Portland ranks as the toughest housing rental market in the country

Are you ready for another “negative” Portland ranking? I guess it’s all in how you read and interpret the data, but people are still moving into Portland at a rate that has our housing market and infrastructure bursting at the seams. It really shouldn’t be a surprise to learn that there aren’t enough rentals, so rental rates rise.

According to Zillow.com, Portland rents have risen 7% year after year, but other sources paint a more dismal picture. The average rent in Portland is now at $1516 per month, and that’s for a 1 bedroom apartment. If you’re looking for a house to rent, think much much more depending on size and location.

Did you know that bidding wars for rentals have become common, and not just close in Portland. Apartment managers are reporting that they have dozens of applicants within minutes of posting apartments, condos and houses for rent on sites such as Craigslist. And of course, the majority of rental units in the best apartments, condos, etc. never make it to Craigslist. Managers have waiting lists and are reporting zero vacancy rates.

Apt for rent in the Pearl

The Portland area has the tightest rental market of any major city in the United States, according to the U.S. Census Bureau. Only 3 percent of apartments here are vacant at any given time—half as many as were available three years ago. Again, this is in part because of the inflow of new residents. But it’s also because during the housing boom, no one was building apartments, so with more people and less housing, we’re bursting at the seams.

If you are looking for a rental unit in the Pearl district – are you ready for this? Rents are increasing an average of 15 – 20 percent annually! Great place to own a rental unit, if you can afford to buy one.

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Air BnBs in Portland Oregon

SW Waterfront high rise condos

Southwest waterfront high rise condos – a beautiful place for an overnight stay in Portland

Vacation rental properties in Portland Oregon are in such high demand that there aren’t enough vacancies at any given time to accommodate everyone who wants to visit. Air BnBs to the rescue. Many Portland property owners are making extra cash renting out extra bedrooms in their homes. And, because Portland is such a diverse metropolitan area, there are accommodations to suit every style and budget.

Visitors to our area can find rooms for rent for as little as $30 per night, or can go more high end with a luxury suite in the Mayor’s mansion for $275 per night or even a whole flat with a view in the Pearl district for $300 per night. (There are even super luxury accommodations that rent for as high as $1000 – $3000 per night).  Home owners who perhaps travel a lot for work, or who have a 2nd home in Portland will often rent out their whole house while they are out of town.

Portland laws governing Air BnBs are under scrutiny.

Currently the laws state:

  • All Air BnBs must be permitted.
  • Permits must be prominently displayed in the unit being rented out.
  • Anyone who wants to rent out space must occupy the dwelling for a portion of the year.

Officials have discovered that there are many property owners who are blatantly disobeying the Air BnB laws. For example, there are known California corporations that own multiple units in some of the high rise condos in downtown Portland and needless to say, do not occupy any of the units any part of the year.

Investors both local and out of state, are buying properties in some of the more close in neighborhoods with no intent of ever occupying them, or using them as long term rentals.

Portland housing officials are in the process of cracking down on illegally run Air BnBs for multiple reasons.

  • The use of otherwise relatively affordable housing that is being turned in Air BnBs is hurting the affordable housing market.
  • The city is not collecting all the taxes due to them.
  • People who actually live in areas with a high density of Air BnBs are finding their quality of living diminished by vacation renters.

Portland is not the only city going after owners of Air BnBs. Crackdowns on illegal use of properties is now taking place in other cities such as New York and San Francisco.

As long as we have a shortage of vacation rental units in Portland, Air BnBs will continue to gain popularity in this area, and investors will be able to reap the rewards.

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September Portland housing market – still hot and favoring sellers

Another offer not accepted

Is this how you feel after you hear you’ve had another offer rejected?

The Portland housing market closed out August much like the rest of 2015. As of the end of August, we still had less than 2 months inventory in listings, which is not good news for home buyers. Some are speculating that the situation could get even tougher during the winter months when typically fewer home owners will list their properties for sale.

While we did see inventory rise from 1.6 months to 1.9 months between July and August this year, these numbers still scream “sellers’ market” throughout the Portland metro area. We also saw a bit of a drop in demand during August, as compared to July 2015, but an increase of just about 20 percent of homes sold during August 2015 as compared to August 2014.

According to an article on Oregonlive.com, “The average sale price through August of this year was $353,200, a 6.2 percent increase over the same period of time in 2014. The median sale price rose 7 percent, from $285,000 to $305,000.”

