Zillow calls Portland the nation’s fourth “hottest” apartment market based upon a combination of new apartments as a percentage of total rentals (just 1.7 percent), the percentage of new apartments rented within three months (72 percent), and apartment rent appreciation over the preceding year (8.6 percent).
Not to be outdone, Axiometrics ranks Portland as the second strongest market for apartment rent growth, citing 10.1 percent annual effective rent growth for the year ending March 2016, an occupancy rate of 95.7 percent, and 9.5 percent revenue growth.
With a market like this, it is little wonder that permits were issued for 6,657 new apartments in the Portland area, according to Barry & Associates, with a total of around 21,500 units in the pipeline (and potentially 24,500 or even more units as the project size for 55 proposed projects becomes known).
And it’s not just Portland’s apartment market.
The Standard & Poor’s/Case-Shiller home price index shows that Portland posted the nation’s largest year-over-year gains in home values for the fourth straight month. Portland’s 11.8 percent increase in home prices for the year ending in January 2016 outpaced the 10.7 percent growth in Seattle and the 10.5 percent growth in San Francisco. Looking at the data somewhat differently, Portland Monthly reported that Portland’s median home sale price of $340,000 was up 45 percent from 2011 to 2015.
What may be driving all of this?
One factor: Jobs. As the Portland Business Journal reported last week, average Portland-area private-sector salaries grew 6.5 percent in 2015—exactly 2.5 times the national average and the 3rd highest growth for a large metro area. In the tech sector alone, job growth is accelerating in Portland (7.6 percent growth for the year ending February 2016) amid rising rents in the San Francisco area, according to Bloomberg. All told, Portland’s unemployment rate was recently reported by The Oregonian to be at its lowest point in more than 15 years.
Another factor: Continued immigration to Portland. The Census Bureau’s data shows that the Portland area’s population grew nearly 2 percent for the year ending July 2015. Little wonder with Oregon charting as the top destination for state-to-state migration for a third straight year, according to United Van Lines.
Yet another factor may be lack of inventory. Indeed, Portland saw the fifth largest decline of housing inventory for the year ending February 2016, according to Redfin.
But regardless of the causation, if these numbers wow, consider this: A typical single-family home in Vancouver, B.C., now costs $960,000 in U.S. Dollars, up 26 percent for the year ending January 2016—and nearly three times as much as the cost of the median home in Portland.
For more on developments and issues in the Portland and Northwest real estate market, follow Jonathan Singer on Twitter (@CREportland).