Portland Rent Registers Sharp Decline

The effects of the long, slow economic nosedive are not uniformly bad.  Discount businesses flourish and gas prices have dropped dramatically.  Add this: rent in many metro areas is dropping, including Portland, which saw the sixth-steepest decline in the country.

The economic crisis has opened up opportunities for apartment tenants. The inventory of vacant apartments is expanding, and rents are dropping quickly in major metros across the country....

Landlords, as a result, are forced to offer discounts to fill vacancies. Apartment vacancies spiked in September after the collapse of Lehman Brothers and the eruption of the financial crisis.

Rents in Salt Lake City, Long Island, Raleigh, NC, New York, and Seattle dropped the fastest.  Next was Portland:

Rank: 6
Rent drop: -3.2%
Q4 2008 rent change: -2.8%
Q4 2007 rent change: 0.4%
Effective rent: $850.40

The Portland area, known for its environmental consciousness, microbrew beer, and cultural offerings, has seen manufacturing layoffs spike in the last several months. The unemployment rate climbed to 7.2% in November 2008 compared to 4.7% in November 2007. The apartment vacancy rate jumped to 5.8% in the fourth quarter last year from 4.6% in the same period in 2007. Landlords on average are giving rent concessions of two weeks.


Update.  The Oregonian has a conflicting report with statistics showing rents rising:

Apartment hunters, already pinched by the shrinking economy, are getting squeezed further by one of the tightest rental markets in years in the Portland area, where it can take months to find an affordable place.

Rents are up more than 5 percent from last year, fewer than 4 percent of apartments are vacant, and construction of new units has slowed.

It's not clear which populations were included to calculate the statistics in either report.

  • Doug L. (unverified)

    What difference does low rent make when you have the Mayor feeling up kids in the Mens room of City Hall? Maybe Sam should set up an office at Cleveland High School?

  • Ms Mel Harmon (unverified)

    Oh, great. Is every thread on B.O. going to now have a Sam Adams snark attack on it?

    He's staying. Don't like it? Recall him as soon as you legally can. Until then, can you stay on topic please?

    Speaking of THIS POST, I hope anyone signing a lease during this time period looks over the terms carefully. Landlords have been known to write in clauses that allow them to raise rents mid-lease with little notice and I can see some doing so now in order to fill the vacancies and then hiking the rents as soon as the economy recovers, even if it's mid-lease.

  • (Show?)

    Interesting set of cities. I have thought of Raleigh and Salt Lake as our competitors for "hot" cities. I wonder why rents would be down so severely in those kinds of cities. It can't be overpriced housing--all three have not been hit badly by the downturn. And it can't only be unemployment--RDU and SLC are not as had off as Portland.

  • (Show?)

    The article cites different reasons for the different cities--Seattle because of layoffs of major companies. But that doesn't quite wash, does it--the NW always seems to have similar patterns, so the causes have to have some common link.

  • (Show?)

    This doesn't quite compute for me. If people are losing houses because of mortgage defaults they have to move to rentals. Also, people who in the past might be moving out of rental property to housing are having trouble getting mortgages. I would have thought that rent occupancy would be going up.

    The implication is that people are doubling up; moving back in with parents or in with friends.

  • (Show?)

    Not uniformly bad? You mean not uniformly bad like the pain of breaking my leg has its good side because it distracts me from the pain of my broken arm?

    This kind of data may well signal the beginning of a deflationary spiral that could feasibly end up with us mired in another Great Depression. Stuff was very cheap during the first Great Depression and yet people tend not to remember those times very fondly.

  • Marshall Collins (unverified)

    I think one contributing factor is the "hibernation" mentality that comes along with this economy. With the housing prices being so far out of reach for most people when the economy was still good so many people who made good money still rented and when the next raise or bonus or new job came along, the first thing I saw many many people do was "upgrade" to a better apartment. I have seen friends who have had a great couple of years change apartments 3 times in that same time period. People can't afford or don't want to spend the extra money to do that right now.

  • (Show?)

    Not uniformly bad in that it affects people/businesses differently.

  • James X. (unverified)

    I'm with Calhoun: if apartment vacancies are up, where are people living? I guess they could be moving to suburbs, or moving back with Mom and Dad, maybe renting a room in a shared house (cheaper than an apartment), or they could be newly homeless.

  • Roy M (unverified)

    Careful of those money saving apartment ads. My 22 yr old niece and her roomy just responded to an add for a 2br apt @ 995 per month that "usually" rents for 1145. It included Internet and clubhouse use.

