After a dramatic rise in rents in Portland from 2010 to 2015, the city’s average market rent prices have leveled off and risen at about the rate of inflation, according to an analysis by the Portland Press Herald.
The cooling market has been cited as a reason to oppose a referendum next month in Portland that would place limits on future rent increases, among other protections for renters. But backers of the measure cite other evidence that rents continue to rise at an unsustainable rate, especially in some neighborhoods, and say individual renters still need to be protected in the future from unaffordable rent hikes and from evictions.
The average advertised rent price for a two-bedroom apartment in Portland, including utilities, rose from $1,560 in September and October 2015 to $1,605 at the same time this year. That’s a 3 percent increase. When adjusted for inflation, rents have actually fallen slightly in the past two years, according to the Press Herald market survey.
While the average rent citywide has leveled off, it remains well above what is considered to be affordable for a renter earning the median income in Portland.
The state of the rental market has become a political issue leading up the citywide vote Nov. 7. Voters will decide the fate of a citizen initiative to adopt a rent stabilization ordinance that would limit increases to the rate of inflation for landlords with six or more units and make it more difficult to evict tenants. It would also establish a rent board, which among other things would hear appeals from tenants who believe they were wrongly evicted or had their rents raised illegally.
More than half of Portland’s residents – 57 percent – are renters.
The leveling of rents and an increase in vacancy rates are signs that the market is now absorbing the demand for market-rate housing that drove up housing costs in recent years, said Tom Watson, a rental property owner and member of Say No To Rent Control, a well-funded political action committee that opposes Question 1 on the city ballot. Watson, however, concedes there is still a lack of housing supply for lower-income renters.
In the last three years, more than 600 units of housing have been built in Portland, with an additional 464 under construction as of September. And other communities in Greater Portland, such as Westbrook, are adding housing units as well.
“There is an irony there that the rent control people are pushing for rent control in a flat market,” said Watson, a co-owner of Port Property Management, which is city’s largest market-rate landlord. “It does seem misplaced.”
After annual increases of 6 percent to 9 percent from 2011 to 2015, Watson said he hasn’t increased rents in his apartments in the last two years and is currently offering $500 off some of his apartments.
Jonathan Culley of Redfern Properties provided similar rent data for his apartments at West End Place, which was built in 2014 and was the first in a wave of market-rate apartment projects in Portland. Average rents in that 39-unit building have declined by nearly 1 percent, since 2015, Culley said.
Meanwhile, a city housing market report released last week estimated that the vacancy rate for rental units is currently at 3.5 percent, which means the shortage of available units has eased since 2015 when the vacancy rate was virtually zero.
However, Fair Rent Portland, which authored the proposed ordinance and collected signatures to put it on the ballot, said the rent limits and other measures are still needed. In addition to preventing future rent spikes, it also contains provisions that would protect renters from unjust evictions and would create a process whereby renters could resolve disputes with landlords through a rent board appointed by the City Council, rather than going to court.
“It’s going to give a lot of people piece of mind,” said Fair Rent Portland organizer Jack O’Brien.
The group also points to another market tracker, RentCafe.com, that indicates rents in Portland increased by 7 percent to 9 percent in 2016. O’Brien agreed that rents appear to be leveling off in 2017, both here and nationally, but said the lull is likely temporary and only means that it is a good time to roll out a rent stabilization ordinance.
“Because at that point, the ordinance isn’t really changing what the market was going to do otherwise and it’s only going to come into effect when you have a significant push for upward rents,” he said. “The long-term trend is really clear – renters are facing higher and higher cost burdens.”
And just because the overall average rent increases have tapered off, that doesn’t mean that some individual renters are still not seeing large rent increases.
O’Brien pointed to a city report released last week that included data from the online real estate firm Zillow showing that some neighborhoods, such as the East End, East Bayside and Oakdale, recently experienced double-digit rent increases.
Both sides agree that Portland’s average rent increases appear to have peaked in 2015, the same year the Maine Sunday Telegram published a series of stories on Portland’s housing crunch. The paper found that rents increased by nearly 40 percent in the five-year period leading up to that report, even after adjusting for inflation.
At the time, desperate renters flocked to open houses to view the few available apartments and sometimes lost out when a rival had cash in hand. Others left the city for a suburb, where buying became the cheaper option. And low-income residents were sometimes forced into substandard units, or into the homeless shelters or campers parked near the downtown. Some landlords evicted low-income tenants from some buildings so they could upgrade and charge higher rents.
Mayor Ethan Strimling called the rental market a crisis at the end of 2015 and created a Housing Committee to look specifically at housing issues, ranging from tenant security to housing supply. The committee originally consisted of five of the nine councilors with the hopes of producing proposals that already had a majority support, but was scaled back to a three-member committee this year.
In the end, the committee in 2016 recommended modest tenant security proposals – such as increasing the notice period for increasing rents, updating the city ordinance to mirror state language on housing anti-discrimination laws and educating tenants about housing laws – rather than more aggressive proposals, such as rent control.
While hundreds of new housing units have been built since then, the affordability gap – or the difference between what people can afford to pay for rent versus what they actually pay – still exists, especially for people who work in the hospitality industry, which is the backbone of the city’s bustling tourist economy.
The median renter income in Portland appears to have leveled off since a decline that began in 2010, during the Great Recession. The median renter household income in Portland in January this year was $34,680, according to data compiled by the Maine State Housing Authority. That is still lower than the 2009 median income of $39,036, but suggests a leveling off or possible rebound from a nine-year low of $30,601 in 2014.
The result is that, despite seeing rents stabilize, many renters still feel like they are being squeezed out of the city. The city’s housing report indicates that half of the city’s renters pay more than 30 percent of their income on housing – the standard benchmark to determine whether housing is affordable.
The maximum affordable rent for a median-income renter in Portland is now about $867 a month, based on the state income data. That’s more than $700 less than the average rent for a two-bedroom apartment, according to the Press Herald survey. And it’s nearly $500 less than the average rent for 114 one-bedroom apartments leased between March and June by Port Property Management, which owns or manages more than 1,000 units, primarily in downtown Portland. Those one-bedroom units averaged $1,113 a month.
Randy Billings can be contacted at 791-6346 or at:
rbillings@pressherald.com
Twitter: randybillings
Staff Writer Cara DeRose contributed to this story.
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