Typically fall signals a slowdown in the housing market. This usually means that buyers who are really serious have less competition for the homes out there. But there is such pent up demand this year that we just don’t know what the fall and winter seasons will bring this year. And, for those who prefer to wait until after the holidays, if 2016 is anything like 2015 this year, home buyers were out in force as early as New Years’ Day in 2015.

The forecast for 2016 in Portland is more of the same; huge home buyer demand and low housing inventory at least through the spring months, which of course will cause a continued rise in both home prices and values. Sellers are still receiving multiple offers on their homes, even fixers, often within hours of a listing going live.

And if you think the Portland housing market is an anomaly, you should know that Portland didn’t even make the most recent list of 25 hottest housing areas nationwide.

I know this sounds a bit like gloom and doom for home buyers, but for those who are serious and persistent, are available to view houses as they are listed, and make offers very quickly, their efforts will be rewarded.

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Marijuana and housing laws in Portland Oregon

marijuana grow operation

You don’t want to be caught with this scene in your back yard

In just one week recreational marijuana will legally be sold in the state of Oregon, though only in limited quantities and it will be available only in medical marijuana stores this year. However, home owners have been able to legally grow up to 4 plants per residence (regardless of the number of adults residing in the residence) in their own backyard since July 15th. More than 4 plants is considered a “grow” operation and must be registered as a business. Grow operations are not permitted in residential areas.

As a home owner, it is highly recommended that plants grown for your own use be kept behind a gated fence, and not taller than fence level. This is just a common sense security precaution. If you have plants above fence level, you are inviting law enforcement to investigate your garden to ensure you are not growing more than the legally permitted 4 plants, and perhaps worse yet, you are almost encouraging vandalism.

Ironically, even if you are growing the legal 4 plants, each adult (21 years of age or greater) is permitted to have only 8 ounces of usable (ready to smoke) marijuana inside your house, or 1 ounce on your person in any public location at any time. This includes decks and patios where cigarette smoking might be legal at a bar.

If you are not a home owner, be aware that most community gardens, apartments, condo developments, and even some HOAs have prohibited growth of marijuana within their legal boundaries. This is not a state law, but one that is managed by each locale individually.

While you are permitted to carry marijuana on your person, you are not permitted to smoke it in any public place.

Driving under the influence of marijuana

Do not drive if you have been smoking weed. Oregon DUII (driving under the influence of intoxicants) covers any intoxicating substance, including medical marijuana, so if you are stopped, you can be cited for DUII and taken to jail.

As most marijuana users know, this drug stays in your system for at least a week or more, so until recently, it had not been possible to accurately test for recent marijuana use.

But according to an article in Mother Jones,

“Oral fluid sampling could be the answer for law enforcement. The driver suspected of impairment is mouth swabbed at roadside and the saliva is placed in a machine, which rapidly prints out a result. This technology is fairer than urinalysis because it is only sensitive to recent marijuana use rather than use that happened a day ago or a week ago.

Of the devices the researchers tested in the study, the Dräger Drug Test 5000 had the best results. Assuming it doesn’t cost a mint, this technology could be a breakthrough for law enforcement as well as an important civil rights protection for people suspected of drug-impaired driving.”

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Spiders in mating mode – but thankfully this spider is harmless

spider 001Have your seen these scary looking spiders around your house?

According to a report on KGW, this is mating season for these garden spiders, so females are very big and especially scary looking. They may make their way into your home looking for warm dry spaces to lay their eggs. On the news, we were assured that these spiders are completely harmless and very unlikely to bite you or anyone in your house.

Because spiders are “good insects” and will eat their fair share of bugs you don’t want outside, like mosquitos, it’s best to not kill them. But you probably want to move them outside so you don’t see a huge population of baby spiders in your house next spring. And remember that most insect sprays are highly toxic, not just to spiders but also to your family, so if you feel you must spray them, do it outside.

Good news – these spiders should disappear in a couple weeks, at least until a whole new batch hatches next spring.

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Milwaukie OR prices climb 18% from last year

Milwaukie OR on the mapHas Milwaukie OR become one of the hottest cities in the Portland metro area? It appears that so many buyers have been priced out of NE and SE Portland that home buyers are looking elsewhere to spend their dollars. Milwaukie has long been an outlyer in the recent Portland metro area housing boom since 2012, but the new Orange line of the Max, scheduled to open on September 12th has brought a lot of attention to the area.

