If you’ve invested in the Portland rental market for any amount of time, you know that things change frequently. Whether we’re talking about rental values, local laws, or tenant demands, the shifts and changes in our real estate and rental markets can make investing a challenge.
Staying up-to-date and understanding what to expect is critical to your success as an investor. But, as you’re busy looking for new investment opportunities and making decisions about your current portfolio while evaluating your investment goals, it can be difficult to follow every rising trend in the Portland rental market. In order to know what you expect, you’ll want to surround yourself with experts who are able to deliver the best data, resources, and advice.
Should you be a new investor in Portland, or thinking about buying a rental property, the need for local support and advice is even more critical. This is a dynamic market that has been experiencing significant changes over the years, and understanding what's happening is crucial to ensuring your investments remain profitable.
At PropM, Inc., we have been working with new and experienced investors to develop strategies that lead to lower investment costs and higher investment returns. We understand the local real estate values, the way rental prices are impacted by the market, and the things that good residents are looking for in their next rental home. We also make it our mission to stay on top of the ever-shifting laws in Portland and throughout Oregon. We’re a very tenant-friendly state, and that’s an important thing to remember when it’s time to market, screen, and negotiate lease agreements and renewals.
We’ve put together a comprehensive analysis of the current rental market trends in Portland, and what you can expect in the coming year. These are our general impressions of the market as a whole, but as you know, every investment property is unique. If you’d like to talk about what these rental trends mean for your property or your investment portfolio specifically, get in touch and we’ll provide a deeper analysis based on what you have and what you want to do.
Rental Demand in Portland is Strong and Getting Stronger
The demand for rental properties in Portland has remained strong, with an occupancy rate of approximately 95 percent in the current market. This is good news for any rental property owner; you can likely count on a strong tenant pool and generally good chances of tenant retention.
That doesn’t mean you can take it for granted. Providing an outstanding rental experience to your residents and focusing on retention strategies is important in order to keep your investment property occupied and your rental income stable. But, the current rental environment is favorable to landlords and investment property owners.
Portland's population growth is one of the primary factors driving the demand for rentals, with a diverse demographic pool when we’re talking about renters. We’re seeing retirees, students, families, and professionals renting homes in Portland. Remote workers from other parts of the country are choosing to spend some time here.
The high home prices in the sales market and the expense of getting a mortgage right now are also keeping people in the rental market. Higher interest rates and a competitive sales market are keeping would-be buyers in their rental homes for a little longer, which is creating a higher demand in the Portland rental market.
We expect this trend to stick around for most of 2024. Look for high occupancy rates, high retention rates, and lower vacancy and turnover numbers. You should not have a difficult time identifying, attracting, and retaining high-quality tenants.
Rising Portland Rental Prices
Oregon was one of the first states in the country to implement statewide rent control. While there are both state and local ordinances that limit the amount of a rental increase you can implement on tenants living in your property, rents have still climbed and they are still at levels that can create income in both the short and long term for investors.
Rents are higher all over the country, and in Portland, the higher costs for residents are no exception. Rents have been going up fairly steadily over the years, even with rent control in place. This trend is expected to continue. Even if your investment property is included in the rent control laws, you can expect to earn more in rent each year, whether you’re renewing your lease agreement or marketing a home to new tenants.
According to research published by Zillow, Portland, rental prices have gone up a minimum of 5 percent over the last few years. We have been gathering data specific to neighborhoods, property types, and residents. If you’d like a more specific and detailed analysis of where your rental value should be right now and how much you can expect to raise it year over year, get in touch with your Portland property managers. We can share the insights and analytics that we gather every day to give us a picture of the market and where the pricing lands.
The rise in rental prices in our market can certainly be attributed to the low supply of rental properties, coupled with the high demand. As an investor, this is good news since it means more profitability for your investments.
Emphasis on Sustainability: Meeting Tenant and Market Demands
Here’s a trend that is growing in popularity, among both renters and investors: environmentally-friendly housing. Portland is a city that embraces greener living and eco-friendly lifestyles. Therefore, sustainability is becoming increasingly important in the local rental industry. We have talked to a number of renters who are looking for environmentally friendly rental homes.
Sustainable features are becoming more and more popular, particularly:
Energy-efficient appliances. When you’re ready to replace a washing machine or a refrigerator look for the Energy Star label. This will appeal to residents, keep energy costs down, and give you a major selling point when you’re marketing your rental home.
Solar panels.
LED lights instead of fluorescent bulbs.
Environmentally friendly landscaping and curb appeal.
Smart thermostats that allow your residents to set the heating or the cooling to levels that respond to whether anyone is home or even in a particular room.
Investing in sustainable features such as these can attract more renters, making your property more desirable and profitable.
Lease Agreement Flexibility
Standard lease agreements are often for terms of one year. This is still the norm, but one of the trends we’ve been following is the tendency for some owners to offer flexible lease terms to residents. There are two reasons for this:
First, more and more remote workers are living nomadically, often moving from city to city for several months at a time. They might not want to rent a home for a full year. If you’re willing to offer a six-month or a nine-month lease agreement, you might find that you can charge more and appeal to renters who can live and work anywhere.
Second, short-term rentals are growing in popularity. While Portland has strict rules and laws that address vacation homes rented out on platforms such as Airbnb, renting out a property for a term that’s longer than a month or two will still give you more flexibility and fewer regulations.
Many landlords are offering month-to-month leases, giving renters more flexibility and a sense of security when they’re not sure how long they want to stay in a home.
There are pros and cons to this, of course. But, if you’re willing to offer flexible lease terms to qualified residents, you’ll find that you’re aligned with the recent and future trends of rental housing. You’ll also attract an expanded pool of potential renters.
Advancing Technology Trends in Portland Property Management
Advancements in technology are changing how people rent and manage rental properties. Tools such as online payment platforms and property management software make it easier for landlords to manage their properties and communicate with their tenants. As a rental property owner, utilizing these technological advancements can make managing your properties more efficient and convenient.
There are also specific technologies that tenants are looking for when they rent a home. Not only will they appreciate online rental payments and online maintenance requests, they’ll also want some smart technology in their home. Consider investing in smart locks or digital keypads. Video doorbells are popular and provide extra security to residents. You may also want to invest in technologies such as automatic irrigation and smart thermostats. These will require an investment, but you’ll find you’re able to increase the value of your property and also appeal to well-qualified renters. You’ll also get ahead of technology trends, offering a modern and appealing rental property in a crowded market.
The Portland rental market is experiencing several trends that rental property owners need to be aware of. These trends include a strong rental demand, rising rental prices, an emphasis on sustainability, flexibility in lease agreements, and technological advancements. As an investor, staying informed about these trends can help you make informed decisions about your properties, maximize profitability, and stay ahead of the competition in the market.
We can help you position yourself to be prepared for and benefit from the latest rental trends in Portland. Contact us at PropM, Inc.
