With both housing prices and rents marching relentlessly upwards, Portland’s status as one of the most heavily moved to cities is creating a whole lot of demand for a very limited supply. Mean-while, the rents have escalated so rapidly that long time renters are being forced to cancel their leases downsize or relocate further out of the city.
Photo by Tsubo
Although it does seem prices are spiraling out of control, the actual reasons for the increase are logical and simple enough to explain. For now, let’s set aside the numbers and have a very honest and basic discussion regarding the fundamental reasons as to why Portland is becoming more expensive. Although the figures such as mortgage rates, national averages, etc, are important, most articles refer to these. As a Portland native, the author would like to focus on the “why,” more so than the “how much.” Let’s begin.
Photo by Mirei
The city of Portland has long been heralded for its friendly folk, relative safety, cleanliness and excellent location – close to beaches, mountains and rivers, it is the perfect place for those who love the outdoors. The city is small enough to get from A to B in good time (although the increasing traffic is changing this fact), but large enough to have all the attractions of a major city – diverse and delicious cuisine, major sports teams, a happening night life. Overall, Portland has most of the benefits of a big city without the usual drawbacks of pollution, crime, traffic, etc.
Photo by Motoko
Furthermore, Portland has an excellent climate free from devastatingly snowy winters, oppressively humid summers, and other natural disasters such as hurricanes and tornadoes. People are finally realizing that our gloomy, rainy winters are a small price to pay for the overall excellent location and weather of our city. Our summer weather is “perfect” in this author’s humble opinion, and other than the rainy winter we really do have 4 distinct seasons, with the trees turning beautiful colors in Autumn and all sorts of flowers blooming in the Spring.
Finally, a rapidly growing business and tech industry in Portland continues to draw people in regardless of the wider weather. In addition to the stalwarts such as Nike, Intel, Precision Castparts and Columbia Sportswear, Portland is developing its own little entrepreneurial community. The increased business is especially noticeable driving along Highway 26 through Hillsboro or I5 South through Tualatin, West Linn, etc. Although the city of Portland proper is getting pretty crowded, there is plenty of surrounding space to fill up (and filling up it is).
Until the infamous earthquake decides to destroy Portland and the entire coast, it is easy to understand why Oregon has been the most heavily moved to state for the past 3 years, with most of that influx coming to the Portland Metro area. Whichever way you look at it – accessibility, weather, business opportunity – Portland is pretty appealing from an outsider’s perspective. And we haven’t even talked about price yet!
Photo by Ryoma
Of course, another major attraction of Portland WAS (from a native Portlander’s perspective) and still IS (from an outsider’s perspective) the very affordability of living here. The fact is, Portland is still relatively cheap compared to a lot of other major cities, especially when viewed from the eyes of the people living in those more expensive cities. For someone living in downtown San Francisco, relocating to Portland and paying over the asking price for a house is still a better deal than anything they could get by staying in the bay area. The same situation applies for those living in many areas in New York, Seattle, San Diego, etc. Although Portlanders feel as if they are getting squeezed, our rents and housing values may still seem like bargain hunting to plenty of people.
In addition to all of the reasons mentioned above, one of the main culprits in the fast price increases is that Portland never built for or planned to become this popular in the first place. Ask any native Portlander, and they shall tell you how there has always been a notion in Portland of relishing its quiet obscurity. Indeed, the now folk-hero mayor from the 1970’s, Tom McCall, is famous for saying “Come Visit [Portland] again and again, but for heaven’s sakes, don’t stay here.”
Photo by Mimi
Because of this attitude, Portland has not built itself up to accommodate as many people as want to move here. This makes the bidding wars over the few apartments and houses available that much more intense. Of course, this same attitude is what has kept Portland so nice and small, but the secret is now out. Portland has been discovered, and in addition to the added cost of living, many Portland “natives” are upset that their days of living in a secret paradise city are now coming to an end.
It is easy to find examples of the many who are struggling to find an apartment to rent or a home to buy. A friend who recently returned to Portland after working in another state tried searching for a reasonably priced apartment but finally elected to live with his parents instead of “throwing money away” on an expensive apartment. He decided to save money for a down payment on a home, something he could not do if he had to pay such a high monthly rent. Yet another friend who has rented the same apartment for a few years is not sure they shall be able to stay there much longer. From just a year ago their rate increased over 300 dollars per month, and they are not sure they can afford to renew their lease when it comes due.
