Rental Housing Journal Metro December 2016

Rental Housing Journal Metro

December 2016

3. Survey Reveals What Millennial Renters Want in 2017 4. The Best Season Bargains for Investment Housing 5. A New Journey 6. Moving Forward

7. How Will a Donald Trump Presidency Impact Real Estate?

8. Residential Landlord Tenant Update 2016 9. Dear Maintenance Men – Water and Wax Removal 10. Short-Term Home Rentals Have Little to No Impact on Housing Availability

11. Challenges and Opportunities for Homeownership Take Center Stage at National Association of Realtors 13. Tiny Houses Approved and Incorporated Into the International Residential Code 14. Apartment Rents Weakening?

Portland/Vancouver

www.rentalhousingjournal.com • Professional Publishing, Inc

Published in association with: Multifamily NW; Rental Housing Association of Oregon; IREM & Clark County Association

Trump Policies Could Affect New Housing Costs as New Buyers Enter the Market in 2017

2.4 – 5.4% Vacancy Rates

Has the Willamette Valley Rental Market Flattened Out?

T

he rental market in the Willamette Valley has been on one heck of a ride over the last few years. The Apartment Report recently came out and revealed vacancy rates as low as 2.4% in Gresham and as high as 5.4% in Northwest Portland, with Salem and Eugene coming in at 2.9% (historically, vacancy rates of 6-7% have been considered “normal”).

In the Portland metro market specifically, we are seeing an average overall vacancy rate of 3.71% and rental rates of $1.47 per square foot per month. In the Salem market those figures are at 2.9% and $1.14; the Eugene market is at 2.94% and $1.16. However, these figures are very continued on page 17

Landlords and Property Managers Bullied and Harassed Over Rent Increases

I

n 2017, recent trends will reverse course as the housing market's economic recovery enters a new stage.

Renting will become more affordable, more Americans will drive to work, and the homeownership rate will bounce back from historical lows.

Millennials will play a significant role in increasing the homeownership rate.

Nearly half of all buyers in 2016 were first-time buyers, and millennials made up over half of this group of buyers.

Here is Zillow's look ahead at the 2017 housing market:

By John Triplett, Rental Housing Journal

A

Portland landlord says he and his property managers have been bullied and intimidated over rent increases after he purchased a small apartment building and had to raise existing rents to afford his new mortgage payments.

He said demonstrators have picketed his personal residence. The have placed notices on the doors of neighbors, camped overnight on his lawn, defecated on his lawn and marched into his property managers’ offices scaring the staff, according to his spokesman, John McIsaac.

The landlord, Landon Marsh, raised rents “only to the lower end of current market rates in Portland,” said McIsaac in a recent interview.

Zillow's 2017 Predictions 1. Cities will focus on denser development of smaller homes close to public transit and urban centers. continued on page 16 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

PRSRT STD US Postage PAID Portland, OR Permit #5460

McIsaac said the rent increases came after Marsh purchased the small apartment complex, did substantial work to improve the condition of the building and raised rents to cover his costs and mortgage. Unfortunately the rent for one tenant went up by 40 percent and the tenant complained to the Portland Tenants United group.

Telling the landlords’ side of the story McIsaac said he is speaking out because many in the landlord and property management industry do not feel their side of the story has been told, and that more attention has been focused on what continued on page 15

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market

Rental Housing Journal Metro

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Rental Housing Journal Metro · December 2016

Rental Housing Journal Metro

Survey Reveals What Millennial Renters Want in 2017

M

FAIR HOUSING FAIR

FAIR HOUSING FAIR NEIGHBOR

illennials recently surpassed Baby Boomers as the largest living generation on Earth, and with millions continuing to put off traditional life milestones like home ownership, property owners are taking note. To reveal just what Gen Y looks for in a rental, SchlageÂŽ, a brand of Allegion which creates technologically advanced lock products to help multi-family property owners secure and manage their units while streamlining operations, has announced the results of a nationwide survey conducted with Wakefield Research of 1,000 U.S. renters in multifamily dwellings. Results include a desire for tech upgrades and the integration of next-generation access control systems as critical elements to entice renters.

Of millennial renters who live in multifamily dwellings, 86 percent are willing to pay more for a "smart" apartment, meaning one that is equipped with automated or remotely controlled devices, compared to 65 percent of Boomers. This is big, considering nearly half of American renters in multi-family dwellings expect to be renting an apartment for the next five or more years.

"As the multi-family marketplace continues to evolve with flexibility being a key factor in most living situations, consumers can feel confident that Schlage's latest door hardware offerings are paving the way for a new era of

convenience and security," said Ann Matheis, marketing director, Allegion.

"Apartments won't look the same in 10 years, from the inside or the outside, and with our long-established position in both the residential and commercial sectors, we have a unique vantage point that helps bring targeted, outcome-driven innovation to multi-family facilities because electronic access is the future."

Results of the industry survey include six key insights into the millennial renter. • Lock Down: Millennials want tech upgrades right down to the locks, as more than 61 percent are likely to rent an apartment specifically because of electronic access features, including keyless entry doors. In fact, 55 percent are likely to pay more for an apartment that had "high-tech" door locks compared to ones that did not. • Smart Renters: On average, millennial renters would pay about a fifth more for smart home features. • Tech vs. Parking: 44 percent of millennials would give up a parking space to live in a "high-tech" apartment. • Advanced Security: 63 percent would move out of an apartment due to lack of security. continued on page 12

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Rental Housing Journal Metro

H

The Best Seasonal Bargains for Investment Housing

omeUnion, a leading online real estate investment and management firm, has released a list of the biggest seasonal bargains for investment housing, and found that the winter off-peak period can be the best time of the year to acquire singlefamily rentals (SFRs). Nationally, the average cap rate for SFRs during the winter months was 6 percent last year, compared to 5.3 percent in the summer.

The new Seasonal Single-Family Rental Investment Advantage Report also found

that investors pay 7.2 percent less per square foot for the same property during the winter as they do during the spring and summer buying season.

"Based on seasonal cap rate fluctuations, our study conclusively found that early winter is the best time to acquire SFRs," explains Steve Hovland, director of research for HomeUnion.

"In many metros, median home prices drop substantially during the colder months, while rent losses were marginal

Metro Area

Cap Rate Increase

Temperature Spread

Pittsburgh San Francisco Milwaukee Philadelphia Chicago Columbus Boston Cincinnati Cleveland Greenville, S.C. Detroit Oklahoma City Palm Beach, Fla. Seattle Birmingham, Ala. Washington, D.C. Tampa St. Louis Jacksonville New York San Jose Houston Minneapolis Austin Portland, Ore. Salt Lake City Oakland, Calif.

Denver Baltimore Miami Dallas Orange County Phoenix Memphis Indianapolis Atlanta Orlando Los Angeles Nashville Sacramento San Antonio San Diego Las Vegas Raleigh, N.C. Kansas City Charlotte Riverside

31.4% 21.8% 19.3% 18.8% 18.3% 18.2% 18.1% 16.3% 16.0% 15.9% 15.9% 15.2% 15.2% 12.8% 12.0% 11.8% 11.7% 11.5% 11.4% 11.3% 11.1% 10.7% 10.4% 10.2% 10.2% 9.6% 9.4% 8.1% 7.9% 7.8% 7.7% 7.6% 7.6% 7.2% 7.0% 7.0% 7.0% 6.8% 6.5% 6.2% 6.0% 5.6% 4.9% 4.9% 4.8% 4.6% 3.9%

47 17 54 46 52 48 46 47 47 38 51 44 15 27 37 45 21 49 27 45 24 30 59 34 33 54 24 43 45 14 38 15 38 43 49 37 21 18 42 40 32 12 46 39 49 38 30

for investors. Winter is the perfect time to acquire solidly performing SFR assets in cold-weather metros such as Pittsburgh and Chicago, as well as in the Sun Belt markets of Jacksonville, Tampa and Greenville, S.C. These markets all ranked among our top 20 metros."

