Portland lost thousands of units in the years following passage of a package of tenant protection rules, and groups representing homeowners and landlords say the matrix of rules is to blame.
In the years after the creation of rent control and applicant screening rules, Oregon’s largest city lost an estimated 14 percent of its single-family rental units, according to a new study commissioned by the groups.
That’s twice the rate of loss in the three-county area excluding the city, and it has sparked calls for the state and municipal leaders to intervene.
“A mom and pop landlord who isn’t an attorney and only has a couple of units and isn’t doing this as their primary job, they’re really in a bad spot,” said Jeremy Rogers, director of policy and legal affairs for the Oregon Realtors, one of the groups that commissioned the study. “They’re really not in a position to understand these as they would need to in order to comply with them.”
In 2017, Portland passed an ordinance requiring landlords to pay a tenant thousands of dollars if they raise rent by 10 percent or more or evict them unless certain criteria are met.
Landlords can be required to pay as much as $4,500 for a three-bedroom property to help tenants find a new place to live, according to the regulations. The rule went into effect in March 2018.
But the Realtors and another group representing landlords say the creation of a statewide rent control law made things more complicated for independent property owners who now have multiple layers of regulations to wade through.
In 2019, the Oregon Legislature passed Senate Bill 608, which, among other things, capped rent increases at no more than 7 percent statewide in most cases and limited landlords’ ability to evict tenants who have lived in a property for more than a year.
After the Realtors and another group that works with property investors, Multifamily Northwest, heard from scores of independent landlords who were selling their properties due to the regulations, they decided to hire ECONorthwest to research the trend.
“If we’re having people tell us that’s what’s happening all the time, and that’s what we’re hearing in the field, that’s what caused us to run the study,” said Michael Havlik, deputy executive director of Multifamily Northwest.
How big is this trend?
According to the study, Portland had 27,656 single-family rental properties before the first of the recent tenant protection laws took effect. That fell to 23,669 in 2020, a drop of 14.4 percent.
The metro area — not including Portland — saw its stock of detached single-family rentals drop by 7 percent during that time, or half the rate of Portland. The metro area includes cities within the three counties that make up the metropolitan area.
The share of detached units that are used as rentals in Portland was 20 percent in 2013, the study found. That dropped to 16 percent in 2020. (The metro area followed a similar trend.)
There’s an intense focus on rental housing in the Rose City, which is expected to see its vacancy rate dropped to 2.8 percent by the end of 2022, according to a January report by Marcus & Millichap. The city also saw a political uprising in favor of bolstering protections for renters, who now pay an average of $1,680 a month.
Havlik pointed to the differences between Portland and the surrounding metro areas as a reason to reconsider the regulations.
“We’ve identified a broad trend,” Havlik said, “and I think it needs to be investigated more thoroughly.”
The decline has occurred since 2014, but researchers found the decline accelerated starting in 2017.
Portland followed up its rent control rule with regulations around screening criteria that can and can’t be used, regulations around the amount and use of security deposits, and the timeline and process for accepting rental applications.
“It was just this whole movement going on in the city of Portland to bash housing providers and pass laws that sort of treated them as if they were the problem,” Rogers said. “That’s why people want to get out, it’s just too easy to make a mistake.”
The Portland Housing Bureau, which is responsible for leading housing policy for the City of Portland and administering programs to produce affordable rental housing, acknowledged the report’s findings in a statement to Inman but dismissed claims that tenant protections were to blame.
The group said Census Bureau statistics show rental housing stock is declining across other major U.S. cities.
“There are many factors that impact the detached single-family rental housing market in Portland and other cities, and the Census Bureau data certainly indicates a broader trend outside of just Portland,” the bureau wrote in its statement. “Without the kind of analysis that identifies causal factors on market shifts, and their significance, the Housing Bureau is not able to comment on these claims.”
For their part, both Havlik and Rogers said they’d welcome further study and a possible return to statewide consistency around rent control, if anything. They note that Eugene, Oregon, is considering its own renter protection ordinance update.
“Our preference would be for the landlord tenant law to reside only at the state level,” Havlik said, “and to avoid creating a patchwork of regulation around the state.”