi-family dwellings, supply-side “solutions” to rent in particular argue for “trickle down” economics in terms of housing. The idea is that by growing the housing market in the area we make increase the competition among landlords who then have to lower their rents to get renters. We are basically told by those who would like to be seen as advocating renters interests that we have to “beat them their own game”. This line of thinking is also what leads many to saying “if you don’t like being a renter [i.e. exploited and regarded as a second class-citizen] then you should buy”. It’s a pernicious kind of victim blaming and cheerleading for an unequal society where the power to determine who gets housed is held by a certain class of folks, and the only way to escape abuse and exploitation is to seek refuge in property itself.

soren
Guest
soren
Mike Sanders
Guest
Mike Sanders

In my copy of the O was a one page pullout flyer ad for a retirement complex in Happy Valley, advertising “independent retirement living,” including everything but your phone, for $1,895/month. Happy Valley is being urbanized so fast by developers that there are streets there that didn’t exist 5 years ago. In Sellwood, I’m paying $750/month. Right down Milwaukie Av., a garage was removed this summer and new housing is going up in its place. Now that MAX has a station at Bybee Blvd., one wonders about even more rent increases and evictions taking place here.

9watts
Guest
9watts

hear, hear.

Peter R
Guest

The graph is misleading and not an accurate representation, it just goes for a bit of “WOW” factor. By showing just resident increases and permits issued you are not factoring in the vacancy rate in 2002. To get a true picture of the severity you would need to know # of units in 2002, vacancy % of those units, then factor in new units vs. population.
Sorry, but I feel that graph trying to pander to the general sentiment that we have massive growth in population with little growth in new units.
That simply isn’t true. I just see this as you trying to manipulate 2 sets of data to have a chart that looks extreme.

lop
Guest
lop

If you count households only you miss what might be called the underhoused, those who take on roommates only because of the economic pressures of rising rents.

Dave
Guest
Dave

bjorn
There are at least 4 vacant homes 2 of which are completely unrecoverable within 2 blocks of my house. The city needs to start foreclosing on abandoned homes and selling them to developers so they can be torn down and replaced. There is a huge hidden inventory of homes that banks are sitting on because they don’t want to acknowledge the losses on their balance sheets.Recommended 8

No–the city needs to start siezing those foreclosed homes and deeding them over to Habitat for Humanity.

EngineerScotty
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EngineerScotty

The big problem isn’t so much that there isn’t housing, but that there isn’t AFFORDABLE housing, particularly affordable housing that isn’t undesirable.

While I haven’t any figures to back this claim up, I suspect that the supply of affordable housing is going down, not up.

Builders, generally, won’t build it unless a) the land is dirt-cheap (which means either greenfield housing on the suburban fringe, or places that are undesirable) or b) they are required or bribed to do so.

And one indicator of the hotness of the housing market is that CONVERSION projects are housing–i.e. good housing is being torn down and replaced. Usually when this occurs, one or both of the following happens: a) the new housing has more dwelling units than the old; b) the new dwelling units are more expensive to rent/buy than the old. And the places where conversions occur are not undesirable or greenfield, ergo the housing won’t be cheap.

(And low-income housing generally gets opposed by the neighbor).

And in the current economic climate, cheap housing in Rockwood or Aloha or Sherwood or Gresham is less desirable than (formerly) cheap housing in St. Johns or Montavilla or Cully or Ladd’s Addition, if nothing else due to the far more auto-dependent nature of the ‘burbs.

Complaining about developers ISN’T off the mark–many projects are making the problem worse, not better, even if they do increase the overall supply. But the alternative proposed by various local NIMBYs–stop construction–also drives up prices due to a constrained supply.