    Then she found out they wanted first and last up front, 250.00 non refundable cleaning deposit, 45.00 app fee, 500.00 pet fee with 20.00 more per month (1 cat), 500.00 security fee, 500.00 fee because she had no recent rental history (just out of college), and 20.00 fee for covered parking. Around 4k to get in. Youngsters have pretty tough too right now when it comes to housing.

  • PSJackson (unverified)

    I would say a lot of this is from condo units that were supposed to be sold weren’t. You can't give away a condo now with the tighter lending regs. Therefore, the developers like Bob Ball (had to get the Adams tie-in in) are pushing the surplus units onto the rental market or taking the whole complex rental until the market recovers. Thus the glut of brand new rental's and the downward pressure on rents.

  • AR (unverified)

    They may be dropping now, but it's still not enough to compensate for how much they skyrocketed before the bottom fell out of the market. To rent something decent in inner-Portland you still have to shell out a ridiculous amount of your income. And speaking to the fees mentioned earlier, the way most of these rental outfits operate you can expect that sort of shadiness from most of them. Just don't expect your deposits returned!

  • Zarathustra (unverified)

    My thoughts echo those of John and Paul G., particularly John. I would have thought that the record high mortgage default rate would have been putting upward pressure on rent rolls and hence prices.

    It points to a discretionary rental market, I guess. Perhaps a bit is accounted for by corporate rentals. When I was a hot contractor with a 3-month gig in a different city each time, I rented, while owning a house. Once I even had three places, one apartment overseas. I thought that was a bit odd, but looking back, the rate at which I did that was directly proportional to the rate I was getting and how easy it was to find new work, so maybe it's a more widespread factor than I had thought. AR mentions another important factor. There's no doubt a "ceiling effect", that all random variation in price will tend to be downward, as it cannot go higher. It's kind of like giving an experimental treatment to your patients with the worst possible case of a disease. They tend to show improvement, even if the treatment is useless, because random variation is constrained upward, as they are already the worst cases.

    I wonder if rental of anonymous corporate properties, like strip malls, is also down.

    You spank that troll, Ms. Mel!

    Just don't expect your deposits returned!

    That bit has gotten so bad that instead of using that as a criterion for a good landlord, I'm now appreciative of the ones that tell you up front, "BTW, I keep the entire deposit".

    BTW, maybe I haven't seen enough to know, but PDX seems pretty conservative vis a vis landlord/tenant issues. I've lived in the NE and SF where there were rent controls and even though there was loud shrieking in those places when the issue was considered, I can't imagine it getting a fair shake here. Accurate? How about at least having some kind of reform where you can't make charges that have absolutely no basis in fact. My favorite pet peeve- pun intended- is the exorbitant deposits that some places require for a single cat. The fact that they don't allow small dogs, but do cats, means they concede that there's much less damage. Then they charge $300 non-refundable. My whinge is that I carry insurance on her that also covers any and all damage she causes to the rental unit. I've never seen a place that will even consider that fact, for a moment.

    The sad situation, imo, is that every bank, landlord, internet business with recurring subscriptions, credit card or telco/ISP regards borderline fraud, hidden charges, arbitrary fees and basically anything that leads to the client paying an extra fee or surcharge as part of their core business model. That's why the country is in the fiscal shape it is, in the first place. One of the things that has been most irritating about the Adams affair is the use of the word predator. If you've got to have your simple minded litmus test nouns, apply predator to the institutions I've been describing. Figures the only time it has been used in the context- "predatory lending practices"- is an euphemism for "stupid consumer judgment". Bottom line, you can't build a strong society with the banks being the least trustworthy entity in the lot. That used to be the diff. between the banker and the landlord.

  • Laurie Sonnenfeld (unverified)

    This report is odd. I'm a realtor who has helped people buy and sell vintage homes and small plexes in the inner city for 20 plus years. I also own a couple of rentals in the Hawthorne area where I live.

    All last year I was hearing (sorry, I didn't save the sources) that rents were up dramatically and vacancy rates were down. I saw some landlords in the area trying to raise rents by 20 and 30%. Some of them went too far and their units sat vacant for several months.

    However, in units where rents went up 5 to 15%, it didn't seem to reduce demand at all. Young adults seemed to be flooding into the area last summer and fall from out of state, driving up demand for the charming inner city older plexes. I had a vacancy in the early fall and had 20 parties show up to see it when I advertised a 30 minute open house on Craigslist. Most of them were sweet, earnest, and adorable by the way, and many of them were still seeking employment.