For properties that need a little TLC, a winter purchase can give contractors ample time to bring the property up to a level that maximizes rents as the spring renting season commences.

2016 Winter Median SFR Price $69,000 $920,000 $70,000 $127,000 $128,000 $110,000 $247,000 $74,900 $62,000 $86,250 $120,000 $85,000 $235,500 $320,000 $76,700 $255,000 $109,100 $85,000 $103,900 $310,000 $742,000 $145,100 $146,000 $219,300 $260,000 $187,500 $428,000 $283,000 $173,000 $192,400 $136,500 $615,000 $161,900 $82,400 $87,000 $104,000 $147,800 $455,000 $129,900 $260,000 $125,000 $452,000 $178,300 $147,500 $92,000 $110,000 $250,600

2016 Summer Median SFR Price $87,000 $1,200,000 $92,000 $161,300 $225,000 $149,800 $300,000 $115,000 $80,100 $140,000 $163,000 $100,000 $275,000 $437,200 $110,000 $333,300 $130,000 $105,000 $166,800 $408,000 $1,050,000 $170,000 $179,000 $257,700 $300,000 $251,500 $545,000 $335,000 $200,000 $215,400 $178,600 $716,600 $186,000 $89,400 $106,200 $117,000 $165,000 $550,000 $150,000 $306,000 $157,700 $495,000 $204,000 $180,000 $106,875 $137,000 $272,000

"We also discovered that school quality isn't as important to investors in the winter: Buyers interested in neighborhoods with high-ranked schools make up a greater proportion of sales during the summer compared to the winter," Hovland adds.

Here's a complete list of the markets offering the biggest discounts during the winter months:

2016 Average Winter Rent $1,000 $3,900 $1,100 $1,420 $1,460 $1,200 $2,020 $1,090 $1,100 $1,130 $1,210 $1,060 $2,130 $1,910 $970 $1,800 $1,160 $1,050 $1,160 $2,090 $3,350 $1,500 $1,380 $1,560 $1,660 $1,260 $2,510 $1,810 $1,520 $1,850 $1,440 $2,900 $1,110 $980 $1,060 $1,130 $1,240 $2,380 $1,220 $1,440 $1,300 $2,290 $1,250 $1,200 $970 $1,130 $1,590

2016 Average Summer Rent $1,180 $4,360 $1,190 $1,520 $1,560 $1,350 $2,130 $1,200 $1,150 $1,220 $1,390 $1,130 $2,280 $2,090 $1,050 $2,020 $1,210 $1,100 $1,250 $2,300 $3,740 $1,610 $1,490 $1,680 $1,760 $1,380 $2,700 $1,970 $1,660 $1,990 $1,530 $3,250 $1,200 $1,040 $1,100 $1,180 $1,280 $2,530 $1,300 $1,570 $1,380 $2,460 $1,310 $1,350 $1,080 $1,170 $1,670

www.HomeUnion.com About HomeUnion HomeUnion is an online real estate investment management firm. Based in Irvine, Calif., it provides all the services needed for individuals to invest remotely in single-family rental (SFR) properties. The company uses a combination of research and data-driven proprietary analytics to incorporate over 110 million homes and 200,000 neighborhoods into their database, and then delivers its solutions to an on-the-ground

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infrastructure that currently serves 18 locations. HomeUnion's role spans the lifecycle of the investment transaction: identifying sound investments, handling all aspects of acquisition, maximizing income, protecting asset value, and selling the asset when the time comes.

Rental Housing Journal Metro ¡ December 2016

President: John Sage Vice President: Phil Owen President Elect: Ron Garcia Secretary: Lynne Whitney Treasurer: Elaine Elsea

John Sage, RHA Oregon President

T

ime flies when you’re having fun!!

Have you heard this before? I’ve heard it so many times, right before leaving that great vacation to Disneyland, or cruise on the Caribbean, or whatever great adventure you were just on. Even sarcastically such as when you are just finishing some troublesome task that you couldn’t wait to complete. Many of those times, whether good or bad, left an impression that will last you the rest of your life. Memories that are so alive with flavor that you can still remember the way the day felt, or the smell of the air, maybe even that feeling in the pit of your stomach. That dull ache or pining as you leave where you were to go on the next step of the journey. If you were to tell me about those memories, feelings and that ache I could truly, deeply, empathize. For you see, I am about to embark on my next step in my journey with RHA Oregon.

This coming year I get to find out what the office of Past President is like.

At our dinner meeting in December I will get the privilege of installing the next board of directors for RHA Oregon and the new President. We have accomplished a lot of different things during the last couple of years. We have improved our office with new equipment and staffing-thank you Phil Owen and

Past President: Elizabeth Carpenter Office Manager: Cari Pierce

President’s Message A New Journey

Cari. We added the Annex for meetings, education, and events at the RHA Oregon building-thank you Ami Stevens and Phil. We increased our membership, now closing in on over 2000-thank you Liz Carpenter. Our influence in local and state political arenas has been helpful to limit the changes to laws affecting property owners throughout Oregonthank you Phil Owen, Ron Garcia, Jim Herman, Jerad Goughnour, and Cindy Robert. We increased attendance at our Starry Night event, Oaks Park picnic, and dinner meetings. Lynne Whitney and AJ Shepard did a great job finding new and different locations, caterers, and

Rental Housing Journal Metro · December 2016

foods for the meetings!! Our Treasurer, Elaine Elsea, without your input we could have never accomplished so much while spending so little. Also, a special thank you for our lobbyist Cindy Robert for her guidance throughout the year.

Lastly, my most sincere and heartfelt thank you to Cari Pierce - our office manager. She provided endless support, knowledge, hard work, and kept me on track throughout my term. Cari, I could never say thank you enough!!!!

Come January 1st, Ron Garcia will be stepping into the position of President.

So, while sad, I am also quite excited. Ron is someone who brings a great amount

10520 NE Weidler, Portland, OR 97220 (503) 254-4723 • Fax (503) 254-4821 info@rhaoregon.com • www.rhaoregon.org

of knowledge, wisdom, and energy to RHA Oregon. During our board retreat in November, Ron showed us a little of his vision for our future and it is exciting.

While we will have challenges in the days, weeks, and months ahead, I am confident in the leadership of RHA Oregon. If there is one thing that I could encourage you to do in the coming year, it is to get involved either with a committee, event, or just attending a class. 2017 is our 90th year in existence. Since 1927 the Rental Housing Alliance Oregon has set the standard for community participation by landlords providing affordable and quality housing.

In closing, thank you to all the members of RHA Oregon, whether a property owner, affiliate, or dual member.

To those of you that I have served with on committees and the board, I appreciate your time, effort, and sharing of knowledge. The amount of learning that I have done since I first stepped into an RHA meeting is amazing. I don’t think that I could ever quantify it. Without you RHA Oregon would not be the great leading organization that it is.

