Apartments are only getting harder to find in the Portland area, and that's quickly driving rents higher. The metro vacancy rate fell to 2.2 percent from April to June, according to preliminary numbers released Thursday by Reis Inc., a real estate data firm.
Portland remains the second-tightest apartment market in the country, with a vacancy rate only slightly higher than New York. In fact, Reis reports identical 2.2 percent vacancy rates but identifies New York as the tightest market in its accompanying analysis.
The Census Bureau puts Portland’s rental vacancy rate at 4.2 percent in the first quarter of 2012, still the second-tightest market surveyed. Reis says its numbers differ from the Census Bureau’s because it only includes market-rate apartments. Second-quarter census numbers will be released at the end of July.
Across the country, vacancy has fallen to 4.7 percent, down 1.2 percentage points from a year earlier. It's only the third time in 30 years the national vacancy rate has fallen below 5 percent according to the firm's metrics. "Vacancy has not been this low since the wake of the dot-com boom more than a decade ago," said Ryan Severino, a Reis economist.
Apartment construction came to a full stop during the recession as lending grew scarce.
But demand has grown in the meantime. Many who lost their homes in foreclosure are now renters, and fewer people are buying their first home than seen historically.
With their buildings full of tenants, property owners are raising rents.
Reis reported a 5 percent increase in Portland-area rental rates over the past 12 months, reaching an average of $831 a month. Only San Francisco saw a greater increase over the same period.
"Landlords have been very aggressive in pushing the rents, particularly in the urban area," said Mark D. Barry, a Portland apartment appraiser. "All you have to do is throw it on Craigslist. ... If it doesn't rent in three, four, five days, or they start getting resistance, then they'll drop it down."
Low vacancy and rising rent has touched off a flurry of new apartment construction. In the Portland area alone, developers have received permits for 2,514 apartments in more than 100 buildings in 12 months ending in May, according to the U.S. Census Bureau.
Those apartments are still months from completion, but property owners have taken note, Barry said.
"Landlords are a little nervous," Barry said. "They're very aware of how much stuff is coming out of the ground."
Published: Thursday, July 05, 2012, 4:39 PM Updated: Thursday, July 05, 2012, 10:07 PMBy Elliot Njus, The Oregonian