Pamplin Media Group – Soaring pad prices
Already high and on the rise, rental costs rose another 14% in Oregon in 2021
It’s no secret that house prices have been rising steadily in recent years, and as a result, rents have also skyrocketed.
According to statistics collected by at least one company monitoring the situation, rental costs in Oregon rose 14% last year alone. Even more shocking, increases in Oregon are halfway against nationwide rent increases.
“When I initially made these numbers and saw them, I thought it couldn’t be true,” said Nick VinZant, senior research analyst for Quote Wizard by Lending Tree. “I had to check them, then recheck them, and it really has been so dramatic this year.”
It’s actually more dramatic in other places. As of January 2021, the states with the largest rent increases are Florida 29%, Rhode Island 28%, Arizona 27% and Nevada 25%. Oregon’s neighbor to the north, Washington, also ranks among the highest with a 23% increase.
Multiple factors contribute to this phenomenon, and one of the obvious consequences is an increase in the number of households subject to rental charges, which the City of Woodburn Planning Department describes in its analysis of housing needs as households spending 50% or more. more of their income to rent.
The HNA study notes: “Overall, in 2017, around 19% of households in Woodburn were overburdened with costs. An analysis of heavy rental charges in Woodburn shows that 26% of renters and 12% of landlords pay more than 50%. of their income on housing costs.
Lending Tree analysts are not surprised.
“We have found that over the past decade, house prices have increased 130% since 2012; incomes have increased by around 30%,” VinZant said.
“What really stands out in places like Oregon is that the rent went up 14% last year, but I don’t think anyone’s wages went up 14%,” he said. he declares. “Housing as a whole – whether owning a house or renting – finds itself in a situation where people can no longer pay for housing because it is rising so rapidly relative to wages.”
The situation manifests itself under bridges, in parks and greenways and in some outlying areas of towns and villages around the valley where homeless camps seem to be on the increase as housing becomes increasingly unaffordable.
Inflation has added a burden
On December 12, CNBC reported that according to Consumer Price Index figures, inflation in November reached its fastest pace since 1982, rising 0.8% for the month and putting it on the on track for a 6.8% release for the year.
The CNBC report cited familiar inflationary sources: energy prices up 33.3% since November 2020; food prices up 6.1% over the year; used vehicle prices up 31.4%. Add in increased housing costs and the mix becomes worrisome.
Analysts often point out that when the housing burden consumes a significant portion of a household’s income, other necessities are often overlooked, such as food, utility bills, school supplies, fuel, maintenance. vehicles or even health care. Food banks and other social services are charged with the monumental task of trying to compensate for these deprivations.
Such needs are evident in places like Woodburn, where the rental charge percentage is actually higher than the norm.
“Generally, we think of rent affordability based on the share of its income that a given household spends on rent each month. Once this share exceeds 30%, a household is considered ‘housing costs’, with limited funds remaining after paying rent to afford other necessities like gas, food and clothing, ”he said. writes Nicole Bachaud, market analyst at Zillow, in an article published last fall, revealing that teachers and healthcare workers were out of necessity living in smaller, older homes. “But even if a household manages to keep its rental charge below this 30% threshold, that does not always give the most accurate picture of the realities in which tenants live.”
Bachaud said data from the American Community Survey and Zillow have shown that many U.S. renters are able to make ends meet by living in smaller, older homes, while previous research has shown that larger rentals. old ones pose more health and safety risks.
“Just ‘paying’ rent doesn’t mean these tenants prosper,” Bachaud wrote.
The slowdown in the pandemic also appeared to make matters even worse.
Administrators of Oregon Housing and Community Services and Local Programs announced on Dec. 9 that Oregon has provided more than $ 170.2 million in federal emergency rent assistance. The report notes that “nearly 25,000 households have received funds to pay their rent due to the difficulties of (the) pandemic”.
That $ 170.2 million was up from $ 157.5 million the week before. Oregon’s emergency rental assistance program is ranked sixth in the country, down from eighth a week earlier, in emergency rent assistance funds disbursed and committed, according to the National Track. Low Income Housing Coalition.
The OHCS and LPA report further noted that approximately $ 170.2 million had assisted 24,705 households, while the group processed and committed an additional $ 21.1 million for 2,465 other households; it received at least 58,849 completed requests. Currently, approximately 22,470 applications are under review.
Get a handle
Taken together and focusing more closely on the home, the accelerating factors of rising home costs and rents associated with headline inflation intensify the load on entities such as the Woodburn Planning Department as it negotiates. through its analysis of housing needs.
As stated in its summary, the HNA aims to project over 20 years to guide decisions to ensure orderly and efficient future growth; ensure that adequate land is within the limits of urban growth to accommodate the projected housing growth; consider housing policies the city might consider to improve housing availability and affordability; update and develop long-term planning policies in a way that preserves the character of the city and contributes to achieving a high quality of life.
Certain peripheral factors also come into play.
Among the contributing factors, according to VinZant, investment in low-end multi-family housing does not appear to be a priority for many investors and developers, and the flexibility of the workplace has allowed people with high-end salaries traditionally received in metropolitan areas to work and live elsewhere.
“People cannot afford to live in the places where they grew up because there is a continuing lack of affordable housing that has not been addressed,” VinZant said.
He added that in some cases an exodus from cities affects rental prices in more rural areas.
“We are seeing people moving out of the big cities and moving to smaller areas where the rent is cheaper than what they used to pay, but they are also pushing up the prices,” VinZant said. “People want a life (and a salary) in a big city, but living is better in small towns. So when they can move and keep their jobs in the city by working remotely, it will (affect) them. rental prices.
“I can’t say that I know how people move around Oregon. I can say that the number of available apartments has gone down, so I guess that means there are more people coming.”
Add investments to the mix
“I think builders are generally looking to high-end products, focused on amenities, vibrant communities and being closer to downtown areas and services that drive up prices,” added VinZant. “Nationally, this is what we have seen.
In recent years, the Woodburn Planning Commission and Woodburn City Council have given the green light to several multi-family projects that will provide the city with more housing options. Each time, the project presenters noted that their plans coincide with the needs of the city as defined in the HNA.
Economic Development staff also touched on the topic, noting that the addition of major employers, such as Amazon, underscores the need in areas such as housing and transportation. In turn, this should spark the interest of investors. Overall, construction has been booming in Woodburn.
“It’s a good thing in business; if there is an opportunity, someone is going to take that opportunity,” VinZant said.
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