Portland's residential real estate market has cooled a bit from the last few years, at least enough for prices to increase more gradually and for buyers to take a little longer to choose where they want to live.
The market is still performing well, though, and the first quarter of 2019 indicates that trend will continue, according to local specialists in the condo and multifamily sectors.
Sean Z. Becker, owner and principal broker for Sean Z. Becker Real Estate, does the majority of his condo sales in the South Waterfront and Pearl District. He saw the condo market slow down last year, particularly in the fourth quarter.
"We're at the tail end of a real estate cycle and that's just normal economics.
The stock market got rattled and that impacts high-end buyers. The government shutdown didn't help," he said. "During the first quarter of this year we have seen a bit of a surge and we hope that's going to continue."
Becker said the Pearl District has seen an increase in inventory and The Vista is about 60 percent sold. However, the market has now shifted to a resale market for condos and more apartments are being built than condos.
"I don't think there is anything systematically wrong. The brokers, the buyers and the market have to adjust their expectations a little bit," he said, adding the high pricing of the last few years has peaked.
"In the condo market buyers are becoming more discerning and they are taking their time," Becker said. "They are comparing prices and looking more at amenities, so things are sitting longer."
Mark Washington, senior vice president with JLL, said this time last year the market was waiting to see how multifamily would perform given the expected large delivery of anticipated supply.
"In some investors' opinions it was a doomsday scenario that could have put the market in a position to retract some of the positive momentum achieved in recent years, producing scenarios where rent growth could be negative and large buildings would take significantly longer periods to lease up," he said.
Instead, the outcome showed promise and exemplified the strength of the fundamentals within the Portland market due to net migration and continued strong job growth, Washington said.
"This doesn't mean that all things were roses and sunshine for the market," he added. "Most buildings are becoming creative in how they attract tenants, concessions within the market have remained at an elevated level, and rent growth in a lot of pockets around the city has tapered off."
Washington noted that during a time when the city delivered its peak in units, the market responded "beautifully" and achieved record absorption while still outpacing supply.
"Given the performance of last year we are seeing a number of owners become confident enough to re-enter the market, but a cloud a caution does loom above the city for a number of reasons," Washington said.
Those factors include another potential peak year of new construction deliveries as well as investors digesting the political environment within the city and state, including the recent passage of legislation regarding rent control, inclusionary housing and green roofs.
He pointed out that older multifamily projects are currently outperforming the Class A product as new construction continues to push the upper price boundaries within the market, making the older buildings a more affordable option. This dynamic might only be temporary, however, as a lot of the older buildings continue to get renovated and the price gap shrinks between older and newer units.
Washington said the rapid evolution of multifamily projects in the Portland metro area means there are several recently completed projects and others under construction that significantly bolster the market. He pointed to The Rodney in the Pearl District, which offers co-working areas for residents who work from home. Modera Belmont on Southeast Belmont features a virtual reality room fully equipped for large groups of friends to play each other online or tour cities around the world without leaving the apartment.
"I am also excited about the projects that have started to transform the Portland waterfront, from Carlyle and Mack Urban's Osprey project down in the South Waterfront to Fore Property Company and Carlyle's Rivage project in North Pearl," he said. "I believe the waterfront will continue to play a significant role in the Portland residential market as residents take advantage of the greenspace and water activities, not to mention the beautiful views of the water, bridges and mountains that you can see from these."
Becker noted that, in Portland's condo market, the most important amenities are location and the surrounding environment, including retail, parks, walkability, and access to the Portland streetcar and MAX.
"When you're selling condos it's like an extended living room and what is around you," he said. "Portland is really blessed. We have a lot of beautiful condo buildings so buyers can kind of live where they want."
The most recent report from Kidder Mathews on Portland's multifamily real estate market shows the five largest projects completed in 2018 were The Arbory in Hillsboro, Oregon City's Edgewater at The Cove, Sunset View Apartments in Beaverton, Heartline Apartments in the Pearl District, and Beaverton's Baseline 158.
The five largest projects currently under construction are The Collective on 4th and 100 Columbia Apartments in Portland, Acero Ridgefield Apartments in Clark County, Modera Glisan in the Pearl District, and Harbor Sky Apartments in Portland.
New construction in the multifamily market increased nearly 32 percent from 2016 to 2018, the average asking rent increased 2.6 percent and the average price per unit rose by nearly 28 percent during that time period. The average rent in Portland for a studio is $1,094, a one-bedroom unit is $1,172, a two-bedroom unit is $1,318 and a three-bedroom unit is $1,499, according to the report.