Sincerely, John Sage President RHA Oregon Stegmann Insurance Agency Inc.

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Rental Housing Journal Metro 16083 SW Upper Boones Ferry Rd, Suite 105, Tigard, OR 97224 503-213-1281 | Fax 503-213-1288 | www.multifamilynw.org

Form of the Month - Maintenance Doorhanger

Dave Bachman President of Cascade Management

Moving Forward

I

t is hard to believe that we have already approached the end of 2016. We started the year amidst significant demand, change and activity in our industry. We leave the year with some clarity to where our market is headed and what to expect in the coming months. A few questions remain, inclusive of the challenges to come and what we must do to work together to meet the needs in our marketplace. We are all impacted and influenced by industry trends and challenges and ultimately must work together to create positive outcomes.

Investor confidence is high and significant acquisition activity is likely to continue. With the Portland Area continuing to bring supply on line, rents will likely continue to temper.

The continued increase in the area’s population continues to drive developer interest to bring more supply on line to meet demand. This will lead to more choices for consumers at more diverse price points. The industry needs to advocate and strongly communicate needs to government officials to garner support that leads to multifamily housing supply.

Supply is king to serve the multifamily community in the foreseeable future and we are all party to supporting the increase in multifamily housing supply. We must remain aware that operational success from property managers also drives continued preference in multifamily housing among residents, investors and developers. We are all reliant on each other’s success in order to meet the existing housing needs.

There are fundamental risks to the supply chain including public policy that provides a disincentive to developers.

Reducing developer risk ultimately creates inventory and affordability. Reducing risk equates to minimizing unnecessary costs both short and long term. There are areas beyond our control such as construction costs, however shortening the timeline to bring projects online will reduce short term costs. Reducing the amount of operational restrictions will also help meet long term financial commitments, therefore, reducing long term cost.

I leave my term as Multifamily NW President to the very capable hands of Jeff Edinger of Tokola Properties who is very well equipped to continue to lead the association’s legislative efforts, excellence in industry education and events.

Multifamily NW is strong with active membership, leadership and staff. The association is correctly positioned to lead the incredible momentum our industry must sustain. I appreciate the continued support of the industry and invite you to contact the Multifamily NW’s office to inquire how you can personally be more involved to continue to work together to create a positive impact moving as we continue to move the industry forward.

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's

Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market 6

The Maintenance Doorhanger is a handy dual purpose form to use in your rentals. On one side it serves as a notice to anyone who might enter the rental that maintenance work is being performed in the house. On the reverse side it serves as a disclosure to the residents that maintenance personnel was inside whether for scheduled maintenance or an emergency.

It has space to further clarify who entered and what action was taken.

Additionally, if maintenance did not enter the house, the door hanger also offers common reasons to communicate the attempt to enter was made.

Upcoming Educational Classes 1/10/2017 1/11/2017 1/17/2017 1/24/2017 1/25/2017 1/25/2017 1/26/2017

CAMT Interior/Exterior CAM Financial Management Strengthening Front Line Skills for Maintenance CAMT Heating CAM Marketing Washington Fair Housing Mold Awareness

Advertise in Rental Housing Journal Metro Circulated to over 6,000 apartment owners, on-site and maintenance personnel monthly.

Call 503-221-1260 for more information Rental Housing Journal Metro · December 2016

Rental Housing Journal Metro

How Will A Donald Trump Presidency Impact Real Estate?

By Zachary Harrison, President, Platinum Drive Realty

A

number of clients have asked me how a Trump presidency could impact property values and real estate markets. Putting aside the politics of the election, real estate is a critical sector of the economy that affects buyers, sellers, renters, landlords and homeowners.

The unexpected election of Donald Trump to the presidency will have profound implications in the United States and around the world. From a high level, a centerpiece of Trump's campaign has been curbing immigration and deporting undocumented immigrants.

However, cross-border transactions and international buyers have been key to

the bull market in U.S. luxury real estate from coast to coast for many years.

A 2016 study by the National Association of Realtors found that international buyers typically purchase more expensive properties. Furthermore, from April 2015 through March 2016 overseas buyers purchased $102.6 billion of residential real estate with New York being one of the five largest markets for purchases by overseas buyers.

International buyers and investors have been instrumental to the success of new construction projects, including Trump's own endeavors, accounting

for approximately 15% of the New York buyers in recent years.

An environment of mass deportations and highly restricted visas could trigger a chain of events that could reduce real estate investment and increase construction costs. The construction labor market is already tight and eliminating millions of workers from this sector could yield labor shortages and impede building activity thereby increasing both labor and construction costs. As a result, developers could bestow the cost implications upon homebuyers or alternatively pull back on projects.

A decrease in the labor pool could also shrink the U.S. economy. A 2015 study by the American Action Forum found that deporting 11.2 million undocumented immigrants would reduce real GDP by $1.6 trillion. A decline in economic activity could cause real estate prices to dip, resulting in higher rental yields and position buy to rent investments as more attractive.

What about interest rates?

The Federal Reserve has signaled a rate increase in December although Dow continued on page 12

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Rental Housing Journal Metro ¡ December 2016

7/18/16 3:04 PM

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Rental Housing Journal Metro

Residential Landlord Tenant Update 2016 By: The Loeffler Law Group PLLC

T

here have been several important changes in landlord-tenant law in 2016. First, the Seattle City Council enacted an ordinance to require landlords to rent premises on a firstin-time basis. Second, HUD officially took the position that it is improperly discriminatory to adopt a policy rejecting all tenants with a criminal history. Third, Seattle enacted legislation prohibiting discrimination based on source of income.

The Washington legislature extended the time period for providing an accounting of security deposits to 21 days and created a mechanism for sealing.

The First-in-Time Ordinance The Seattle City Council enacted ordinance 125114 in August. The “First in Time” Ordinance requires landlords to offer a rental property to the first qualified applicant based on who submitted the completed application first. The stated purpose of the ordinance is to reduce discrimination by limiting the landlord’s ability to choose to whom to rent.

To comply with the ordinance, Landlords are required to process completed applications chronologically in the order in which they are received and keep records of each application’s date of submission. Landlords also should list their tenant selection criteria. The city intends to hire specialized officials to

develop and implement an enforcement strategy. This likely will include “sting” operations. This ordinance will be effective January 2017. Landlords are strongly advised to revise their tenant selection criteria and procedures accordingly.

Criminal Background Checks In April 2016, the United States Department of Housing and Urban Development (HUD) published a memorandum opining that tenant screening criteria discriminating against tenants and applicants based on their criminal history is a violation of the Fair Housing Act. HUD observed that minorities have a disproportionately higher rate of arrest, conviction and incarceration rates than the general population. A screening program or criteria prohibiting all tenants with any criminal history is therefore prohibited as it is more likely to affect minorities.

This does not mean all criminal screening is banned or that a landlord is required to rent to all convicted criminals. To satisfy HUD requirements, screening criteria must be carefully tailored to prevent discrimination. This will require Landlords to review tenants’ criminal history on a case-by-case basis.

Landlords are advised to consider the nature and severity of the crime, the time that has passed, and whether the tenant

has complied with terms of any sentence (i.e. paid fines, completed probation, etc.).

Source of Income and Place of Employment Discrimination The Seattle City Council enacted an ordinance prohibiting landlords from discriminating against tenants for their source of income or place of employment.

