By Don McIntosh
In Portland, City Council declared a housing state of emergency Sept. 7 — for the second year in a row. The emergency is real, and worsening rapidly.
Portland home prices are now out of range for most working people. The median sale price is $385,000, having risen at or above 10 percent annually for the last five years, and whilst America’s home prices have risen
the rate at which they are rising in Portland is causing deep concern for the local citizens.
Portland rents, meanwhile, are rising on average 12 percent a year — faster than anywhere else in the nation, and four or five times the rate that wages are increasing. Rising rents are shaping up to be an enormous and permanent shift of income from renters to landlords: At current average rents, two years of double-digit increases amount to about $600 million taken out of the pockets of tenants in Portland alone. This could be a great opportunity for investors to invest in cheap property and renovate it to create affordable housing, but make sure you keep an eye on what is a good cap rate guide so that you don’t make a bad investment.
About 47 percent of Portland households — roughly 125,000 in all — are renters. The increase also comes from stricter Eviction Laws. You may not think about it but, there are tens of thousands of renters who aren’t paying any rent each month, someone has to pay for them!
And unaffordable rent is contributing to rising homelessness. Shantytowns are cropping up under bridges, along railroad tracks, and in parks and on the sidewalks of residential neighborhoods. As many as 4,000 people may be living on Portland streets.
Portland City Council’s response to the emergency has focused on supply. The market failed to supply affordable rental housing, so the City will offer tax abatements to developers in exchange for temporary commitments to rent some units affordably. Relaxed zoning codes will make it easier for homeowners to build detached housing units on existing lots. A $258 million bond issue will pay to construct 1,300 units of affordable housing for lower-income renters.
It’s not enough, says the union-backed group Portland Tenants United.
“No one facing a $500 rent increase is going to say, ‘Thank God for the housing bond,’” says Lewis & Clark College instructor Margot Black, who helped found the group.
At a Nov. 18 press conference outside City Hall, Portland Tenants United called on City Council to enact rent control. As practiced in other U.S. cities, rent control limits rent increases to a certain maximum, such as the overall rate of inflation. Rent control is by far the most potent tool to stop runaway rent increases, but the Oregon Legislature, at the request of the landlord lobby, enacted legislation in 1985 prohibiting Oregon cities from enacting rent control ordinances. Oregon House Speaker Tina Kotek (D-Portland) said she’ll seek to overturn that prohibition next year.
But Portland Tenants United says the city doesn’t have to wait. The state law banning rent control provides a temporary exception in the event of a natural or man-made disaster that materially eliminates a significant portion of housing. Black says Airbnb, which may have taken more than 1,000 units off the long-term rental market, is such a disaster, and that it has materially eliminated housing.
So it’s calling for the city to enact an emergency rent freeze — and a moratorium on “no cause” evictions.
Steve Goldberg — a retired longtime labor lawyer now assisting Portland Tenants United — says there is legal precedent that would support the city’s right to take action on a rent freeze.
City Commissioner-elect Chloe Eudaly, who defeated incumbent Steve Novick, will be the only renter on City Council when she takes office in January. And her rent has risen 60 percent in the last four years. At the Portland Tenants United press conference, Eudaly said it was her landlord’s rent increase that made her get active politically.
“I support the call for an emergency rent freeze, whether that requires an act of municipal disobedience or not,” Eudaly said. “I argue that the cost of not acting is much greater than any legal penalties we may face.”
Oregon AFL-CIO political director Graham Trainor says housing affordability was one of the top issues legislative candidates heard on voters’ doorsteps this election cycle, so lawmakers know they must do something about the crisis.
The AFL-CIO will be working as part of the Stable Homes for Oregon Families Coalition on two solutions: an end to no-cause evictions, and removal of the prohibition on rent control.
Devastating rent increases
Laid-off Daimler Machinist Local 1005 member Mike McLaren had his rent increased from $600 to $1,100 from one month to the next. Rent increases like that are becoming commonplace in Portland. At Labor’s Community Service Agency (LCSA), outreach specialist Eryn Byram says over the last year she’s seen the almost complete disappearance of any Portland-area rental housing under $1,000 a month. From mid-2015 to mid-2016, LCSA’s temporary hardship assistance program helped 87 union members with money for rent or security deposits.