Landlords say they need to do very little now to attract tenants. Nina Lyski—the building manager for Jeanne Manor, a historic 67-unit building in the South Park Blocks owned by KBC Management—says there are 15 people on a waiting list.
“I rented about eight apartments last year sight unseen,” she says.
Nancy Swann, who runs the complaint hotline for the Community Alliance of Tenants, says most of the criteria landlords use to reject tenants aren’t new: Credit history, rental history, pet ownership and employment have been application questions for years.
The difference today is that landlords can afford to be picky. The slightest blemish on a credit history can doom a would-be renter’s chances.
Swann says landlords who in the past have been willing to work through problems with tenants are far less inclined to do so in this market.
She has heard complaints from people who lost their jobs and whose landlords refused to wait for the tenants’ unemployment benefits to start before evicting them.
“A lot of landlords are like, ‘Pay the rent or get out,’” Swann says.
Developers say the economics of building apartment complexes in Portland don’t pencil out right now, even with rents climbing fast.
High-rise buildings need higher rents to pay off their large upfront construction costs, which tend to run higher per unit than the low-slung apartment buildings outside the city’s core. There are only a few places in the city—the Pearl District, for example—where landlords can demand especially high rents, but some developers say not high enough.
Spencer Welton, senior vice president of development for Simpson Housing LLLP, says apartment towers like the 15-story building his company planned—and then canceled—for the Pearl District can’t charge rents high enough to pay for the project.
Welton says his company, after looking at rents in similar-sized Pearl buildings, planned to charge an average of $1,700 to $1,800 a month for a one-bedroom unit.
It didn’t pencil out to cover the $56 million project. “With the kind of construction we were trying to do, the rents just didn’t support that,” he says.
Portland developer Bob Ball says he can make a new Pearl District building work. He recently announced plans for a six-story, white-brick apartment complex called The Parker on Northwest 13th Avenue between Pettygrove and Quimby streets, with a planned opening of 2013.
Ball says the key is constructing a shorter building with slightly smaller units, thus reducing the building costs while allowing him (he hopes) to charge about the same rents Simpson considered.
“If you have the right product and the right amount of land, I think the rents are there to support it,” he says. “But if you’re building anything with many stories, you’re going to have to have the rents to pay for it.”
Pearl District rents are beyond the means of most Portlanders. Yet developers are not building the low-slung apartment complexes that are cheaper on a square-foot basis to develop and, in turn, rent for less money.
Tokola Properties’ Unti says the region’s available land for stick-built, horizontal, suburban apartments has pretty much been used up, and the area’s urban-growth boundary has limited where new construction can be built.
Unti also says banks cut way back on lending for real-estate development, especially those for apartments that charge mid- to low-range rents.
“In the past, I could borrow about 85 to 90 percent of the cost to build a new apartment,” he says. “Now, I can borrow about 60 percent. Everyone is more risk sensitive, more risk averse.”
Unti says public-private partnerships, such as subsidies in urban-renewal areas, could help.
Fish says the city has tried to find ways to help, but he admits it hasn’t been enough. According to the Housing Bureau, the city since 2006 has paid $150 million to help add 4,500 units of affordable housing through construction and aid to renters making down payments when they buy a home.
Fish says the subsidized units go to households that make 60 percent or less of Portland’s median family income. That means a family of four that makes less than $43,200 would qualify. A single person needs to make less than $30,240.
Even with this housing available, Fish says more than 50 percent of Portland renters are “cost-burdened,” which means they pay more than 30 percent of their monthly incomes on rent.
“On paper, we’re doing a pretty good job, but the demand just keeps growing,” Fish says. “We’re going to have an impact, but on the margins. The market is going to provide the bulk of the housing.”
No one has a good answer for satisfying the demand.
“It’s absolutely true we won’t be able to build our way out of our housing crisis,” says Mary Li, Multnomah County community services director.
Li, who works with several programs designed to help people find housing, says she sees the shortage on a daily basis.
She says the city and county provide financial help for people to rent, from short-term rent assistance to cosigning leases if the renter has bad credit. But those programs don’t address the rental shortage.
That means higher rents—the only way developers will get the cash they need to qualify for financing. And rents have already risen too high for the average Portlander.
Elisa Harrigan, executive director of the Community Alliance of Tenants, says she’s already seeing the impact of high rents.
“We’re seeing the burden be higher on tenants to maintain their housing,” she says. “People’s incomes aren’t growing at the same rate as the rental price, and government services are getting cut.
“Things were bad before, but they’re worse now.”
Bozanich hopes the city and developers figure it out.
“I know that community is really important to Portland,” she says. “I hope we get to keep living that way instead of being pushed out and separated.”