    For what it is worth I am annoyed that my rental forms even have a space for "pet rent." I am glad I can help people with well behaved pets by renting to them. I usually refund 90 to 100% of deposits unless there has been damage done by the tenant or pet. I know there must be other landlords around here besides me who are honest and well intentioned. Just so you know...

  • James X. (unverified)

    I'm not surprised by downward pressure on price, just a drop in vacancies. People can always find cheaper apartments, or (this is for Roy's neice) a room on Craigslist for $300.

    My best guess is that people are fleeing the city for the cheaper suburbs, although Portland is a pretty cheap city (globally, we're down between Sierra Leone and Barbados).

  • Dan Gicker (unverified)

    Laurie I don't believe you and I suspect your profession makes you biased toward promoting the belief in a scarce and expensive rental market.

    Unemployment is up

  • Dan Gicker (unverified)

    Sorry I meant to hit preview not post. As I said unemployment is up 1% pt from 8 in Nov to 9% in Dec. I have two anecdotes that further my point. In Dec, my landlord at the time told me there were several vacancies in the two complexes at the time, this building is in a desirable neighborhood by OHSU. I moved in Jan and my current landlord was eager to negotiate a fair price. I think there is a rental glut.

  • (Show?)

    I think the answer to the riddle lies in micro-markets. The statistic is calculated for all rent in a very large area. If you happen to want to live close-in, you may not see any of these effects--in fact, rent may be rising. But in other areas, rent's decline my be substantially greater than the Q4 3% the story cites.

  • Dan Gicker (unverified)

    Okay, I'll concede there are probably a couple neighborhoods in close in SE that are doing okay. But it's not true that all places close in are doing okay.

    My neighborhood is five minutes from downtown-closer than Sunnyside and it is not doing well in the rental market.

    I'd wager there are more neighborhoods doing poorly than well and that this will tend to depress rents everywhere, eventually.

  • Mike N (unverified)

    Rents going up in an economic downturn where housing sales fall is not an uncommon event. I moved away from the Bay Area in 2000, when rents were being jacked up sky high during the time of the dot.com bomb. The problem was that most building had focused on expensive housing in that area, which had its demand suddenly drop when the internet businesses were tanking, and no more company stock purchases of houses were occurring then. Since little housing was built at the lower end, and people were either staying in rental housing, or not selling their lower end houses to move up, rents rose. I know for a fact that in an apartment building I was in, the landlord was jacking up rents 40% when tenants leases were ending.

    I moved away from that and ultimately moved to San Diego. San Diego's rental market didn't have near the compaction that the Bay Area did, but it also had rents going up recently too, despite the economic downturn and the housing sales drop-off... I moved up here now. Others are probably moving other places that can support their means better.

  • (Show?)

    I have to say that I'm hearing a lot from renters who go to move and are told the complex will be keeping the entire deposit (this without even visiting the unit; some of which I know to be in excellent shape).

    Pet deposits drive me crazy. A huge deposit for a small gecko? Or for the aquariums that are fully covered on the required renters insurance?

    I've found that many complexes make a good chunk of their profit off all the fees and such they charge.

  • formerPDXer (unverified)

    I think there are regional differences on the deposit issue. I used to live in pdx but have been in the Boston area for 15 years.

    Here, the norm is that deposits do get refunded absent real damages, and in fact New England states usually require that your landlord hold the desposit in an interest-bearing account and give you the accrued interest. Not with all landlords, sure, but the default assumption among my acquaintances at least is that you'll get it back unless there's concrete damage above wear & tear. Landlords are not allowed to charge "cleaning fees" for normal wear and tear, that's supposed to be in the base rent.

    My friends out in OR have had different experiences, and yeah, it sounds like the default is that your landlord will find ways to hang onto the whole thing. I think landlords also have more room to charge huge late fees, etc. than they do in New England.

    That being said, there are other quirks here. In Boston the norm to move in is first + last + deposit equal to a full month's rent. And frequently there is a "broker's fee" of another month's rent for a realtor who often was barely involved at all (but probably is a friend/relative of the landlord or something, I really dont get what service they provide).

    So, it's not uncommon to have to front four month's rent to move in.

  • Gil Johnson (unverified)

    As a landlord, I haven't had any problem renting out my apartments and have moderately increased rents over the years. I'm still probably a bit below the market rate, though, and I do return the entire deposit if the place is left in good shape.

    As a small business owner whose lease is up at the end of the year, I'm wondering if commercial rents are down, as well. The new lease my landlord offered contains annual rent increases plus unknown "triple net" costs, and if the commercial market is down, I'm gonna want a better deal.

  • (Show?)


