Bend Oregon Rental Demand Grows
At least the headline (“Bend Rental Demand Grows”) makes it sound like there is a little something positive happening in this Bend Oregon real estate market. We see our monthly sales figures ( August home sales in Bend) remaining fairly stable; and our Notices of Default remain high. The following are excerpts from an article in The Bulletin appearing about two weeks ago; it was written by Ed Merriman.
Central Oregon Rental Market Stabilizes?
Bend’s rental housing market continues to stabilize due in part to the misfortunes of people who lost their homes and are transitioning from homeowners to renters.
“In single-family residential rentals in Bend, from the summer of 2009 to the summer of 2010, we have actually seen a decrease in vacancies and an increase in rental rates,” said Lawnae Hunter, president of the Central Oregon Rental Owners Association.
“People moving out of homes due to short sales or foreclosures (find foreclosures in Bend) are going into single-family rentals in Bend, because that is what they are used to,” Hunter said.
Kevin Restine, general manager with Plus Property Management, also sees people who lost their homes due to the mortgage crisis and economic decline moving into rental houses in Bend, which he said is turning out to be “the silver lining in an otherwise dark cloud” for property owners.
“We see lots of folks, who have lost their homes due to different scenarios, who have long histories of paying their bills well. They have turned out to be very good tenants in rentals in Bend,” Restine said.
Hunter said the mortgage crisis and recession have taken a toll on home ownership nationwide. The latest U.S. figures show ownership declined from 59 percent to 55 percent over the past two years, she said.
In addition to reducing vacancy rates in single-family rentals in Bend, Restine and Hunter said the migration of former homeowners into rental housing also has helped stabilize vacancy rates for upper-end duplexes and three-bedroom apartments.
Vacancy rates still remain fairly high, however, for two-bedroom apartments, especially in complexes Hunter described as being “in the low end of the rental market.
“Rentals in the $650-and-below market are more sensitive to job losses,” Hunter said, adding that wage earners in that population are more vulnerable to economic troughs and related unemployment, or reductions in wages or hours.
Even in the older, lower-end apartment complexes, Hunter said vacancy rates aren’t as bad as they were a year ago.
“Last summer, some of the larger complexes had vacancies of up to 25 percent,” Hunter said. “I think that number has come down.”
The last vacancy rate survey, done in the first quarter of 2009, showed an overall vacancy rate for rental homes and apartments of 12 percent, which she said was nearly double the vacancy rates that hovered around 6 to 7 percent in 2007 and 2008. Those rates represented a huge increase from a 3.4 percent vacancy rate reported in the group’s 2001 survey.
Rents holding steady
Rents have held steady for single-family homes, and apartment rents continued to rebound this summer in Central Oregon after dropping the last two years.
People who couldn’t make $2,000 monthly mortgage payments on homes they lost can afford $969 a month in rent. That’s the average cost for a three-bedroom house in the Bend area reported in the first quarter of 2010, down from $1,003 during the same period in 2009.
Rents for a two-bedroom house in Bend Oregon averaged $803, down from $826 in 2009; and the average rent for a one-bedroom house reported in the association’s 2010 survey was $612, down from $616 in 2009.
The association’s surveys show rents in Bend for single-family homes haven’t varied more than $30 or $40 in several years, going back to 2006, when the region’s housing market was still booming, and the vacancy rate was low.
Rental Market Optimism
Tim Reynolds, a builder turned property manager, said he bought Above and Beyond Property Management of Bend about a month ago because he believes property values in Bend and Central Oregon will rebound.
“I am optimistic about the rental market. There are a lot of people losing their homes who are going into the rental market, and investors are buying up those properties,” Reynolds said. “It gives you good-quality rentals at bargain prices.”
As investors buy up foreclosed homes in Bend, Reynolds said that adds to the inventory of rentals for property-management companies.
“Recently, we have had so many people moving out of home ownership into rentals that our vacancy rate at the end of August was 3.9 percent,” Lahey said. “Our average (vacancy rate) is around 6 percent, so that is a big change.”
Lahey credits the improvement in vacancy rates, in part, to an easing of criteria for credit scores and other financial information by property owners.
She said renters who left big mortgages they couldn’t afford can start rebuilding their credit by paying monthly rent that is often half what they paid on their mortgage.
“I would say right now we are seeing the rental market in Bend Oregon stabilize just a little bit,” he said.