The city of Milwaukie has spent a lot of money improving and updating the downtown area. The waterfront park has undergone a major update and the Farmers market is one of the largest and most diverse in the metro area too. But perhaps the driving factor in the popularity of Milwaukie over the last year has been the opening of the Orange MAX line, scheduled for September 12th.

While home prices have soared in nearby areas, home buyers have been looking just a bit south of Sellwood, Eastmoreland. The end result is that home buyers have finally discovered Milwaukie and are snapping up properties as quickly as they are listed. Home values have soared 18% in just the last year, while housing inventory has dropped to only about 50% of what was available just a year ago. It looks like that trend is likely to continue, especially for homes within walking distance of the new MAX station located just a short distance south of downtown Milwaukie. Residents of Milwaukie had fought the new MAX line fearing that it would cause property values to drop and crime to increase. But in fact, just the opposite has happened so far. Even big investors from outside the metro area are now swooping into Milwaukie buying up large parcels of land for future development.

The grand opening of the new MAX line is scheduled for September 12th with lots of events scheduled that day at all Orange line stations on the way to downtown Portland.

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Casting blame for higher home prices in Portland OR?

anti Californian stickers2Are Californians responsible for high home prices in Portland?

Recently some realtors in Portland have noticed stickers on their For Sale signs in front of their listed properties like the one in the photo. There is no indication yet who is doing this, but it’s also no secret that many Oregonians blame the influx of Californians for the high home prices in the metro area.

The reality is that we are seeing an influx of people from all over the country, though California residents make up the biggest numbers of immigrants moving here. This has been going on for decades but until recently, housing prices remained among the lowest on the west coast. Prior to the recent strengthening of the dollar, we were seeing Portland housing being snapped up by investors from all over the world. But the hard truth is that people are moving into the Portland metro area from around the country.

Housing inventories are at a 10 year low

The real culprit in the rapidly increasing home values and prices in Portland is the 10 year low housing inventory. There is so much demand for housing, and so few homes to choose from that multiple offers on homes for sale is inevitable. While the hottest selling neighborhoods are in inner NE and SE Portland, a full 58% of Portland’s lower priced neighborhoods have seen gentrification since 2000, and this, as much as immigration to our city, has caused increased property values.

In recent years, especially since the recession, three quarters of all new home construction was apartments and condos, which were specifically geared towards our younger population. Currently there are 4000 new apartments under construction within the Portland city limits, and 7000 throughout the metro area. It is only in the last couple years, as rents rose to almost out of control levels, that many renters have decided that home ownership makes more financial sense.

Builders are aware of our housing shortage, but it takes time to get a new housing development approved and up and ready for sale. And, with our urban growth boundary, and some of the other difficult housing restrictions placed on developers, where to build new housing has become a challenge as well. The urban growth boundary limits the amount of land for sale, and height restrictions in the downtown and close in Portland neighborhoods make building high rise structures almost impossible.

Portland continues to outpace the country in growth

Portland is and has been among the fastest growing metropolitan areas in the country for several years now, and this trend is likely to continue.  In fact, in 2013 and 2014 Portland topped the list of major cities in the U.S. with highest growth rates. The features that we love about our area are among those that are luring people here.  According to an article in Golocalpdx.com, “Unique amenities such as outdoor recreation, arts and entertainment activities, and green space protection likely continue to propel Oregon to the top of the list for the second straight year.” In addition, Portland ranked #5 in the nation for job growth in 2014.

What else is causing our population explosion?

Young people are moving here in droves. In fact, as of this year, the median age in Portland is 35! Millenials have named Portland their number 1 choice for all of the above reasons and more. Millenials are technologically and environmentally oriented, and feel that Portland supports those life style choices better than other large cities in the U.S. Thousands of  young people are moving here every year, with and without jobs.

The city of Portland will be addressing its Comprehensive Plan, a 20-year blueprint for development next spring. Of course, the plan will have to tackle the topic of how to handle our growth and lack of affordable housing. Clearly gentrification is pushing too many residents of Portland out of their own homes, and as more and more neighborhoods gentrify, there is no where for these residents to go. High on the list of must haves in this plan will be affordable housing. It is anticipated that growth of new affordable housing centers will be close to mass transit corridors, though specifically where these corridors are has not been specified.

We will need to keep an eye on the Comprehensive Planning, or even get involved to make sure our voices are heard.

 

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Portland ranks 8th worst city in US for traffic congestion

GPS maker Tom-Tom rates Portland traffic, road conditions and congestion as 8th worst in the country.