Landlords may not refuse to accept a tenant who receives a rent subsidy from a public entity such as Section 8 or a private entity such as the YWCA. Landlords are

also prohibited from favoring tenants based on employer, such as providing rental incentives for employees of Microsoft or Amazon.

When calculating rent for a tenant receiving a rent subsidy, the rent is effectively reduced by the amount of the subsidy. For example: a landlord requires tenants to have a monthly income three times the amount of rent, the rent is $1,000.00, and Section 8 provides monthly $800.00 subsidy. The tenant continued on page 18

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Rental Housing Journal Metro · December 2016

Rental Housing Journal Metro

DEAR MAINTENANCE MEN: Water and Wax Removal

By Jerry L’Ecuyer & Frank Alvarez

Dear Maintenance Men: I have a bathroom sink that is slow draining. I have already snaked the drain and found no stoppage. When I remove the pop-up assembly and have an open drain, water whooshes down with no problem. However, with the pop-up in place, water backs up into the sink and drains very slowly.

Paul Dear Paul: Most bathroom sinks have an overflow hole near the top edge of the sink. This hole serves two purposes; 1: Acts as a safety drain to keep the sink from overflowing should the water rise above a certain level in the sink. 2: The overflow hole also serves as an air vent for the sink when the water levels are above the popup plug. The overflow hole allows air to escape through the drain and the water to evacuate more efficiently.

What has happened is hair, toothpaste, grime etc. have built-up and sealed off the overflow drain where it exits just below the pop-up assembly plug. Most snakes are too big to go through the overflow drain. Alternatively, a speedometer cable will work great or even a long zip tie will work. Push the cable or zip tie down through the overflow hole at the top of the sink and push any gunk out into the

drain. Use water to help push the debris out the overflow drain, a funnel works great to direct a good flow of water. If you cannot get the overflow to drain, disassemble the main drain assembly to gain access to the overflow drain exit.

Once the overflow drain has good airflow, the sink should drain a bit faster. If this does not solve the problem completely, look at restricting the water flow coming out of the faucet. Use a restrictive aerator to cut down on the GPM of the faucet.

Dear Maintenance Men: My property has 100-gallon gas fired water heating that serves four units. It is about 8 years old. The tenants are complaining of very little hot water. I have checked the tank and the thermostat is working, the water is hot. Are my residents making up stories? What am I missing?

Thorne

Dear Thorne: The water heater may need a bit of maintenance. The first thing to do is clean out the sediment at the bottom of the tank. This will require a shutdown of the heater for a couple of hours and some hands and knees work. Most 100-gallon gas water heaters have a clean-out port at the front of the tank. The port is either round or oval. Be sure to get a new cleanout port gasket before starting this job.

Once the water is drained and the port opened, remove all the sediment from the tank. You can expect to haul out one to two buckets of calcium buildup.

(Sediment removal should be done once a year.) Removing the sediment will greatly improve the heating efficiency the water heater. Because of the age of the tank; while you have the port open, check the inlet dip tube and the anode rod inside the tank. If the anode rod is corroded, replace it by pulling it out from the top of the tank and inserting a new one. The anode rod is a sacrificial zinc rod that helps keep the tank from corroding. The second item to check is the cold-water inlet dip tube. Cold water entering the heater is routed to the bottom of the tank by the dip tube. If the tube is corroded, broken or missing, the tank will develop continued on page 16

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OR-RTG-20 Oregon

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48-HOUR NOTICE TENANT(S): Windows OF ENTRY OR-RTG-24 Oregon __________________ __________________ ____________ ADDRESS: ____________________________________ __________________ Blinds/Drapes TENANT(S ): ____________________ ____________UNIT: ______________

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48-HOUR NOTICE Light Fixtures OF ENTRY

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Pursuant to RCW Doors/Woodwork 59.18.150, this is your Counter Tops 48 hour entering the dwelling notice that your landlord Locks unit and premises or their agents will located at (Address) ____________________ Cabinets be ____________________ Ceilings ____________________ Sink __________ Electrical Outlets ________ on between the hours Floor of Garbage Cans (Date) and .

Windows (Time) TV Antenna/Cable (Time) The entry will occur Blinds/Drapes for the Light Fixtures Fireplace ____________________ following purpose: ____________________ Cleanliness Doors/Woodwork__________ ____________________ ____________________ __________________ ____________________ Locks ____________________ ________ Walls

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PMS 280/PMS 7543 over color

arizona, alaska, california, colorado, delaware, florida, georgia, illinois, indiana, kansas, kentucky, massachusetts, nevada, new Jersey, new york, north carolina, ohio, oregon, pennsylvania, texas, utah, washington, washington d.c., west virginia & more. do NoT put over a busy background

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3) Type _______________ Breed _______________ Size ______ Age __ Weight ___ Color ____ Name ________ Carpet/Vinyl/Wood Vaccinations: Yes____ No____ License Number: ______________ Additional Security Deposit Required:$

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1) The pet(s) shall be on a leash or otherwise under tenant’sGarbage control Cans when it is outside the tenant’s dwelling unit.

TV Antenna/Cable 2) Tenant(s) shall promptly pick up all pet waste from the premises promptly.

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4) Tenant(s) are liable for all damages caused by their pet(s).

5) Tenant(s) shall pay the additional security deposit listedCleanliness above and/or their rental agreement as a condition to keeping the pet(s) listed above.

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1 7) Tenant(s) shall immediately report to landlord any typeWalls of damage or injury caused by their pet.

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Electric Outlets

Rental Housing Journal Metro · December 2016

_____________________________ Landlord

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9

Rental Housing Journal Metro

Short-Term Home Rentals Have Little to No Impact on Housing Affordability

N

early all housing experts surveyed last month in Zillow's quarterly survey agreed short-term home rentals like those offered on Airbnb® and HomeAway® do not have a meaningful and large[i] impact on housing affordability, according to the latest Zillow® Home Price Expectations (ZHPE) Survey.

Respondents to the quarterly survey, sponsored by Zillow and conducted by Pulsenomics LLC[ii], were asked about the impact of short-term home rentals[iii] on supply and housing affordability.

Half of the experts surveyed said the impact is meaningful, but small[iv]. Just over 40 percent said the impact is not meaningful[v], and about 5 percent said short-term home rentals have a large impact on housing affordability. Just 3.8 percent responded as unsure.

Cities across the country are debating the role short-term rentals play in housing affordability. One view suggests shortterm rentals subtract from the supply of long-term rental homes and contribute to rising rents. Others argue shortterm rental units give homeowners an additional source of income, allowing them to more easily afford a monthly mortgage payment.

"Cities across the country are grappling with housing affordability issues, especially in places with rapidly rising rents and home values," said Zillow Chief Economist Dr. Svenja Gudell. "In

some hot West Coast markets, it's not uncommon for renters to spend 40 percent or more of their income on a monthly rental payment, when historically that number was much lower. Inventory plays a large role in this affordability crisis; there simply aren't enough rentals on the market to keep prices low. Clearly experts aren't convinced that short-term rentals are the cause of our problem."

Only 7 percent of homeowners rent out, or are planning to rent out, all or a portion of their primary residence, according to the Zillow Group Report on Consumer Housing Trends.

Overall, the experts surveyed – which include economists and researchers -said they expect home price appreciation to be at almost 5 percent by the end of 2016, and slow down to 3.6 percent by the end of next year. Zillow forecasts rents across the U.S. to appreciate 1.6 percent from October 2016 to October 2017.

