On Thursday Oregon Senator Jeff Merkley reached out to his constituency with an e-mail addressing the unprecedented shortage of “affordable’ rental housing in the state. In short: For the better part of a decade, affordable housing, or a lack there off, has been a growing issue for many low and middle income working Oregonian’s and their families.
For renters living in Eugene, and Portland, Oregon, along with an uptick in the national and state economy, comes increased market demand for single family housing — as well as out of state investors shopping for rental property.
With that demand and subsequent “turn over” of rental property comes increased rental rates. It’s a math problem at its unrestricted market demand driven roots, with more than a bit of sad social hardship overtones.
There are several factors impacting the price of real estate these days as well as a seemingly endless uptick in rental rates, the first being the backlash of the deepest recession in modern U.S. History.
3 million displaced homeowners became renters
For 3 or more years’ thousands of homes sat devalued, overpriced and eventually abandoned, in as Senator Merkley refers to as “all corners of the state.” With that housing blight came an opportunity for “gorilla investors,” mortgage takeover artist, and bulk distressed institutional note buyers to buy penny on the dollar distressed housing. I know, I represented many out of state buyers as a their real estate agent — sad times.
The housing option for Oregonians that opted to walk away, or lost their often righteous battle with over bloated mortgage lenders, was to either move or rent. Rental demand in Oregon has been at an all-time high since the height of the recession in 2008. Today we live in a “buyer’s” market.
An investment opportunity
With heightened market demand demand comes not only the opportunity for home and apartment owners to pick and choose their tenant, (to a certain degree) but to also “opt out” of what is often referred to as “affordable” housing, or Section 8 in many states – or, low cost housing guaranteed and subsidized by public funds.
Today the affordable rental housing market in Oregon is so grim that well-meaning, working folks are forced to live in their cars and on the streets. While Senator Merkley tells us that this problem is not unique to Oregon, the displaced find little comfort in that acknowledgement.
Some folks are waiting years for subsidized housing, often never receiving relief. According to my sources the average rental price for a modest 3-bedroom home in Eugene, Oregon, if you can find one tops $1250 per month – the math simply doesn’t work for a moderate income family.
No subsidized housing available
For the apartment or rental house owner, subsidized housing only works on a grandfathered in property, with low to no mortgaged overhead. These properties are rare in cities like Eugene and Portland to begin with. And further exasperated by zoning restriction, expanded college housing projects, and frankly, by developers looking to other forms of housing related projects for higher profits.
Now, with unprecedented market pressure caused by pent up demand, the return of out of state interest, and a historically low inventory (2 months in some Oregon markets, 6 is the norm) low to middle class renters are finding affordable, attainable housing to be rare if nonexistent.
Oregon is a state of financial contradiction
With one of the lowest average per capita incomes in the United States, (29th) and the third highest personal income tax rate in the nation, (9.3%) when compounded by a the 27th worst unemployment rate in the U.S., and unusual tight timber and farmland preservation urban growth boundaries. A well intentioned Senator Jeff Merkley has a task in front of him akin to climbing a sand mountain in flip-flops.
Re-zoning, federal subsidies, water and sewer
Senator Merkley shares with us that there’s an estimated 100,000 housing unit shortage in the state of Oregon. That’s a big hit for a state with a total population smaller than many major metropolitan cities in the United States. Frankly, he doesn’t have an immediate, nor long term solution to the rental housing shortage. However, after traveling the state and listening to the concerns of the constituency, now returns the Washington D.C. with the problem.
Senator Merkley is listening. Do you have a viable solution for the current “affordable” rental shortage?