Pacific Northwest still cool on built-to-rent houses
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Despite a chronic need here for affordable housing, the national trend to build houses for rent, not for sale, hasn't gained traction in the Pacific Northwest.
Why it matters: With mortgage rates perched near record highs for the year, there has been a proliferation of such housing in many communities across the U.S.
- They offer residents property management perks without down payments or long-term commitments — and no mortgages.
By the numbers: In 2023, the U.S. saw 27,500 build-to-rent houses completed, an all-time high. It was 75% more than the year before and triple the number in 2021, according to a recent RentCafe report.
- Seattle has 2,462 single-family rental units altogether, with 411 of those completed between 2018 and 2023, per the data.
- Another 718 units are in the planning stages, according to data sent to Axios from the National Rental Home Council (RHC).
- Portland saw 203 units completed between 2018-2023 and has 1,183 finished units total and 120 more planned, per RentCafe and RHC data.
- There are now 69 single-family rentals under construction in Washington and zero in Oregon, per RHC.
Reality check: David Howard, director of RHC, told Axios that population growth in cities such as Portland and Seattle is not as robust as it used to be, and that could be partly why developers are skipping the PNW.
- "Given the fact that financing has become more challenging over the past 12 to 18 months with rising interest rates, etc., developers may be more cautious [in these] markets," said Howard.
Zoom in: Both states also could be out of favor for this kind of development due to policy decisions by state and local lawmakers, some PNW housing experts say.
- Washington state's Growth Management Act was "intended to prevent subdivision sprawl in rural areas," Greg Smith of Seattle YIMBY told Axios, "but it also makes it much more expensive to buy land outside the city."
- And in the city, the price of land is so expensive "developers cannot afford to buy it, build a new house and rent it out at a high enough rate to make it worth the project," Smith said.
- Oregon's limits on annual rent increases also worry built-to-rent developers, Howard said.
What they're saying: "I think developers have just gravitated toward other markets where there perhaps is more certainty," according to Howard.
The big picture: These built-to-rent developments are typically popular in the Southeast, Southwest and the Sunbelt, where land costs less.
The bottom line: Finding ways to increase the housing supply in Washington and Oregon has been a hot topic in the states' capitals.
- Measures signed by Oregon Gov. Tina Kotek this year included a $376 million package aimed at housing development.
- Washington legislators passed bills in recent years meant to address the issue, including measures requiring cities to add density, make it easier to construct small condominium buildings and potentially allow smaller housing units.