"More than 90 percent of the 111 panelists who participated in this quarter's survey expect home value growth to be slower next year, and more than 85 percent of them foresee home value appreciation rates flat or lower compared to 2016 in every year through 2021," said Pulsenomics founder Terry Loebs. "While those figures represent a clear consensus that home value growth will moderate in the coming years, there is no consensus concerning the pace of

the expected deceleration. For example, the most optimistic experts project that U.S. home value appreciation will average more than 4 percent annually through 2021, while the most pessimistic expect an average annual rate of just 1.1 percent for 2017 and beyond."

Zillow Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc. About Pulsenomics: Pulsenomics LLC (www.pulsenomics.com) is an independent research and consulting firm that specializes in data analytics, new product and index development for institutional clients in the financial and real estate arenas. Pulsenomics also designs and manages expert surveys and consumer

polls to identify trends and expectations that are relevant to effective business management and monitoring economic health. Pulsenomics LLC is the author of The Home Price Expectations Survey™, The U.S. Housing Confidence Survey, and The U.S. Housing Confidence Index. Pulsenomics®, The Housing Confidence Index™, and The Housing Confidence Survey™ are trademarks of Pulsenomics LLC. Airbnb is a registered trademark of Airbnb, Inc. HomeAway is a registered trademark of HomeAway, Inc. [i] Meaningful and large is defined as: short-term rentals significantly reduce the supply of long-term rental units and are compounding today's rent affordability problems. [ii] This edition of the Zillow® Home Price Expectations Survey surveyed 111 experts between October 28 and November 15, 2016. The survey was conducted by Pulsenomics LLC on behalf of Zillow, Inc. and asked the experts about their expectations for the housing market. [iii] Short-term home rentals are classified as a full apartment, single-family home, or auxiliary unit.

A short-term room rental is classified as a room in an otherwise occupied unit. [iv] Meaningful but small is defined as: short-term rentals reduce the supply of long-term rental units only marginally and contribute little to today's rent affordability problems. [v] Not meaningful is defined as: short-term rentals do not have a meaningful impact on the supply or affordability of standard, long-term rental units.

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Rental Housing Journal Metro · December 2016

Rental Housing Journal Metro

Challenges and Opportunities for Homeownership Take Center Stage at National Association of Realtors®

T

he homeownership rate in America continues to hover around a 50year low, but experts gathered for an event in the Washington, D.C. offices of the National Association of Realtors® said today that there are real-world opportunities to turn that trend around.

"It's tough out there right now for buyers, especially in many of the red-hot markets around the country where competition is the fiercest," said National Association of Realtors® President William E. Brown, a Realtor® from Alamo, California and founder of Investment Properties.

"Thankfully, we know there are ways to help consumers. Addressing the growing student loan burden, widening the credit box for strong buyers, building more homes that meet the demand of lower and middle-income buyers – these are among the many steps we can take to clear the pathway to homeownership."

The event on housing and homeownership was headlined by Nobel Prize Winning economist Dr. Robert Shiller, who offered his take on the housing market's history and possible future. He looked at trends in oil prices, building costs, and other factors that play a role in driving demand, but told the

packed audience that public sentiment clearly plays its own role in driving the housing market.

Looking at the recovery since the Great Recession, Shiller said "it's kind of obvious that home prices have been rising at a good clip… But it's not because of building costs, population trends, or interests rates." Instead, Shiller said "it's the changing narrative and the stories that go along with it."

To make his point, Dr. Shiller showed data on the expected average annual

Rental Housing Journal Metro · December 2016

increase of recent homebuyers, from 2002 to 2016. He noted that in the runup to the Great Recession, homebuyers expected an average annual increase in home values as high as 13 percent. Since then that expectation has fallen, changing the narrative of the housing market.

"That's why I don't think we're in a bubble now," Shiller said. "It's not as it was in 2004."

Following Dr. Shiller's remarks, CNBC real estate correspondent Diana Olick moderated a panel of experts including

NAR's Chief Economist Lawrence Yun; Dr. Beth Ann Bovino, chief U.S. economist at S&P Global; Dr. Susan Wachter, Albert Sussman Professor of Real Estate, Wharton School of Business; and Dr. John Weicher, Director, Center for Housing and Financial Markets, Hudson Institute.

The noted economists honed in on the homeownership rate and its importance to the broader economy. Yun in particular talked about challenges to homeownership continued on page 18

11

Rental Housing Journal Metro

What Millennial Renters Want ...continued from page 3

• Work/Rent Balance: 64 percent feel that being close to work is more important when choosing an apartment than being close to friends and family.

• The Future: 45 percent of renters feel that physical door keys will be obsolete in the next 10 years.

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How Will A Donald Trump Presidency ...continued from page 7

*Survey Methodology This survey was conducted by Wakefield Research among 1,000 U.S. renters in multi-family dwellings, between Oct. 12-24, 2016, using email and an online survey. Results of any sample are subject to sampling variations. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.

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futures were down 800 points the evening of Trump's election before rebounding in the days that followed. Market volatility could influence the Fed to delay a rate hike extending what has been a stronger than usual real estate market this fall.

However, treasury yields have been higher on expectations of tax cuts, infrastructure spending, and inflation, which may lead to higher rates and deficits.

Fortunately, the timing of the presidential election and subsequent results fall in November, traditionally a quieter period on the U.S. real estate calendar.

Will a Trump presidency lift real estate to even greater heights? Once the surprise of the election results wears off, the hope is that there will be a stable real estate framework in which buyers, sellers and renters can best operate. Only time will tell, but it will be interesting to see how everything plays out.

About Platinum Drive Realty Platinum Drive Realty is a leading real estate firm servicing Westchester County, NY and Connecticut. The firm prides itself on delivering exceptional service to everyone from first time buyers and sellers to experienced homeowners, builders and investors. Platinum Drive Realty was recently named The Inc. 5000's Fastest Growing Real Estate Brokerage in the Tri-State area (NY-NJ-CT) and One of the Fastest Growing Companies in America for three consecutive years (2014, 2015, 2016).

For more information about Platinum Drive Realty, please visit www.platinumdr.com.

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Rental Housing Journal Metro · December 2016

Rental Housing Journal Metro

Tiny HousesApproved and Incorporated into the International Residential Code

T

he International Code Council (ICC) reported that public comment RB168-16, the tiny house appendix, passed their final round of voting, receiving the required 2/3 majority vote. As a result, a tiny house specific appendix will be part of the 2018 International Residential Code (IRC), allowing people to receive a Certificate of Occupancy (COO) for their tiny house when built to meet the provisions of the adopted code appendix. A lack of recognition of tiny houses in the IRC had been a major hindrance to the creation of legal tiny houses in communities across the United States.

The approval of RB168-16 is a culmination of the efforts of Andrew Morrison (www.TinyHouseBuild. com) and a team of architects, builders, designers, and educators. The team initially defended the proposed appendix at the ICC public comment hearings in October 2016 at which time they received the first 2/3 majority vote necessary to place RB168-16 on the official ballot.

Tiny houses have gained popularity in the last few years as a result of historically high housing costs, flat lined wages, and a grassroots movement towards minimalism. A tiny house specific code helps not only those wanting to build tiny but also local building officials overwhelmed with applications for tiny house projects.

"RB168-16 brings much needed safety standards to tiny house construction," says BA Norrgard, Volunteer Coordinator at Habitat for Humanity and founding member of the Tiny House Collaborative.

