Study shows thousands of older multifamily units are changing hands and sales may increase

COURTESY METRO - The PSU study was commissioned as part of the Southwest Corridor Project being overseen by Metro.More than 11,000 affordable apartment units dot the corridor served by the region's next MAX line — many of them vulnerable to being demolished or remodeled so they're no longer so affordable.

That's the startling conclusion of a new Portland State University report that sheds new light on the city's rapidly disappearing stock of "naturally occurring affordable housing."

Those are the apartment buildings and complexes that aren't as spiffy, and much older than the glistening ones popping up all over Portland as it gentrifies and densifies.

The 41-page report, called Preserving Housing Choice and Opportunity: A Study of Apartment Building Sales and Rents, concluded that there's still a large amount of this natural affordable housing stock in Portland. However, it's vanishing quickly as investors and developers snatch it up, often to demolish or remodel, sometimes displacing renters who can't afford subsequent rent increases.

The study was conducted for the Southwest Corridor Project overseen by Metro, which proposes a new MAX line between Portland and Tualatin through Tigard.

Since the report was released, TriMet agreed to postpone a regional bond measure to help fund the light rail line, in part because public concern over losing more affordable housing is so great. In its place, Metro promised to work on a regional affordable housing measure, possibly for the November 2018 ballot.

The new study found there have been more than 2,000 transactions involving more than 68,000 affordable apartment units in the Portland metro area between 2006 and 2017. Twenty percent of those transactions happened over the past 18 months.

Worrisome pattern

"I think there's this invisible story of all these buildings that have been in our communities for decades are also changing hands," said Ryan Curren, Portland Bureau of Planning and Sustainability project manager for the Southwest Corridor Equitable Housing Strategy.

"Most of that activity," Curren said, "is in this market — not in the newer market that gets a lot of attention."

He said the report puts numbers behind a lot of the discussion occurring about rising rents and affordable housing.

The proposed MAX line is already having an impact on nearby housing stock. Though the PSU study looked at much of the region's naturally occurring affordable housing numbers, it focused on what's happening in the Southwest Corridor.

The report found there are 11,400 of these apartments in the corridor, or 93 percent of the multifamily housing stock.

Curren said that is good news to have such a high percentage that's affordable, but the rate at which they're disappearing is worrisome.

"These aren't just isolated incidents," he said, talking about stories of large numbers of tenants being displaced from a building. "There's a bigger trend. Then you put the numbers behind those trends, the sale per unit — the rents increasing by different quality of housing."

"Most of that activity is in this market — not in the newer market that gets a lot of attention."

— Ryan Curren

Sales prices sizzle

The average sales price of apartments along the corridor skyrocketed by 274 percent in just seven years, rising from $54,682 per unit in 2010 to $204,584 in August 2017.

But the composition of the apartment stock in the area is changing.

Since 2010, 81 percent of the new multifamily units there have been luxury apartments.

"These are the last buildings that are affordable without any kind of regulations or protections," Curren said of the older apartments. "It gives us a sense of urgency and data to back it up that we need to target some funding to preserve the affordability of these buildings, whether it's nonprofits buying the buildings or incentivizing current owners to maintain stable rents. But there needs to be some intervention there, especially around transit corridors."

Although there's been much effort recently to build more affordable housing, Curren said the amount of housing needed is well beyond what public dollars could ever provide.

That's where other organizations can step in, including foundations like Meyer Memorial Trust, which uses philanthropy and private dollars to buy housing.

Of course, some old houses reach a point where they may need to be replaced. Old homes with bad roofs or boilers, or contamination from lead and asbestos, may not be safe, though they're cheaper to live in.

Rating the buildings

The PSU report rates housing in the region by one- through five-star ratings, depending on their design, construction and property amenities. The naturally occurring affordable housing generally falls in the two- and three-star categories.

Curren said there's plenty of the three-star buildings, some with 100 or more units.

"They were more likely built in the '70s and '80s, so they're not that old. So the three-star ones are a pretty good asset you could put public dollars in," he said.

Curren pointed out that in Seattle, which passed a $54 billion transit measure last year, officials required use of a portion of the dollars to acquire land and buildings along a planned light rail route.

There are some efforts locally to help, including the Network for Oregon Affordable Housing, which has an acquisition fund of private bank money, philanthropic money and some public dollars, making up about $36 million. It acts as a lender for land acquisition of affordable housing, or acquiring affordable housing at risk of being lost and converted.

"The city of Portland does have some money in that fund — specifically for land acquisition. Just for $1 million, not a big piece of it. We'd like it to be larger," said Dee Walsh, chief operating officer of the Network for Oregon Affordable Housing.

Meanwhile, the Community Alliance of Tenants has boots on the ground to work with people at risk of displacement.

Tenants experiencing displacement

"What we've heard mainly is that it's pretty common, this rising rent question across the city, but it's really pronounced in the Southwest Corridor," said Pam Phan, policy and organizing manager with the Community Alliance of Tenants.

Forty-seven percent of people living in Portland are renters, according to the Portland Housing Bureau.

According to the PSU report, two-thirds of the corridor's naturally occurring affordable housing sales are in low-income census tracts, while nearly 40 percent are in racially diverse areas.

The most vulnerable populations in the corridor are low-income renters of color who have large families.

"We're hearing that maybe five to 10 years ago, these rents for two bedrooms were about $700 a month and now they've jumped to $1,200 to $1,400," Phan said.

Find out more

To read the full report:

Lyndsey Hewitt
Reporter, Portland Tribune
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