Oregon Real Estate Market Now A Renters Market
Portland, OR March 23, 2009 11:21 a.m.
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As Oregon’s ‘real estate’ market staggers, the closely related ‘rental market’ is also struggling to find solid footing. Rents usually increase during a recession – because people can’t pay their mortgages but still need somewhere to live. So they have to rent.
But there’s evidence things are different this time. And as Kristian Foden-Vencil reports, it's a renters' market.
Melanie Adrian started a property management company two years ago, to help the owners of all those condos find renters.
Melanie Adrian: “Prior to this downturn in the economy we were seeing increases in rent. We were seeing high occupancies, we were seeing no concessions being given away. And as soon as the economy started taking a downturn we’ve seen a lot of rental properties come on the market which has caused increases in concessions as well as decreases in the rental rates.”
She’s seen some places offer the first three months ‘rent free.’
So the question is, why? Are investors buying foreclosed properties and renting them out for cheap?
Melanie Adrian: “I think there’s a little bit of that. I think more it’s owners who have bought investment properties, they need to turn around and they can’t sell them, which was their intention when the market was going strong. And they’ve had to turn around and make those properties rental properties. And instead of doing it on their own, because they aren’t experienced to do that, they have hired people like us to manage those properties.”
Nearby, in a small park, Peter Phelps sit and enjoys a sun break. He sports a long grey ponytail and a bunch of keys hanging off his belt.
Phelps is a computer technician at Portland State University. Over the years, he’s lived in more than a dozen rental properties in the area.
Peter Phelps: “Well there’s actually several different complexes that I walk by on a regular basis because I have various appointments and errands that I run. And places where two years ago there were waiting lists to buy places as now, suddenly you’re starting to put signs out in front saying, please come in an check our place out – we’ll negotiate the rent.”
The lease on Phelps’ last place ended in February. So he decided to do what many renters are now doing.
Peter Phelps: “A friend of mine who owns a house is in between employment situations and I figured I could help him out and rent a room from him for a while until he gets back on his feet.”
Kristian Foden-Vencil: “That’s pretty good. How much do you pay for that?”
Peter Phelps: “We’re still working that one out. I’m fixing stuff up and taking care of past bills and helping him with a bunch of the maintenance, so I’m not quite sure what it’s going to turn into, but it’ll be fair, I’m sure.”
To try and understand how renters like Phelps are responding to the market, property managers turn to ‘Metro Multifamily Housing Association.’ It conducts surveys on everything from rental prices to the number of units standing vacant.
Greg Knakal is both the president of the association and responsible for renting out about 900 apartments around town.
Greg Knakal: “Normal recession you would see rents stabilize, but in this particular time we’re seeing kind of the opposite. We’re seeing people move out of apartments due to a job loss and we think they’re moving in with family members, whereas in the past where we’d see them double-up with roommates and get a two bedroom, we’re not seeing that today.”
Knakal admits it’s a good time for renters to negotiate.
Greg Knakal: “Today we may be running incentives to get people in. Which could be concessions, giving away free rent, even though we would rather not. We may also give some kind of upgrade in an apartment, do some kind of accent wall, a ceiling fan, add something to the apartment to make it more attractive. And then also the last thing we would be doing is reducing the rent some to help motivate new prospects to move in.”
Knakal doesn’t expect rents to firm up until the unemployment rate improves.
Still, it’s not exactly a free-for-all out there. Only about five percent of rentals stand vacant. Last year, when the economy was better, vacancy rates stood at about 3 percent.
© 2009 OPB
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