Meanwhile, a close relative is searching to buy their first home, but each time a fairly priced home comes on the market it receives multiple offers and usually sells for 20,000 – 50,000 over the asking price. For example, they recently bid on a home offered at 349,000, but it ended up selling for 400,000 in an all cash deal. According to many Portland realtors, the all-cash offer has become the new normal in the Portland housing market. Of course, it is great for people who already own their homes. A colleague who bought their home only last May has already seen the value of their home increase by 50,000 according to the website Zillow’s “Zestimate”
Photo by Mimi
According to the website Rent Jungle, the average monthly rent for a one bedroom or two-bedroom apartment within 10 miles of the city of Portland (Northwest, Southwest and Southeast and Northeast Portland) is 1266 and 1456 dollars, respectively, while A studio apartment is right about 1000 dollars. In 2009, the earliest year for which rentjungle.com kept records, rent for a one and two-bedroom was 810 and 905, respectively. That means that on average rental rates in the city have increased just over 8% per year. A quick check of OREGONLIVE shows that Oregon’s minimum wage over the same period increased only 1.62% per year, from 8.40 in 2009 to 9.25 in 2015. So, unless one has gotten some great promotions or saved well, the same apartment they have been living in for some years may now be too expensive. In this case, the only option is to downsize or move further away from the city, out into the suburbs and beyond.
Photo by Tsubo
This is creating a gentrification of sorts in Portland. As peoples’ rents are increased, they are forced to relocate to cheaper apartments farther away from the city – deeper southwest into Beaverton/Hillsboro, or farther east into Gresham, for example. Similarly, first time home buyers cannot compete for houses in the city or in the suburbs around it, so they too are forced to con-sider houses father away. Meanwhile, there are plenty of wealthy outsiders (and to be fair, there are plenty of wealthy Portlanders as well) who can take-over the prime rental and home locations.
For any Japanese foreign exchange students or expatriates, the high prices in Portland may make it difficult to decide where to buy/rent and what size of unit to select. Depending upon your budget and the size that you need, you may have to choose between a 2 bedroom apartment farther out in Beaverton, or a studio or one bedroom closer into downtown Portland, for example. Furthermore, renting a studio in a newly built apartment complex could easily be as much or more expensive than a 2 bedroom in an older apartment building. Proximity to transportation such as the MAX train, parking at the apartment building, etc, are all factors that will impact the price. There is no wrong or right answer, but depending upon your needs and budget compromising location or quality may be necessary.
Photo by Ryoma
So, what shall happen? Although it is hard to anticipate what the earthquake shall do, if and when it happens, over the long haul Portland is going to get more expensive. The trend of outsiders moving in will only increase. However, the pace of price increases could level out somewhat (emphasis on COULD). At the end of the day, supply and demand determines the cost of living, and some things are being done to try and tip the balance.
Developers are building apartments and condos wherever they can, which should eventually help to absorb some of the demand. Apartments and housing starts are also rapidly being built all around the suburbs of Portland (whether or not one feel’s that the city government is helping or hindering these developments is outside the scope of this article). Interest rates for mortgages should slowly creep back up (although with the recent global economic turmoil, rate increases could still be a while off), somewhat stabilizing the rise of home values. However, as long as Portland’s popularity continues to grow and people continue to move here faster than we can absorb them, overall prices shall continue their upward march — That’s supply and demand 101.
Photo by Mimi
In conclusion, the purpose of this article is to lay out in simple terms why our housing and rents keep increasing. It is not some major plot or conspiracy, but a very logical consequence of, quite simply, the rest of America realizing the awesomeness of Portland. The question to ask, then, is, “Is living in Portland worth the increasing premium?” The fact is, Portland is a wonderful city of-fering an excellent quality of life. Instead of complaining about the increasing cost of living, we should be grateful Portland has flown under the radar for so long – after all, it is still cheaper here than in many of the other major west or east coast cities. Although maybe not for too much longer…