The cost of renting an apartment in Portland plummeted in 2020 amid the coronavirus pandemic, with rental prices in downtown and Northwest Portland driving the sharp decline.
Last year’s falling rents reversed a decade of steep increases that contributed to the city’s housing crisis. With many Oregonians unemployed during the pandemic, though, lower rents may not make housing more affordable overall.
Portland rents have dropped 7.4% since the start of the pandemic, with median rents currently sitting at $1,119 for a one-bedroom apartment and $1,305 for a two-bedroom apartment, according to online rental platform Apartment List.
Many other urban areas experienced similar shifts in 2020. Among the nation’s 100 largest cities, Portland’s decline was the 14th fastest since the start of the pandemic, according to the rental platform.
However, rent changes varied significantly by neighborhood.
The cost of renting an apartment in downtown Portland dropped 6.8% in 2020, while rental prices dropped 5.7% in Northwest Portland, which includes Old Town and the Pearl District, according to CoStar, which tracks real estate data.
The decline eclipsed the rent drop that occurred in Portland during the Great Recession in 2009 when average rent fell 4.7% citywide and 5.6% downtown, according to Costar.
Meanwhile, average rents dropped 2.4% in Southeast Portland, while rising 2% in East Portland. CoStar’s numbers show rents were stable in North, Northeast and Southwest Portland, excluding downtown.
Downtowns across the country have experienced steep rent declines since the start of the pandemic as business closures and a trend toward remote work has made suburban markets with more spacious options and greater access to outdoor recreation more desirable, said Steve Basham, CoStar Group managing analyst.
An increase in construction prior to the pandemic also meant that new units came on the market at a time when demand was decreasing. Costar estimates that 15% of downtown Portland apartments are currently vacant.
“This is not at all a Portland-specific phenomenon,” Basham said. “We’re seeing that same trend playing out across the country. Usually renters are paying top dollar to live downtown and you’re justifying that expense because you are close to your job, you are close to the restaurants and the cultural scene downtown. In the era of COVID, a lot of the things that make that downtown living so appealing aren’t there anymore.”
Downtown Portland is facing distinct challenges with ongoing protests, more homeless camps and a significant spike in vandalism that may have contributed to the rent decline. Still, Chris Salviati, a housing economist at Apartment List, said Portland isn’t an outlier when it comes to its rent decline. He said the rent drop within the city has actually been less dramatic than some of the country’s biggest urban markets.
Rent in San Francisco has declined 27% since the start of the pandemic, the sharpest decline in the country, according to Apartment List. Asking rents are down 22% in Seattle, 21% in Boston and 20% in New York City, according to the company.
“When we look at the list of places that are seeing rents come down fastest, it tends to be places that have really expensive housing markets,” Salviati said. “And that also have workforces that are more skewed toward the segment of the population that are able to take advantage of remote work flexibility.”
The median asking rent in Portland skyrocketed 57% from 2010 to 2019, growing at double the national rate as median prices jumped from $838 to $1,312, according to the U.S. Census Bureau. The majority of that increase took place in the first five years of the decade before rent prices began to level off as an influx of new units came on the market, according to Salviati.
“The housing costs in Portland aren’t as extreme as some of these other cities, but Portland is a place that has been a pretty hot market for a number of years now and has seen quite a lot of change and rapid rent growth,” Salviati said. “I think there are similar dynamics at play in Portland as there are in other cities that have seen rent coming down during the pandemic.”
Rents in Portland are declining at a much faster rate than both the state as a whole and the national average. Oregon rents are down just 1.8% year-over-year, while apartment rents nationally are down 1.5%, according to Apartment List.
In contrast, many suburban markets in the Portland area and across the country saw rental prices spike in 2020.
It’s an open question whether urban rents will rebound as the pandemic recedes.
Basham said it is likely that renters will return to downtowns once the amenities and nightlife that city centers can offer come back. But if businesses continue to allow employees to work remotely after the pandemic and reduce their footprint in downtown cores, he said that could lead to a permanent change in apartment demand.
“I don’t think you’re going to see the quasi-ghost towns that you might see right now if you go to a downtown area,” Basham said. “But I do think there’s a definite possibility that our peak levels of demand when everything gets back to normal are maybe not at the peak levels they were prior to the pandemic.”
— Jamie Goldberg | [email protected] | @jamiebgoldberg
