Portland Oregon Rental Market Forecast – 3.8% Rent Increase in 2016
Rents are expected to flatten in 2016 instead of the skyrocketing trend happening in the last couple of years in Portland, Oregon. According to Zillow’s press release, rental forecast of 2016 shows a relief as rents will plateau throughout the nation. This slowdown forecast means that rents will rise at a slower pace than income in many markets in the U.S. That also means that demand to purchase homes will decrease compared to previous years and also possibly increase supplies as rental companies start to release rental properties to the market due to the slow growth in both rental and home prices in 2016 and thereafter.
In Portland, OR, we have experienced a skyrocketing rent hikes in 2014, and 2015. In 2014, Portland’s median rent increased 7.3% from January 2014 ($1,457) to January 2015 ($1,564). In 2015, the median rent increased 13.23% from January 2015 ($1,564) to January 2016 ($1,771). Accordingly, Portland’s 2015 housing market gained a whopping 14% median appreciation according to sale prices from January 2015 to January 2016. In 2014, Portland housing market gained 5% in median home sale price appreciation so there seems to be a strong correlation between rental prices and home sale prices.
Zillow’s 2016 rental market prediction for Portland shows a rent increase of only 3.8%. Seattle is supposed to increase by 4.5%; Denver 4%; and San Francisco 5.9%. Some markets will actually have rents decreased. Las Vegas rents will decrease by -1.8%; Indianapolis by -3.6%; and Chicago by -1.4%. Overall, 1.1% rents increase is predicted for the entire U.S. market.
As suggested in a previous post regarding Portland’s housing market forecast in 2016, rental predictions also coincide with the flattening housing market value increase this year. This means more supplies on the market and a healthier growth rate. Many people worry about the housing bubble in Portland and as much as it’s next to impossible to predict the future of the economy in a year or two later, so far, the U.S. economy is doing okay for now. We added 242,000 jobs in February 2016 and the U.S. stock market is gaining confidence again. Moreover, housing bubble affects higher end homes more than lower end homes. I think this new trend will help many Portland home buyers and renters as the rental market cools down.