    Wish we had some of those rules here. It's pretty much the norm in any large complex to charge cleaning fees for normal wear and tear. And as of late I have yet to come across a single person who has gotten any of their deposit back when they moved.

    Our previous landlord tried to charge us for items we'd been complaining about being broken since we'd moved in, such as sliding/folding doors that fell down on our first day there. I didn't mind paying for items that were our fault, like the cat breaking a set of blinds, but I wasn't about to pay for things that were broken when we moved into the unit.

  • FG (unverified)

    Two points:

    1) The fact people are puzzling over why the two stories seem completely contradictory points to the reality the stories are simply poorly written: They didn't cite their source of the statistics and the methodology used to compute the statistics. I guess it's more fund to muse aimlessly rather than actually think intelligently.

    2) As far as deposits. Even in PDX landlords do have to show cause for keeping deposits. The way to get your deposit back from even the most corrupt landlord is to find a family law lawyer to write a standard letter reminding the landlord it will cost them a lot more if they don't follow the law. It has worked for me every time. Now if you have actually given them cause to retain the deposit, that's another story.

    1) and 2) just go to show why Sam Adams has the audacity to say (and actually foolishly believe) he thinks he has something to offer PDX. He just knows his audience.

  • LiberalIncarnate (unverified)

    I am not seeing this from my own experience. Rents have gone significantly UP. My own rent, in an old 70s building with bad plumbing is already above market rate. As soon as someone moves out, there is someone new moving in within a week. Until I signed a new lease here, my rent was going up once every six months!

  • formerPDXer (unverified)


    It's not all perfect out here. As I said, you usually end up throwing away a month's rent on a "brokers fee", and move-in costs tend to be higher. Pain up front instead of at the end. It's also tough to find month-to-month situations if that's what you want insted of a 12mo lease, and landlords often do enforce penalties for people who want early lease termination.

    I had one guy who was interested in being a roommate of mine, but his current landlord wouldn't let him out early, even though the person had a new tennant all lined up for the landlord. Nor would the ll let him sublet. So he was stuck with a long commute for six months. Peronsally, if I were a ll I can't imagine why I'd trap a pissed off tennant in my building if there was a new one ready to mail a check, but so it goes.

  • Zarathustra (unverified)

    The big diff between Boston and here is the degree of litigiousness in the local culture. Most big real-estate is nationally managed, though, and, as pointed out, they keep the net damage about equal.

    Here's one trick I've found often works in PDX for not being assessed cleaning charges, though about 1/2 the time you still have to write a strongly worded letter. A lot of complexes have a regular cleaning company they use. Sometimes it's a resident with a relationship to the management. Either way, you usually see them when someone else moves out. After a while you can spot them. Get friendly with one of the workers. When it comes time for you to move out, do no cleaning, and invite the person to clean your apartment, one time deal. It will cost $50-$100, but that's usually 1/3 to 1/6 the deposit. Tell them to clean it "just like you do for the management". You have just eliminated any possible rational case for keeping your deposit for cleaning charges. Take lots of pictures before and after for damages with a witness. If you have someone that witnessed the pictures that show no damage, and you have their own cleaning staff doing the exact same cleaning job they would normally do, even PDX landlords can't keep a penny unless the lease clearly specified "non-refundable" on the deposit.

  • Max Rockbin (unverified)

    I'm a landlord in Portland. Rents had been going up dramatically, especially in the past two years. In the last two months though, we've seen most of those increases evaporate. I operate in close-in NW Portland, so things are probably a little different here. The biggest issue, as someone pointed out, is the huge increase in the number of rentals available. All that overbuilding of condos (and there are still cranes in the Pearl) has resulted in thousands (literally) of new high end condos now converted to rentals being dumped on the market. I think that's the biggest factor. Fear has also made people more conservative. There are more people living with roommates and, so, demand for fewer units. More people who stay in a cheaper apartment than they can normally afford, which creates more vacancies in the higher end apartments, but more demand for less expensive apartments.
    It's very difficult to know exactly why rents are down so much. But the fact that they are down about 15% in my neck of the woods is unmistakable.
    Someone said that the drop in rents hasn't yet come close to making up for the rapid upswing over the last two years or so. It's true. Things haven't gone all the way back down. But you might consider that rents were down for a full 3 years before they went up. Artificially depressed rents meant that when things started to go up, they went up quickly.

    For my entry in the deposit refund survey: I refund all of the deposit most of the time. I offer to let tenants use the same cleaning service I would use, which means there would be no deduction for cleaning. If a window is broken, or if a carpet is destroyed, then there's going to be a deduction.

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