Houston freeways

Could you imagine Portland neighborhoods divided by freeways like these in Houston?

OK – we’ve all been stuck in rush hour traffic, and while we sit there, it’s pretty bad, but are we really the 8th worst city in the country, beating out Boston and Chicago? Most Portland residents disagree. If you’ve ever driven in Los Angeles, San Francisco, Los Angeles or Washington DC, you’ve experienced traffic that would curl your hair. The drivers in those cities are scary too; sitting on your rear bumper, cutting in and out to gain a few cars lengths, or honking at you incessantly to try to make you pull over. In my experience, at least most Portland drivers are more courteous by comparison.

ODOT claims this ranking is just wrong because it fails to look at important factors such as length of commute. Portland residents have much shorter commutes than those of comparably sized cities, or other cities measured in this ranking.

The most congested road is I-84, followed by 2nd worst I-5 northbound.

Did Portland residents actually choose congestion over more freeways?

aerial view of Portland OR

Aerial view of Portland Oregon

Portland has long been an anti-freeway city. More than 40 years ago, there were many more freeways on the drawing board, such as the Laurelhurst Freeway, the Mount Hood Freeway, and Sellwood Freeway, all of which would have had a huge negative impact on those beautiful old historic neighborhoods. More houses would have been demolished to make way for overhead transit and on and off ramps.The faces of many of our neighborhoods would very likely bear little resemblance to the Portland we know now.

Instead, Portland residents chose to use “freeway dollars” to enhance public transit, create more green areas and make room for bicyclists. The end effect is a much more beautiful city, albeit one with traffic issues on the freeways. We can’t have it both ways. Should we keep Portland beautiful or build more concrete roads? Something to ponder the next time you are sitting in rush hour traffic.

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Will saving for more down payment save you money long term?

new house keys

Are you waiting to receive your new house keys?

In the days of yore, when home prices were very much lower than they are now, especially here in the Portland metro area, it was common practice to save for a 20% down payment before even considering buying a home. But most home prices are no longer in the $100,000 – $150,000 range, so what now? In the Portland metro area, the average home price has risen to $300,000 in just a few years.

Clearly, a 20% down payment will mean that your monthly payments will be based on a lower mortgage and there will be no required PMI (Private mortgage insurance). So, of course, your monthly payments will be lower. But that $300,000 home, adjusted for the current rate of inflation here in Portland, will very likely cost you $321,000 or more, depending on the neighborhood next year. Add to that:

  • Mortgage rates are projected to be higher next year;
  • Your rent will very likely increase over the next year;
  • You will have lost the tax advantages of home ownership this year

You need to ask yourself if your savings plan is keeping up with the rate of inflation and whether or not you will actually be able to afford that $300,000 house next year?

In spite of all that’s going on with the world economies and Wall Street’s crazy ups and downs recently, the Portland housing market remains strong.

Are you actually losing money by waiting?

  1. CoreLogic has recently projected that home values will increase by 4.3% nationwide over the next 12 months. But we already know that Portland has seen higher pricing inflation than national averages for the last 3 years at least? What will 2016 bring?
  2. Portland rents are among the highest in the country because we have a shortage of rental units available. That trend is likely to continue as more people keep immigrating to Portland.
  3. The housing shortage in Portland is very likely to keep sellers in control, so our rate of housing price inflation may continue to rank in the top five in the country.

OK – reality. Housing prices do rise and fall sometimes. We all saw that during the recent recession. But, each time they drop, they seem to rebound to ever higher levels. And in the meantime, IF you purchased a home with only 10% down, your monthly payment was locked in, and you were in your own home.

Low housing inventories are driving housing prices UP in the Portland metro area

You have probably heard that housing inventories are low here in Portland. In fact inventory levels have been less than 2 months (meaning that if no new homes are listed, all listings will be sold off within 60 days) for a few months now. This shortage of inventory is largely responsible for the sellers market we have been experiencing all year. A normal balanced market that favors neither buyers nor sellers has about 6 months inventory. As long as inventories stay low and people keep moving to Portland in such huge numbers every year, it is projected that it could be years before we see another buyers market like the one we experienced in 2010-2012.

Saving for a down payment has been the single biggest obstacle for first time home buyers over the last several years, but for most people, it doesn’t have to be. If you’re not sure how much you could potentially save by purchasing sooner rather than later, call anytime for more information. It never hurts to explore your options.

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