"Last year, the Portland apartment market was buoyed by troubles in the condo and single-family market. People who couldn't buy or lost their home to foreclosure turned back to apartments. But as the economy sinks deeper into recession, even the apartment market is showing signs of strain. Mark Barry, a Portland-area apartment appraiser, says people are losing jobs or worrying about losing their jobs and moving in with family or doubling up with friends. Read Barry's 2009 forecast. The DJC also covered Barry's take as part of Hagerman Frick O'Brien's investors round table from last week. "Said reader sent in these comments:
"There are a lot of small time "developers" and "investors" that are relying on pulling in large rents for the projects that stalled out. It will take time, but when this wave hits, it will be devastating. If the housing market stunned those with wealth, this will be the blow that knocks them out.In the end, it will be a good thing for those who struggle to pay rent monthly (as rents will go down), but this will have a serious adverse impact upon the wealthy."The newsletter is an interesting read. Here are a couple of points that jumped out and smacked me in the face."the biggest reason for a healthy apartment market in both Portland and across the nation is due to the decline in the rate of home ownership. Home ownership rates in Oregon hovered around 63% to 65% since the mid 1980’s until the recent housing bubble, when it peaked at 69%. The most recent data shows that 65% of Oregon households are now home owners. Thus, around 6% of the people who owned homes a few years ago are now renters."That's a huge change, almost 10% of previous home owners are now renters."Single Family Market: There is not a lot of optimism for the single family market in the US or Portland for 2009. Wells Fargo’s economist has identified Portland as the seventh most overvalued metro area in the country, and is forecasting a decline of 11.9% in 2009. Fortune Magazine recently forecast a 14.8% decline for 2009, and another 4.8% decline in 2010."We're already down 8-9% for the year. The additional 11.9% decline in 2009 will hurt. A lot. And proves again that we're not in better shape than the rest of the country, just further behind."Apartment Vacancies and Rental Income: Continuation of a tough single family market in 2009 will help the apartment market. Offsetting this trend is the fact that around 3,000 units from the “shadow inventory” of homes, condos, and rowhouses are now rentals, with more expectedThis is something I've been investigating recently, stay tuned for more on it.
to come in 2009."
Overall 2009 looks to be just as bad if not worse than 2008, with no real recovery until 2010.
3 comments:
Interesting timing with the article. I just noticed via craigslist that three developments in my area are now offered as rentals though I think remain on rmls: Braedon Heights just off of Barnes/Burnside, Sylvan Crest just north of the Sylvan exit, and Montara Loop in Forest Heights.
I got to thinking about three properties featured on this blog and their current status:
5219 SE Belmont (9-11-08)sold for 830K, closing on 10-13-08 though it doesn't appear to be a primary residence at this point per Portlandmaps.
5789 SW Salmon (9-9-09) still on market for $300K. And I see its almost identical neighbor is a rental with an asking price of $1100/month http://portland.craigslist.org/mlt/apa/986874260.html
632 NE Russell (7-30-08) closed 6-5-08 for $525K and was last listed for $475 short sale, go figure that one out.
Bearlee,
I'll post an explanation, TR signifies a transfer back to the bank i.e. foreclosure. It was likely listed as a short sale but didn't find any buyers, and has now gone back to the bank at auction.
This is hilarious!
Last spring,when I was looking for a new place, word on the street was that apartment rents were headed UP. There was an Oregonian article about it, and I read all the protestations over at the "Portland Gentrification" blog. It seemed true enough, because we couldn't find a decent 2 bedroom that took a dog for under $1000.
One day, suddenly, a decent 3 bedroom HOUSE poped up fo $900. I wondered "What the heck is going on when apartments are going up, but house rentals are falling!"
I knew rising apartments and falling houses couldn't last forever, and eventually apartment landlords would have to give it up and face the reality of depreciation. Now, here we are.
They thought they'd make a killing off of all the foreclosure folks suddenly being flung on the market. What they didn't count on was 1)People who can't sell their house and are determined not to go into foreclosure are willing to rent them out at a loss, and 2) Investors with cash will buy decent foreclosures and turn them right around as a rental.
I went back to Craigslist to look this week, and the same types of apartments we were looking for are now going for $100 less. At the same time, houses are renting for $200 less. LOOK OUT BELOW!
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