"This is a huge breakthrough that holds incredible potential for positive change in the housing sector, which is in crisis."

The approval of RB168-16 is historic; however, each jurisdiction currently enforcing the IRC must now adopt the appendix for it to become law.

That is the next step for the tiny house appendix and one that Morrison's team intends to meet head on.

Morrison, a builder for over 20 years who leads tiny house workshops and has taught over 2,500 students to date says: "We have a great group of enthusiastic people in the tiny house community and we will work together to continue the positive movement forward for the industry."

Andrew Morrison , Owner Tiny House Build 541.890.3957 136957@email4pr.com www.TinyHouseBuild.com

Rental Housing Journal Metro ¡ December 2016

13

Rental Housing Journal Metro

Apartment Rents Weakening?

Rent growth Slowing

By: Cliff Hockley, President, Bluestone & Hockley Real Estate Services

O

n September 14 of 2016, Mark Barry, MAI local apartment appraiser, updated brokers and investors at a local Morgan Chase Bank presentation. In his speech he highlighted the significant sales volume in 2014, 2015 and 2016, but issued warning signs.

He indicated that apartment rents were beginning to flatten as vacancies were beginning to increase.

He said: Vacancies are beginning to rise mainly in the urban core as new construction goes up, which equals more competition. In Portland we are seeing significant rent concessions in class A properties within urban core. There are many properties offering first month rent concessions with one year leases. (Some are even offering two months free.)

Properties on the outside (farther East, South and West) have more stable rents.

As inner core prices begin to rise people will be moving outward. Currently, 9,000 units are under construction, mostly in the 30 units and under range. With 25,000 more currently proposed, competition is increasing no matter what.

Not all new construction currently proposed will be built as not all will be able to get the rents they are planning on. Properties that are pushing rents are seeing higher vacancies because the market is so competitive.

According to Mark Barry’s research, Studios have the highest vacancy rate at 5% with 1, 2 and 3 bedroom units

around 2%. (In a recent phone survey (early October 2016) of local residential property managers the vacancy rate has increased to over 3 %.)

Important statistics to consider: Population In 2010, The Portland–Vancouver– Hillsboro Metropolitan Statistical Area (MSA) was the 23rd largest in the United States, with a population of approximately 2,226,009. Since then, the Portland metropolitan region added 40,621 new residents from 2014 to 2015, a growth rate of 1.72 percent. The new estimates show the 7-county greater Portland region just shy of the 2.4 million population mark, with 2,389,228 residents as of July 1, 2015. Most of the immigrants are from California, followed by immigration from the rest of the US. Additionally most of the immigrants have a higher education and are root seekers (from 25 -35 years old).

Employment Despite the increase in new residents, unemployment in the Portland Metro areas has stabilized. Household income is averaging $64,000 a year, slightly above the national average of $56,516.

The US economy is slowing down, with a particular focus in the manufacturing sector.

American manufacturing barely grew in September as a broader swath of of a strong dollar and faltering overseas markets.

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The Institute for Supply Management’s factory index reflects this decrease in activity. The index fell to 50.2, from 51.1 in the it has been since May 2013. Fifty is the dividing line between expansion and contraction. Out of eighteen industries, only seven grew in the past month, the fewest since December 2012.

Oil-related weakness among energy companies is now spreading to computer, plastics and machinery makers. The stronger dollar combined with slower growth in emerging markets hurts foreign sales. Auto dealers and construction companies are insulated by the spending of American consumers.

Summary We are at the top of the market.

In Oregon 3 -3 ½ % growth rate is expected due to the relocation of many businesses from out of state. The glut of new developments and lower demand for Class A multi- family properties has increased competition between units as demonstrated by the amount of free is can it continue to grow? With increased vacancy rates it’s hard to judge if we are seeing pre-election jitters or the beginning of an economic downturn?

I am not sure facing a rejection of ever increasing rental rates.

Clifford A. Hockley is President of Bluestone & Hockley Real Estate Services, greater Portland’s full service real estate brokerage and property management company. Founded

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Cliff is a member of the Institute of Real Estate Management and was named Certified Property Manager of the year in 2001 and 2003. Cliff is a frequent contributor to industry newsletters.

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Rental Housing Journal Metro · December 2016

Rental Housing Journal Metro

Landlords and Property Managers Bullied the activists’ demonstrations, and what the tenants say.

“I represent the landlords and property managers who do not want to have exorbitantly high rents, we want more housing stock,” McIsaac said.

“In Portland, 85 percent of the landlords are small operators. They might have their retirement tied up in these properties, but they don’t make a ton of money off of them. So the stereotype is that all of the property owners are huge, out-of-state multimillion-dollar concerns. That is not the case. A lot of these property owners have day jobs,” McIsaac said.

The story of one small landlord McIsaac said that with the hysteria over rent increases, “the activist group has targeted a couple of landlords in particular. They are not going after the big guys who own thousands of units. They are going after the little guys who own like 20 units.

“And this one guy, Landon Marsh, who is my client, is in the hospital interior-design business. He is a oneman consulting business. He does not do property development for a living.

He has investment properties. They are small ones. All three buildings he owns combined make up 20 units.”

Where this all started with apartment building purchase “He bought one building around seven or eight months ago out in a semiblighted part of East Portland, a workingclass area,” McIsaac said. “It was built about seven years ago. And it needed some repairs just from wear and tear. The tenants asked him to make these repairs and he said, ‘Yes I will do that.’ “

...continued from page 1

“So he set to making the repairs. But he had bought the building at market value.

And market value right now is a hell of a lot higher than it was seven years ago – it’s a lot higher.

“He said that he was going to have to raise the rent. But he said he would keep the rents – and he stuck to this – at the very low end of market rates. So he’s not a profiteer by any stretch of the imagination,” McIsaac said. He said in his opinion, “This guy is a liberal, progressive classic Portlander. He is a caring, altruistic, sensitive man.”

Group pushing rent control and end to no-cause evictions for Portland Portland Tenants United is a growing tenants union dedicated to organizing tenants to take action to strengthen and enforce tenants’ rights and protections, according to their Facebook page.

At a recent press conference, Portland Tenants United and City Commissionerelect Chloe Eudaly, promoting something called “Keep Portland Housed,” called for a freeze on rent and an end to no-cause evictions in Portland until there is a policy in place to improve conditions for renters.

Leader says group wants municipal disobedience and rent control “We’ve been in an officially declared housing emergency for over a year. Despite

that, tenant protections – the most critical component to preventing homelessness – have not meaningfully improved, and conditions continue to worsen,” Eudaly said in a press release. “My election, and the passage of Portland’s housing bond, present a clear and obvious mandate to City Council to act.”

Eudaly admits state laws prohibit local rent control measures. But she wants city commissioners to commit “municipal disobedience,” do it anyway and fight the resulting lawsuits, she told the Portland Tribune.

Portland Tenants United is focused on lowering the eviction rates in Portland by organizing tenants to vocalize their concerns. Gabriel Erbs, organizer for the group, insists the fight is far from over, according to a report on Portland Patch.

"Tenants can be evicted, for whatever reason or no reason at all, at the landlord’s whim," he said.

Portland Tenants United showed up.

Dozens of protesters gathered across the street from the museum. It didn’t take long for tempers to flare, according to koin.com.

The television station reported that, “Tensions were high. Some choice words were exchanged as well as some apparent shoving as protesters came face to face with ceremony attendees. Shouts calling the multifamily association attendees ‘parasite’ and ‘bloodsucker’ rang out from protesters.”

