By: Russell White, Director of Residential Property Management
With the uncertainty over the last year, keeping your small investment might seem more like a gamble than a predictable long-range strategy. If you are considering selling, you may be cashing your chips in a little too soon. Projections from experts and others (https://www.mashvisor.com/blog/portland-housing-market-2020/) speculate that rents are most likely going to increase over the next 24 months for single-family homes. In fact, because some owners are cashing out, the market for single-family rental homes is constricting and getting more valuable.
Marketplace demand and increases in rent for single-family homes is due to the following factors:
- A lack of single-family homes is building in the rental marketplace due to increasing city and state regulation and legislation impacting rentals.
- Millennials are buying homes which is being driven by COVID and demographics which reduces the stock of rentable single-family homes.
- Increased costs of building materials and lack of single-family zoned land has slowed the construction of new homes.
- In Portland, there’s a lack of apartment construction due to costs and legislation, which will drive demand.
- Due to COVID, renters are exiting out of crowded apartment buildings and into homes and plexes.
According to Oregon.gov’s Oregon’s Economic Forecast document, 2021 is a year for a strong recovery. Oregonians’ income is actually higher now than it was at the start of the pandemic and the money that has been saved among the middle- and upper-class households is set to drive stronger economic growth this year. The forecast says that Oregon’s economy will return to full health by early 2023. Goldman Sachs has also projected a strong 2021 recovery for the US economy. Additionally, unemployment rates have remained steady recently and have dropped significantly from the early days of COVID.
With a higher demand for housing and a record low supply currently available, the value of your investment will continue appreciating beyond what it currently has. The world continues to be bullish on Portland and Oregon.
A recent article in the Willamette Week discussed Portland’s continued desirability as a place to live, despite the many factors impacting society.
“Based on an analysis by United Van Lines of about 125 metropolitan areas, Portland ranked 18th as a moving destination in 2020. That’s down from ninth in 2019, and just behind cities such as Charlotte and Phoenix, but still ahead of regional magnets such as Denver and Salt Lake City. Meanwhile, Oregon as a whole remained the third-most popular state to move to, trailing just South Carolina and Idaho.”
Zillow forecasts that home values will increase, on average, about 10% in the Portland Metro area over the next year.
During COVID, some areas in the Portland Metro may have seen vacancy rates increase, however, those figures are primarily based on newer apartment complexes with higher rents. While apartments were seeing increases in vacancy and decreasing rent, the single-family home rental market has been strengthening. CoStar predicts rental rates inside the city of Portland will decrease or only marginally increase this year, but after 2021 they expect strong rent increases, even in the apartment sector.
Just like the wise gambler, the informed investor reads the signs and knows when it’s time to leave the game. With so many indicators pointing towards more financial gain, you may not want to get up from the table so soon. Take your time, follow the economic forecasts and consider holding on for a bit longer. Your investment values will keep increasing. After all, your investment property isn’t a game of chance but will follow a pattern of sustained growth. Remember that the Government has injected trillions of dollars into the economy to strengthen it. That investment will have a long-term positive effect.