By: Property Management Systems – Portland’s leading resource for rental news.
PORTLAND, Ore. – 2015 was a huge year for the Portland Oregon rental market and it ended with a bang thanks to new legislation by the city council which now requires landlords to offer tenants a 3 month eviction notice.
With all of the changes that we saw in the Portland Oregon Rental Market last year many property owners, economists and renters are wondering what we can expect in 2016 now that everyone is back from their holiday vacations and business is getting back to normal.
In today’s post we will break down predictions for the Portland Rental Market and how these changes will affect you especially if you own rental property here or plan on renting in the coming months.
Demand In The Portland Oregon Rental Market Will Continue Increase
Why will the demand for rental properties increase in 2016? There are a wide variety of answers including the fact that more people will continue to relocate to the Portland area and the fact that many people who would normally be classified as buyers are unable to afford a down payment on a home or they have poor credit and are unable to qualify for a mortgage loan.
Another reason why we will continue to see a demand for rental properties in Portland this year include the fact that construction of rental properties in the Portland Oregon real estate market is still at least two years behind thanks to the recent economic recession.
The good news though is that we saw more construction starts in 2015 compared to 2014 and many of those are multi-family rental properties which are expected to be available for rent in the coming months.
Property Owners Need To Be Better Prepared
One lesson that many rental property owners in Portland Oregon learned during 2015 was that they were unprepared for the influx of renters who are demanding rental properties.
Sadly many property owners are still struggling to manage their Portland Oregon rental properties themselves and will realize that they are unable to handle the influx of requests from people who are interested in renting from them every time they have a new rental property that becomes available for rent.
What is a solution to this problem? Anyone who owns a rental property in Portland Oregon can improve upon their ability to manage requests from renters by investing in new software or computers to streamline the property management side of their business or, they could save time money and hassle of property management by choosing to outsource all of their property management needs with a Portland Oregon property management company like Property Management Systems.
More Legal Fights Can Be Expected
Although the Portland City Council stepped up in a big way to help tenants last year their new 3 month eviction requirements were met with legal challenges by many developers and more legal fights can be expected this year as the need for affordable rental units in Portland versus the commercial demand from developers to buy, fix and rent multi-family units remains an ongoing struggle for 2016.
One legal challenge involving the Rose City Village Apartments was recently settled.
The developers who purchased this apartment complex agreed to settle and allowed 44 rental units to stay affordable over the next 30 years while promising to pay some renters up to $7,500 if they are evicted.
An investment group including Portland-based Guardian bought the complex in 2006, expecting to rent out units at market rates. Guardian proceeded to evict tenants, renovate the apartments and raise rent for anyone wanting to return to the sprawling complex.
Johnson, director of litigation for the Oregon Law Center, filed a lawsuit in 2007 fighting to preserve the units for low-income Portlanders. Four years later, Johnson secured a victory from the Oregon Court of Appeals, and low-income renters began moving back in.
But Guardian kept fighting.
This past summer, the Oregon Court of Appeals reversed course and vacated the decision on a technicality. Then a Multnomah County judge delivered a blow to a second lawsuit, deciding that even if Johnson won, none of the units would have to be affordable beyond January 2021, and the end of the original 30-year period.
Source – Seattle Times
2016 Will Be a Great Year For Owners To Build Their Portfolios
After months of speculating whether or not mortgage interest rates would increase, we are finally starting to see gradual rate increases by the Fed but, these increases are nothing compared to what people were speculating they would be last year.
Gradual mortgage rate increases is actually a good thing for property owners because this means that 2016 is going to be another great year to buy rental property in Portland Oregon especially in the surrounding areas like: Hillsboro, Beaverton, Gresham, Troutdale and other towns just outside of Portland because, even though the Portland Oregon rental market remains hot right now, there still are many affordable communities nearby for property owners to invest in.
Although it may be tempting for any property owner to consider adding additional Portland Oregon rental properties to their portfolio, they first need to consider their profit margin and evaluate if they have the budget for purchasing new apartment buildings or single-family homes.
Multi-Family Properties Will Still Continue To Be In High Demand
2016 is also predicted to be another huge year for multifamily rental properties in Portland Oregon and the surrounding areas.
Millennials will be one of the biggest factors behind the demand for multifamily rental properties in Portland this year due to the fact that many millennials are just starting out and are either not married, don’t have families, or they don’t have children of their own so they don’t need big houses or big spaces like a front or backyard for their children and their pets to play.
In Portland Oregon, many millennials are expected to continue renting out multifamily units in the downtown area so they can be close to work, close to the latest restaurants or close to the amenities that they love and use on a regular basis.
Recent research by Axiometrics confirmed:
Annual effective rent growth of 4.7% in the fourth quarter of 2015 represented a 7-basis-point (bps) increase from the figure of one year earlier (also rounded to 4.7%), though it was 35 bps lower than the 5.2% of the third quarter of 2015. The fourth-quarter rate is the highest year-end figure since 2005, when effective rent growth was 5.8%.
Rent growth has been 4.7% or above for five straight quarters, even though a three-quarter streak of at least 5.0% growth was broken. Never in Axiometrics’ 20-year history has annual effective rent growth been at 4.7% or above for such a long period.
Quarter-over-quarter effective rent growth was-0.6% in the fourth-quarter, continuing a trend of negative rent growth at the end of the year. That rate was a 32-bps decrease from the 0.3% reported in 4Q14 and marked the only quarter of 2015 in which the rent-growth rate decreased from the corresponding quarter of 2014. It should be noted that quarter-to-quarter rent growth is normally negative in the fourth quarter due to seasonality.
Average national rent was $1,244 for the fourth quarter of 2015, a $54 increase from the average of $1,188 in the fourth quarter of 2014.
Source – Multifamilybiz.com
Investors Will Vary Their Portfolios In 2016
Last of all, in 2016 Portland Oregon real estate investors are expected to vary their portfolios in rental properties by purchasing a variety of commercial and residential properties including homes in the suburbs rather than just buying strictly multifamily rental properties in the downtown area.
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For more information on the Portland Oregon Rental Market, or to view the latest rentals, contact Property Management Systems today by calling us at (503) 515-3170 or click here to connect with us online.