Rental Market Economics......

[pdxtex]

Recently a friend and I were discussing the future of Portland development, and how many new projects are currently under way or in the pipe. Then we starting talking about rental rates. I haven't really been paying attention to rental rates for the last few years and holy $%^&'n hell batman, yeah, sh!ts gotten really expensive. I understand the dynamics of under supply, but do you think landlords are just using this as an opportunity to gouge new tenants?? Wages haven't increased to keep up with rental increases either. So the question was simple, what tools, if any do urban planners have to combat high rental rates? Also, if a magic wand were waved, and all of a sudden the rental housing supply doubled overnight, would rental rates plummet or would the current standard be the new base rate? put on your thinking caps......

[soleri]

Yes, when demand drops (or supply increases), the market responds accordingly. The good news for a city like Portland is that the sharp spike in apartment construction will eventually mean smaller rent increases, or even rent drops if inventory significantly exceeds demand. The interesting discussion is why Portland's not-quite-stellar economy is generating high population inflows. The New York Times had a piece about this phenomenon a couple of weeks ago: http://www.nytimes.com/2014/09/21/ma...lbias%3Ar&_r=0

Great cities cost a great deal of money to live in. Portland is still known as the cheapest city on the west coast but it is being discovered, particularly by people who are giving up on costlier cities like Seattle or San Francisco. If Portland didn't have the cachet it does, then it would be less attractive not only to newcomers but residents as well. Call it the dark side of success but I think most people understand the trade-off involved. If Portland's economy were as hot as Seattle's or San Francisco's and the wage scale was correspondingly higher, then rents would be even more exorbitant. The good news is that many of the newbies are not suburbanites but urban warriors who want to live in the city. This means greater density and all the good things that derive from it - better mass transit, better restaurants, more art and music venues, etc. The down side, possibly, is a kind of homogenization of the city over time as yuppies replace hippies. It's my one real concern about Portland's success. And true enough, Seattle and San Francisco led the way on that front, too.

[brickell]

Originally Posted by pdxtex

I understand the dynamics of under supply, but do you think landlords are just using this as an opportunity to gouge new tenants?? Wages haven't increased to keep up with rental increases either..

As a landlord, I've asked myself the same question. But if people are willing to pay, it's like taking money out of my own family's pocket. I keep raising the rent and people keep lining up for the privilege to pay it. What am I supposed to do?

[pdxtex]

^^^i suppose. if i ran a hotdog cart and people were willing to buy 10 dollar hotdogs, id be more then happy to sell them 10 dollar hotdogs, possibly 11 bucks! i guess its just eye opening how popular portland has become. the timing is poor with that little subprime loan, speed bump we just ecountered however people just keep on moving here. its weird. its cool but its not that cool. hipsters dont ski or do outdoor junk. that whole "cheapest" big city on the west coast thing is starting to wear thin. if anything sacremento should be the next portland, thats the cheapest big west coast city. and its got better weather. shrug...

[Gantz]

Originally Posted by pdxtex

i guess its just eye opening how popular portland has become.

It's not just Portland. Most major cities in growing areas (West coast, East coast, and the South) have skyrocketing rents in places where the construction can't keep up with demand.
If you think Portland is bad, here in NYC, where the demand is high and almost no available land for large scale construction, we have condos selling for $130 million and parking spots selling for $1million each.

[pdxtex]

Originally Posted by soleri

Yes, when demand drops (or supply increases), the market responds accordingly. The good news for a city like Portland is that the sharp spike in apartment construction will eventually mean smaller rent increases, or even rent drops if inventory significantly exceeds demand. The interesting discussion is why Portland's not-quite-stellar economy is generating high population inflows. The New York Times had a piece about this phenomenon a couple of weeks ago: http://www.nytimes.com/2014/09/21/ma...lbias%3Ar&_r=0

Great cities cost a great deal of money to live in. Portland is still known as the cheapest city on the west coast but it is being discovered, particularly by people who are giving up on costlier cities like Seattle or San Francisco. If Portland didn't have the cachet it does, then it would be less attractive not only to newcomers but residents as well. Call it the dark side of success but I think most people understand the trade-off involved. If Portland's economy were as hot as Seattle's or San Francisco's and the wage scale was correspondingly higher, then rents would be even more exorbitant. The good news is that many of the newbies are not suburbanites but urban warriors who want to live in the city. This means greater density and all the good things that derive from it - better mass transit, better restaurants, more art and music venues, etc. The down side, possibly, is a kind of homogenization of the city over time as yuppies replace hippies. It's my one real concern about Portland's success. And true enough, Seattle and San Francisco led the way on that front, too.

From Todays "I Anonymous" letter from the Portland Mercury.

"Bitter Biscuites"





I, Anonymous

Bitter Biscuits

You are a Southern comfort-food spot that replaced my favorite bar in Northeast Portland. You probably never had any direct involvement in the closing (it was the landlords that tripled the rent), but you did step in quickly to say that you would pay that tripled rent. Now you have the gall to run an Indiegogo campaign asking for start-up money for your brunch spot? WTF! I thought you could PAY that tripled rent? And why are you asking ME for it? I have been trying not to resent you because this isn't important and it probably isn't really your fault. You could make it easier on me by shutting up and doing the respectable thing like getting a freaking small business loan. I'd appreciate some time for my nostalgia to ebb without your goddamn antique photos and $10 coffees up in my face. Just keep your head down for a while until the sting wears off for those of us that lost an actual community watering hole (as opposed to the timed dining obstacle course that is Portland brunch). Then you can run your smug twee shit all you like.

—Anonymous

[Eightball]

Originally Posted by brickell

As a landlord, I've asked myself the same question. But if people are willing to pay, it's like taking money out of my own family's pocket. I keep raising the rent and people keep lining up for the privilege to pay it. What am I supposed to do?

On point.