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Good Housing News and Bad Housing News

The return of the housing market is creating a major rental pinch



Since last summer, housing prices in Central Oregon—and especially Bend—have rebounded alongside the strengthening economy, with many homes selling above asking price. Great news, right? Well, not for everyone.

According to numbers released last week by the Central Oregon Rental Owners Association, Bend's rental vacancy rate dropped below one percent (to 0.7), a number reminiscent of legendarily tight markets, like those in New York City and San Francisco. Housing Works' Housing and Resident Services Director Kenny LaPoint said that the current market is tightening the noose even a bit more. Last year, vacancies were already at one percent, and it only has worsened (for renters) since then. Especially for people earning modest or fixed incomes, these numbers darken the horizon considerably.

"It's a little out of control," LaPoint commented. "It's like Southern California around here." He added that a healthy vacancy rate would be about four to five percent.

Of course, such tight vacancy rates play havoc on the supply and demand rules for housing; last week's COROA survey indicated the average range in rent for a two-bedroom property (anything from a tri-plex to a free-standing home) in 2013 was in the high $700, low $800 range. But because of a constricting market, the latest figures top out at $980 for a two-bedroom rental, roughly a 25 percent jump.

"There's always going to be a need for affordable housing any time your economy is based on hospitality and you're in a desirable place to live," Bend's Affordable Housing manager Jim Long said last week in a meeting room at city hall. "Combine that with the amount of developable land we have until the (Urban Growth Boundary) expands, and your market keeps getting tighter and tighter. We're back to the days of $300,000 an acre for land, undeveloped land in town."

In the past, one means to release pressure on the housing market Bend has implemented is an Affordable Housing Fee, which Long helped establish in 2006. Unique in Oregon, the fund collects one-fifth of one percent of the value of any submitted building permit in Bend; it is a small individual amount, but as many hands make light work, the collected fees have allowed Long's department to sustain 371 units in the city for low-income residents and loaned almost $6 million for area development.

"This is not a panacea," Long said of the program. "Our affordable housing fee is not going to cure the problem. It's at least one more step to alleviate it."

One way the fee has been used is on display at a stretch of three apartment buildings along NW Dekalb Ave. in Bend called Housing for Heroes. A gray sign sits out front, displaying the complex's name, topped with an American flag. Maintained by Central Oregon Veterans Outreach, the two-bedroom, one-bathroom rentals are home to an assortment of vets who have encountered long-term homelessness or just had a difficult time finding steady employment to pay for a suitable place to rent. Only one of the 12 units is currently unoccupied—but its new tenant's set to move in soon, and the waiting list reaches back to December.

Often, though, these affordable housing options cater to specific demographics, like homeless vets. City officials point out that more general populations—like the incoming student population for the expanding OSU-Cascades campus—will present even broader pressures. And, unless, city officials find a solution soon, the housing bottleneck will tighten even more.

Based on past growth and taking into consideration all those college kids, city councilmember Victor Chudowsky said that by 2025, the city could swell from its current 80,000 to 115,000 residents.

"What the state wants from all Oregon cities is more density," Chudowsky said. "More infill, more people per square mile, more residences per acre...We're constantly up zoning for more density." The city councilor said that two-thirds of the city's housing stock is single-family and only one-third is multi-family.

"In my mind, we've always had an opportunity for urban infill," said city councilmember Doug Knight. "Creating projects in the community that we have and filling out the fabric that may have holes in it—it's my idea to do that as creatively as possible and as affordable as possible."

In early April, city council took one step toward resolving the housing pinch—or, at least one step away from sure disaster—by hearing public comment on the matter, as well as a brief report by Affordable Housing Advisory Committee member Andy High. The fee, which is scheduled to expire in June, could be extended for five years as a "sunset" clause. A second reading of the ordinance to "sunset" the program over the next five years is set for May 7. Councilmember Jodie Barram also has suggested a more permanent place for the Affordable Housing Fee by including the matter into bi-annual budget discussions.

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