Apr 15, 2024 - News

Why rent is still so high for many in Portland

Change in asking rent by apartment type, Q4 2022 to Q4 2023
Data: CoStar; Note: CoStar rates multifamily buildings on architectural design, structure, amenities, site and certifications; Chart: Alice Feng/Axios

Portland saw a slight dip in rental prices for both middle-tier and high-end units at the end of last year, per data from real estate firm CoStar Group. But local housing experts don't expect renters will feel any relief soon.

Why it matters: A yearslong underproduction of new residential housing units is continuing to fuel Portland's affordability crisis.

By the numbers: Rent in Portland has remained relatively unchanged since early 2023 — the average cost of rent is $1,800 per month, according to Brandon Schrader, housing economist at Oregon Housing and Community Services.

  • "Rent appears to have stabilized, but I don't think the average renter is seeing that relief due to the prior years of rapid increases," Schrader told Axios.
  • He noted that between February 2020 and February 2024, rents across the city increased by 21%.

Context: Even with a swell in outmigration since the pandemic, there isn't enough affordable housing supply.

  • Inflation and high interest rates have made new project financing difficult, while Portland's limited land and complex permit process have caused developers headaches for years.

Zoom in: Every unit type (multi- and single-family) saw fewer residential permits between 2021 and 2023, but structures with five or more units saw the biggest drop — a decline of 24.8%, per Oregon Housing and Community Services data shared with Axios.

  • According to a city analysis, Portland will need to add approximately 120,000 housing units at all income levels over the next 20 years to curb its housing crisis.

The intrigue: Even with waning demand for housing in the city's urban core (thanks to the recent population exodus), rental prices didn't budge.

  • The rental vacancy rate grew from 4% to 6.8% between 2022 and 2023 in Portland, per census data.
  • Portland's rental market is in a "sticky" holding pattern, Schrader said, resistant to change. And landlords don't appear to want to make concessions to renters either.
  • This means we "could start to feel the squeeze of fewer units coming online — namely, rent ticking up — in the coming months," Schrader said.

What we're watching: Gov. Tina Kotek's $376 million housing package, passed by the Legislature during this year's short session, includes a "revolving loan fund" that developers can tap into to build more moderate and affordable housing.

  • But the package still awaits Kotek's signature, as she determines whether the proposed housing production projects are "shovel ready" enough.
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