While 2024 has not been the best year for those in the multifamily housing industry, it is important to note what the research and statistics show. We have put together an overall economic snapchat with the help of Multifamily Northwest’s Spring Apartment Report, where we analyze the factors affecting our industry.
Vacancy Rates. Historically speaking, factors such as urbanization, job mobility, and changing demographics are known to influence the rental demand. At this time, we are seeing a decrease in demand which is leading to higher vacancy rates. In fact, over the last six months the vacancy rates have increased by 6.2%. While Portland vacancy rates are nearing a 15- year high, a balanced market is considered to have a vacancy rate of 4.0-6.0, so the rate is not too alarming at the moment. Multi-Family NorthWest pushes upon this in their most recent Spring Report:
“The increase in vacancy rates during 2023 was driven by new supply of around 7,200 units compared to absorption of 3,400 units. CoStar is forecasting that supply and demand will have a better alignment over the next three years and vacancies will not show significant increases.:"
Based on what the research shows, one can predict that the current “high” vacancy rate is not alarming, and should balance out. There are so many factors that influence rental demand, making fluctuations fairly common.
Economic Health. It is important to have a general idea of the overall economic climate. Last year, rumors of even a possible recession were circling. That being said, this year has been much better than most economics predicted. We are seeing a labor market that is no longer overheated and beginning to rebalance, lower unemployment, and a household income remaining stable despite inflation. Of course, this can all be very quickly affected based on what the Fed does with rates. If they cut rates too quickly it will encourage economic growth and keep inflation high, and if they do not cut rates it will untimely slow growth over the next couple years. Recognizing these trends may be the first step in keeping afloat in future challenges.
Workforce & Employment. One of the driving reasons people relocate is for employment and/or work. Therefore, areas with high job volume attract the most residents, and generally see substantial economic growth and drive innovation. The number of businesses in Oregon increased by 25% back in 2019, and has remained stable. Josh Lehner, from the Oregon Office of Economic Analysis shares insight :
“Additionally, productivity is expected to increase due to private and public investment in business expansions, infrastructure, housing, and industrial policies. In the near-term this activity will boost growth, and increase the competition for construction workers, but in the long-run it will provide productivity gains for the entire economy. In particular, the CHIPS and Science Act is expected to see tens of billions of dollars of semiconductor and related investment in Oregon, primarily in the Portland region. This supports thousands of construction jobs in the coming years, and creates thousands more new industry jobs once the projects are complete.”
The labor market in Oregon is looking to be strong, with most adults able to find employment. The end result is good news for workers, residents, business owners, and housing markets!
Looking ahead, the Multifamily housing industry is healthy, and despite challenges has been able to remain strong. While certain factors are hard to predict, we expect this industry to grow and flourish as we round out 2024.
Blog post written by: Aysha Martin