A small group of protesters stormed past security into the museum to disrupt the event. They were soon removed by security, according to katu.com.

Deborah Imse, executive director of Multifamily NW, said in response to the protest, “Over the past few years, rents in Oregon have risen while incomes have lagged behind, creating an urgent housing crisis. In order to thrive, the region needs to work together to create more quality housing options for families of all incomes.

“With demand for housing continuing to increase, we must take action to reduce rental costs by increasing the variety of housing types available to people of all incomes and creating more subsidized affordable and market-rate units,” Imse said in the statement.

Landlord and tenant activists have clashed Tensions escalated late in 2016 at the Portland Art Museum during an awards ceremony. Multifamily NW, an association promoting quality rental housing, was holding its annual ACE awards ceremony for its members when protestors from

Property management groups say more apartment units needed Any solutions to the Portland housing issue, property management organizations say, should be market-based.

A spring 2016 apartment report released continued on page 19

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15

Rental Housing Journal Metro

Trumps Policies Could Affect ...continued from page 1 2.

More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.

3.

Rental affordability prove as incomes growth in rents slows.

will rise

imand

4. Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.

5. The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing – putting them further from adequate public transit options.

6. Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.

Statement from Zillow Chief Economist Dr. Svenja Gudell: "There are pros and cons to both existing homes and new construction, and the choice for home buyers can often be difficult. For those considering new construction in 2017, it's worth considering the added cost that may come amidst ongoing construction labor shortages that could get worse if

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President-elect Trump follows through on his hard-line stances on immigration and immigrant labor. A shortage of construction workers as a result may force builders to pay higher wages, costs which are likely to get passed on to buyers in the form of higher new home prices.

"Those looking for more affordable housing options will be pushed to areas farther away from good transit options, in turn leading more Americans to drive to work.

"Renters should have an easier time in 2017. Income growth and slowing rent appreciation will combine to make renting more affordable than it has been for the past two years."

Zillow

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

Dear Maintenance Men ...continued from page 9

hot and cold areas, leading to complaints about short-term hot water. The dip tube is located inside the cold-water inlet pipe.

Replacements for both the anode rod and dip tube can be found at most plumbing supply houses.

Dear Maintenance Men: How do I remove candle wax or gum from my rental unit’s carpet?

Janet Dear Janet: The best way to remove candle wax from a carpet is to use a hand held clothes iron. Put an absorbent paper towel over the wax and heat the area with a hot iron.

The paper towel will absorb the wax as it melts. Be careful not to burn the carpet as an iron can melt certain carpet fibers and scorch others. Start on the lowest setting.

Remove any left over stain by blotting the area with a small amount of dry-cleaning solvent. (Dry-cleaning brand names to look for: Guardsman Dry Cleaning fluid, Woolite Dry Cleaning Secret, Dryel or any dry fabric cleaner and in a pinch; lighter fluid.) Also, blotting with a mild detergent mixed with warm water may work. Make sure the detergent does not contain any alkaline or bleaches.

Remove gum by either freezing the gum and removing it by pieces or using peanut butter to loosen the gum’s grip on the carpet. A product known as “GooGone”, found at Home Depot, may be used to remove gum, tar, grease and glue.

Use Goo-Gone sparingly Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Jerry L'Ecuyer is a licensed contractor & real estate broker. He is currently on the Board of Directors and Chairman of the Education Committee of the Apartment Association of Orange County. Jerry has been involved with apartments as a professional since 1988.

Frank Alvarez is the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com

Rental Housing Journal Metro · December 2016

Rental Housing Journal Metro

Vacancy Rates ...continued from page 1 close to what they were at the beginning of 2016, so we are seeing signs that the rental market has officially started to level off.

Within my company (www.

IRCEnterprises.com), vacancy rates have run between 0% and 1% for the last couple of years, and as of this writing we are at 0%. We typically average 1.5-2.5% below the market average, so I am sure our vacancies will follow the market very soon.

What’s an investor to do? Above all, in times of increasing vacancy rates you must focus on making your properties and your customer service something new tenants seek out and current tenants want to hang onto. That is you cushion against the uncertainties of the rental rate environment.

I don’t foresee rent levels dropping due to the upward trend in vacancy rate, but I imagine that we will see them level off over the next few quarters. But whether rental rates go up or down from here is largely in our local municipalities’ hands, in my opinion. Rents have increased enough in the area to attract investors who are happy to build apartments, purchase single family homes as investments, or keep the home they move out of as a rental property, which increases the housing stock somewhat. If the cities of the Willamette Valley would like to help ease the current tight housing situation further, they should also be speeding up the zoning and permitting process to add living units to the market, and possibly even offer incentives like the city of Salem’s Tool Box Program (through which investors can get grant money from the city if they add residential units in the downtown core).

One thing our economy, cities, and state have done very well is to make greater Portland a sought-after place to live. By 2020 this region is projected to grow by 231,100 people. Oregon averages three people per household, so that equates to an additional 77,033.33 residences needed, although from what I have seen, I feel this estimate is low.

In the Willamette Valley, there are currently about 11,000 units under construction, and another 28,000 proposed and waiting to be approved.

Some of these projects will not get the approvals they need to begin construction, but most will. The question is, will it take six months or two years?

Whatever the timeline, that still leaves us entering the 2018-2019 biennium with a 38,000-unit deficit.

Regardless, I am optimistic that our local governments will start enacting changes that help speed up bringing units to market. If they do, we have a chance to keep pace with population growth.

This also means as the market corrects itself that the days of 10-20% per year rent increases will disappear. My guess is that we will see an average annual rent increase of 3-5% over the next four years

for those units that are currently priced at the top of the market. Of course, there are still plenty of units out there priced well below market that will be playing a little bit of catch-up as long-term tenants with artificially low rents move out.

So, what’s next? Are rental properties still worth investing in? In my opinion the answer is still a resounding yes! Oregon’s population growth doesn’t show any signs of slowing. Adding rental units must happen to simply keep up with demand and maintain this leveled-off state of the market. At current rents, the rental market is a profitable investment. With that said, interest rates are going to gradually be on

the increase, and there will be a point at which the cost of financing can change the profitability of rental properties.

Variables like these, though, are why investing in rental properties without the help of a professional can be challenging.

Make sure that you do your homework to become your own professional and/or hire a firm like www.IRCEnterprises.com to help you purchase and manage your investment properties.

One of the great things about being a real estate investor is that no matter what the market is like, there is always a way to make a profit. It’s just a matter of becoming an informed student of the market and of the many ways that you can profit from it, which is where membership in Northwest REIA can help.

Christian Bryant President of IRC Real Estate & Property Management President of PAROA & NWREIA www.IRCEnterprises.com Christian@IRCEnterprises.com

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Rental Housing Journal Metro

Residential Landlord Tenant Update ...continued from page 8

Challenges and Opportunities for ...continued from page 11

needs to only show income of $600.00, or three times the rent after applying the subsidy payment.

including rising rents and student debt loads, noting that the difficulty in purchasing a home has led to a growing wealth inequality between generations.

"There is a tremendous wealth buildup among people who are 65 and older," Yun said. "They have essentially paid off their mortgages." For the younger generation, including those under 35 years of age, Yun said "they feel that they are being left out." Yun added that while the pendulum swung too far towards loose underwriting before the Great Recession, it has since swung in the other direction, leading to what he described as "overly strict underwriting standards" that can put homeownership out of reach for even strong buyers in some circumstances.

