A few years ago, Rosalie Nowalk had options when her rent got too high.
When the last rent increase notice for her Lake Oswego apartment came earlier this year, however, she found her options had dwindled.
“I might have looked in Oregon City, Mollala, McMinnville,” said Norwalk, who has lived in the area for 30 years and wants to stay close to her children and grandchildren. “But these places become more than the rent I pay here. It’s like there’s nowhere left to go. »
Rents in the Portland metro area have climbed rapidly over the past year, straining the budgets of tenants like Nowalk and forcing them to make a difficult decision: to stay and try to cope with soaring costs, or try your luck in a new place that might just be a temporary respite.
The Norwalk landlord in the apartment complex where she has lived for four years recently notified her of a 9.9% rent increase, the maximum Oregon landlords can raise rent this year under of the state rent control law. The price hike will put his monthly rent around $1,300 per month, not including utilities.
In Multnomah County, according to data from the Apartment List online rental market, rents have fallen during the pandemic but have already exceeded pre-pandemic levels. The average approached $1,370 in March.
Across the Portland area, rents held steady during the early days of the pandemic, then surged last year. The average rent reached $1,570 in March, according to Apartment List, up nearly 12% since March 2020, when the pandemic reached Oregon.
Rent increases are even more dramatic elsewhere, said Apartment List economist Chris Salviati. The 8% increase in metro area rents over the past year is rapid compared to previous years, but the company’s National Rent Index has climbed 17% over the past year.
He said part of the increase can be attributed to a rebound in the pandemic. Portland’s rent prices have fallen in 2020, he said, and some of the increases are making up for the lost ground.
He added that at the start of 2020, apartment vacancy rates had risen to around 7%, which he said economists consider healthy. But in 2021, those rates have plunged to around 4%, increasing competition among tenants for the fewest number of apartments available. Those numbers are just starting to go up.
Patrick Barry, a Portland-area apartment appraiser whose clients often own small apartment complexes, said he’s seen many of these trends reflected in his day-to-day work, but not as dramatically as National apartment company research suggests this. For the most part, it has recently seen tenants get rent increases between 5% and 7%.
“Even though landlords are vilified, most don’t want to lose tenants, so they stop short of doing the maximum increase unless it’s something really well below market,” he said. he declares.
But Barry said rents have risen due to a “perfect storm” of regulations, typical market cycles and the pandemic.
Portland’s Inclusive Zoning Rule, approved in 2017, requires developers of large apartment buildings to make a percentage of units affordable to low- and middle-income tenants.
Developers rushed to circumvent the rule, securing permits and building a flurry of new apartments. This flattened rents and drove up vacancy rates. Barry said some regional and national real estate developers have cooled off in Portland due to market oversaturation, Oregon’s affordable housing mandate and rent control policy.
Then the pandemic all but halted new construction, he said.
Data from real estate research firm CoStar shows that between 2017 and 2019, there were around 12,500 units under construction at any given time.
In 2020, that number had dropped to 9,100 and in 2021, it dropped to 4,900. This year, there are around 4,950 units under construction so far.
Slow construction has left less options for tenants and helped keep rents high, Salviati said. (Renting a new apartment can also be a risk for tenants; those in buildings less than 15 years old aren’t subject to state rent control.)
But he and Barry both pointed to another trend that drove up demand last year: More people are separating from their roommates.
“Maybe it’s the effect of people being locked down during the pandemic,” Salviati said. “But let’s say you have three roommates living together, occupying one unit. If these people want to fend for themselves, you now have people occupying three units. »
This trend could reverse as rents climb and tenants look to cut spending again.
For many, the wave of recent rent increases is an unpleasant surprise after months of relative stability.
Mike Stanavech is paying $1,675 for a 900-square-foot double studio in the North Portland neighborhood of St. Johns. His rent will go up by $50 next month, the first increase since the pandemic began.
He said the jump isn’t outrageous, but there’s very little in the area that he would consider “affordable.”
“I shop for apartments all the time online. I’m always on the hunt for the newest, biggest, trendiest apartment,” he said. “Down in Slabtown, along the river, these are out of sight, unapproachable,” he said.
Stanavecch said he’s thought about downsizing or looking for something cheaper, but it doesn’t seem worth it. The amount of money he would save versus the space he would lose is minimal.
“It’s crazy to think how much money I spend on rent,” he said.
For Savana Wilson, a rent increase notice in her Southwest Portland neighborhood apartment in Hillsdale – the first since she moved in 15 months ago – came with two options: a month-to-month rental for a monthly increase of $100 or signing an annual lease for a monthly increase of $41.
The two-bedroom, two-bathroom apartment with a washer and dryer in the unit was fairly reasonably priced, she said, at $1,375. And while she and her partner aren’t thrilled about the prospect of a rent increase, she said, the uncertainty of finding a new apartment could be worse.
“You have to look at the very cost of moving right now,” she said. “Not knowing how much of the deposit they might be trying to take and trying to cover the moving costs can be harder than a $100 raise, although we don’t know exactly why they’re raising it by $100. .”
Barry, the apartment’s appraiser, said the sticker clash may slow in the coming months. Permits for new apartments are slowly coming back, but he expects it will take at least a year for tenants to feel the improvement.
“The rate of increase over the past 18 months is unsustainable,” he said. “But I think it will take 18 months to two years for it to stabilize.”
Nowalk said she was worried about how she would fare if prices continued to rise.
“I wonder how, if I pay half my regular income in rent, how long can I live here? ” she says. “It drives you a little crazy. I worked very hard, got a few houses, saved money on sales. Why am I 66 and feeling so insecure? »
— Jayati Ramakrishnan