Much like Jimmy McMillan of the “Rent is Too Damn High” party, Portland’s housing market is at dizzying new heights and the pressure of this new paradigm is having a ripple-effect across all sectors of the housing market. The forces of supply and demand at work on real estate purchases are also influencing Portland homes and apartments, where high demand meets investors looking to financially rebuild from recession. Predictably, these titanic forces are pitting landlord against tenant.
Landlord vs Tenant
At the city level, landlords are now facing increasing red tape and are required to give 60 day notices for tenants to vacate. Adding to landlord concerns, new legislation in the Oregon Senate (House Bill 2004) would up that standard and require many landlords to give 90 days notice for evictions. Not only this, but many landlords would also have to pay the tenant one month of rent on top of that. But wait, there’s more! If passed, the law would also lift the statewide ban on rent control which would free up the city of Portland to enact new policies to limit rising rents. In a related effort, local Portland government is enacting laws to restrict AirBNB for the stated goal of forcing more homes and rooms to be available to long-term tenants.
For tenants struggling to keep an affordable place to live, these measures seem both reasonable and necessary. On the other hand, many landlords are also under financial pressure and fear that these additional monetary strains could push them into the red. The bottom line is that home values in Portland went up over 12% last year, which is much faster than most household incomes are rising. Is it a good idea to hold rental prices back while real estate prices soar? And will such laws even be effective? While at first it might seem like the landlords are simply cashing in on the housing boom, the reality is much more complicated.
The Human Cost of No-Cause Evictions
The kids were finally asleep for the night (or, if not asleep, at least quietly in their rooms) and a new wave of anxiety verging on panic set in. There was the notice on the table, a few pages of official-sounding jargon spilled below a clip-art logo and a generic “xyz” property management company name. Picking up the document, it was odd to feel how something as insignificant and light as a page with monolithic blocks of text could set their family back financially for months, if not years. The young couple each sighed and silently shared a look that seemed to convey all of the frustration and pain they felt at having to again scramble and fight just to avoid homelessness. As they added up first and last month’s rent, security deposit and application fees it became clear that even before they took time off work and physically did the work of moving, that this was going to cost them several months’ worth of savings. The last move had pushed them both further away from their jobs, meaning higher transportation costs and a lower quality of life. In years past, this would have only been a 30 day notice that would leave them only a few weeks to pay several thousand dollars toward a new rental so having a little extra time meant they had a fighting chance to find a new place.
As the couple went through the budget, trying to find the extra money, thoughts of saving for retirement and having a financial safety net seemed to evaporate under the glaring light of the demands of the present. While the couple emotionally absorbed the impact of another move and how to pay for it, their thoughts strayed to the plight of other tenants in the complex who may not even have a chance. On the ground floor to the left was a disabled grandmother scraping by on social security checks because her retirement had been all but obliterated in the Great Recession. Or, what about the couple with the new baby and thousands still owed in medical bills getting by on a single income? These questions played back and forth as fear and frustration coalesced into resolve and determination. A few minutes later, they sent an email to state and local lawmakers, joining countless others like it, demanding justice and greater rights and that their collective grievances be addressed. After public outcry from many people facing an eviction without enough time to find something new, Oregon House Bill 2004, was born.
Somewhere else in Portland, a local home owner was searching local home values and realized that the hour of their financial freedom may have finally arrived. For the last several years this home owner had barely scraped by through renting out their primary residence because the recession had left them unable to sell and unable to earn enough money to make the payments. Now, with an established tenant living in the property and calling it home, this owner is facing the difficult decision to issue an eviction notice. As the weight of responsibility hangs heavy, the only options are to continue to rent out the house at a loss or begin the lengthy process of removing a renter so that Realtors would be able to show the home to their buyer clients. The rent wasn’t enough to cover all of the home’s costs and the homeowner looked forward to selling and being free from the property that had threatened him with short sale or foreclosure ever since the recession began. Last week’s meeting with the real estate agent confirmed what was already known; that most buyers would be scared off by having a tenant in the property and they would have a difficult time getting the sale price needed to move forward. The added time and complications of removing the tenant would tack on thousands of dollars in extra costs to selling because vacant or occupied, the mortgage has to get paid.
For those renting as well as owners hoping to finally be able to sell their property after a long recession and a slow recovery, many people in Portland, OR are feeling the squeeze of rising housing costs as the area becomes more popular to out-of-state residents.