On the question of whether the homeownership rate will rise, Bovino likewise noted that "we do expect to see some improvement, but it's going to take some time. Rents are increasing and interest rates are low, so there is an interest in getting back into homeownership."

NAR reported in November that the median existing-home price for all housing types in October was up 6.0 percent from the previous year, marking the 56th consecutive month of year-overyear gains. This finding coincided with a 4.3 percent year-over-year decline in inventory levels, a consistent challenge for buyers looking to purchase a home, particularly in competitive markets The audience also had the opportunity to hear from Congressmen Frank Lucas (R-Okla.) and Brad Sherman (D-Calif.), both Members of the House Financial Services Committee. In a panel moderated by Politico financial services reporter Lorraine Woellert, the

Lengthening the Time to Account for a Security Deposit In late 2015, the Court of Appeals ruled that the landlord’s “passive delay” in accounting for the security deposit at the end of a tenancy “falls woefully short” of showing that circumstances beyond the landlord’s control prohibited it from accounting for the security deposit within 14 days. The landlord, therefore, must demonstrate that it actively attempted to determine its damages at the end of the tenancy within the statutory deadline.

The Washington State legislature subsequently determined to lengthen that deadline from 14 days to 21 days. While the additional seven days is helpful, landlords are advised that the courts will look more carefully at how the landlord used the time allotted in determining whether the landlord properly and timely accounted for the tenant’s security deposit.

Order of Limited Dissemination The Legislature added a new section to the Residential Landlord-Tenant Act. RCW 59.18.367. This new section authorizing the court to order an unlawful detainer action to have limited dissemination if the case was without basis, the tenant reinstated its tenancy by law, or for “other good cause.” The tenant has the option to move the court for an order that effectively prohibits tenant screening service providers from disclosing the unlawful detainer action in a tenant screening report or using the report as a factor for determining

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whether to recommend that tenant for future tenancies.

An order of limited dissemination does not prohibit a landlord from doing its own court search for an eviction and using that information. It only limits a screening company’s ability to disclose the information to the landlord.

This new rule may be used as a negotiation tool for existing and past tenants. Tenants who desire clean rental histories may be more willing to pay old judgments or pay their rent current in order to get a landlord’s cooperation for an order of limited dissemination.

Evan Loeffler is the principal at the Loeffler Law Group PLLC in Seattle. Mr. Loeffler’s practice emphasizes landlord-tenant relations and real estate litigation. He is the author of several chapters on landlord-tenant law in the Washington Lawyers Practice Manual and is on the faculty for several landlord-tenant CLE programs.

Congressmen discussed the likelihood that significant reforms to tax policy may come before Congress in 2017, agreeing that eliminating the mortgage interest deduction would likely meet strong public opposition.

Brown thanked participants for their expertise, adding that as President of NAR he is committed to keeping housing at the front of the agenda.

"I'm pleased we could highlight these issues with today's event and reiterate the importance of protecting and defending incentives for homeownership and real estate investment," said Brown.

"I look forward to continuing this good work throughout my tenure as president of NAR." The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

S&P Global is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. The Company's divisions include S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices and S&P Global Platts. S&P Global has approximately 20,000 employees in 31 countries. For more information, visit www.spglobal.com.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the "News, Blogs and Videos" tab on the website.

Rental Housing Journal Metro · December 2016

Rental Housing Journal Metro

Landlords and Property Managers Bullied ...continued from page 15

by Multifamily NW says that “Portland’s current development pipeline includes an impressive 21,600 proposed units.”

“More housing is the solution, and our priorities are to help increase supply and educate politicians on the fact that simply adding fees and making business harder

“At the same time, we should streamline the process for development review and permitting new construction while retaining standards for high-quality buildings. Under the current process, approvals can take a year or more, adding to project costs and delaying the construction of much-needed marketrate and affordable units,” Imse wrote.

Landlords Trying To Do The Right Thing Caught in the Middle McIsaac said Marsh tried to work with the existing tenants on payment plans and provide plenty of lead time and help moving if they decided not to pay the rent increases. Most tenants decided to stay, he said. has the reverse effect on the problem they want to solve,” Multifamily NW’s Imse wrote in an email to the Portland Mercury.

“As the organization representing property owners and managers, Multifamily NW has adopted a solutionsoriented approach to address the housing shortage. The market data we collect, along with reviews of affordable housing policies across the country and the experience of our members, have shown us the best way to create affordability in the housing market: adopting proven strategies that add to the housing supply,” Imse wrote in an article on Oregonlive. com in early 2016.

No lawsuits have been filed.

“But they have come up with some non-factual statements about how he has treated tenants and what he has said to them. And he has bent over backwards, and so has the rental company, to make it easier for tenants,” McIsaac said.

“So it is interesting here in Portland the media has not jumped on him, they have been extremely neutral on him. The head of the tenants union has taken it upon herself to negotiate with landlords on behalf of the tenants and she is not a lawyer, not a property owner, she’s just an activist,” McIsaac said.

Barrier to constructing new apartments need to be removed “To increase the overall housing supply, we need to remove barriers to building.

This includes updating zoning codes to allow for a wider variety of housing types at a range of price levels.

Activists marched into property management office Activists were protesting at one event and then went over to the office of the property management company Marsh had been using to handle his rentals.

“They marched into the A&G Rental Management LLC office and intimidated

the people working there. Drove some of them from the main area back into their offices. They had to lock themselves in their offices. And the principals were not in the office at the time, so they basically attacked the support staff – not physically – but screaming, bullhorns, stomping, just marching through this office. It’s not very big, maybe a grand total of 1,000 square feet. So 30 of them came in there so it was pretty unpleasant,” McIsaac said.

Challenge of buying apartments at market rates “The bottom line is, if somebody buys a new rental property at market rate from somebody else who owned it for 10 years, the owner is going to sell it at market value. The new owner is going to have to raise the rents to make the monthly mortgage. If you do away with no-cause evictions, then you also do away with the ability to evict bad actors who are drug dealers or domestic abusers, because that is what the law exists for,” McIsaac said.

– but the tenants union has refused conversations and any negotiations that are not absolutely in their favor,” he said.

“And they have a couple of politicians on their side,” McIsaac said. “Some politicians support no-cause evictions and rent control. But they don’t know the facts. If they did, they would not do it. The Portland Tenants Union is funded by the national Service Employees International Union (SEIU). No-cause evictions are No. 1 and rental control is No. 2 but I think there are other things lurking underneath if they can get these laws passed.

“If you have rent control you cannot improve your buildings. You have to be an altruistic millionaire to improve a building with rent control because rent is where you derive your income.”

“His (Marsh’s) other properties have long-term tenants – his other two properties – and so it’s just a crazy, uncomfortable situation. I think the property managers and the landlords are really willing to work with tenants because of the type of city we have here

10 out of 10 property managers agree It’s the trees It’s no surprise: Recycling and garbage volumes increase over 25 percent for Portland-area residents during the holidays. y Get seasonal waste management tips — including tree recycling. y Subscribe to Multifamily Matters e-newsletter for more ideas and resources. www.portlandoregon.gov/bps/MFHoliday

Contact us Email: multifamily@portlandoregon.gov Phone: 503-823-7224

Rental Housing Journal Metro · December 2016

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Rental Housing Journal Metro

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Rental Housing Journal Metro ¡ December 2016