As New Construction Continues – What Do Renters Need to Know?
Is Rent Relief Coming Thanks to a Glut of New Rentals in Places like Portland?
In case you missed the many recent headlines, there is an ongoing rent crisis in the smaller cities of the west. On the ground, the situation has gotten tense, as a lack of inventory, the ever-expanding tech boom, and a general lack of protection for renters has led to a variety of problems.
As you might have guessed, things have been pretty great for landlords and developers, but renters have had it rough and with no end in sight. Well, all of that may be about to change.
Due to ongoing speculation and development in cities like Portland, Oregon, a massive amount of new inventory is about to come online, so to speak. The question is, will all of this supply do anything to stem the rising rents? Will any of this new construction actually produce rentals that are both livable and affordable?
What’s Happening in Denver
Portland isn’t the first city in the West to go through growing pains (San Francisco in the 80s; Seattle in the 90s) and it won’t be the last (consider yourselves warned, Albuquerque and Spokane!). Much of what is currently happening in cities like Portland has already played out in places like San Diego and Denver.
In fact, Denver’s recent construction boom outstripped demand for new apartments to such a degree that the City has had to step in and do something with all of the empty, brand-new, high-rise, luxury apartments that no one can seem to afford. They’re subsidizing rent, and moving lower income, working folks into apartments built for wealthier residents that never materialized.
Learning From What’s Happening in the Bay Area
On the other end of the spectrum from Denver, the Bay Area of California has been experiencing an ongoing rent crisis that shows no sign of producing a glut of available rentals, no matter how fast they build.
According to an article on Slate, San Francisco outpaces bigger East Coast cities like New York by as much as 30% when it comes to building new rentals. The trouble is, even at that rate, they’re still behind demand. This is because people keep moving to the Bay Area as job growth continues at a breakneck pace.
The three cities of the Bay — San Jose, Oakland, and San Francisco — will only get relief if the smaller surrounding bedroom communities step up and beginning adding rental inventory as well. Too bad that isn’t likely to happen.
So what can smaller western U.S. cities like Portland learn from San Francisco? It’s hard to say, but maybe it’s something like, do everything you can to stay in front of demand.
What’s a Renter to Think?
Will the glut of construction in cities like Portland lead to a stabilization of their wildly rising rental markets? Will Portland end up like Denver, with too much luxury inventory and more of its vulnerable citizenry pushed out into the cold or forced to relocate to other cities?
Will Portland and other cities like it end up with the same problems plaguing renters in the Bay Area—out-of-control rents and no available inventory? Or, will Portland’s rental market stabilize somewhat, like Seattle’s has, despite the city’s continued growth?
Ultimately, it may be too early to tell. All the inventory about to come online, coupled with potential legal reforms that give renters some relief, may actually stabilize the rental market a bit in Portland. And the same could happen in other cities like it.
Additional relief may be needed to get those who need housing into surplus luxury inventory. But whatever the outcome, Portland and the other smaller cities of the west will never be able to go back to the sleepy low-rent existence they once took for granted.