The argument about Portland, Oregon’s continuing rise in real estate prices takes two paths. More than that, there are the people who own real estate, and those who do not.
Some had arrived before Portland became a shining gem to the rest of the U.S. At some point people from all over moved there because they liked the quirkiness and the music and art scene, and the small city charm.
Are Loose Lips To Blame?
Did people talk too much about how great it is? Is that why it became over-run with soaring real estate prices and little to no affordable rentals? If so, then the argument would stand at simply supply and demand. Portland did not have soaring housing prices and rental rates in 1999, when the population was swelling.
Enter Irrational Exuberance?
Take the people who bought low, multiple financed houses, and kept renovating and flipping. House flipping, favorable borrowing rates, and irrational exuberance following the tech bust may have contributed to the state Portland is in the right now. It’s happening in a lot of places, and no, house flippers, do not get defensive.
It seems the flippers who made it through the late aughts became even more aggressive in snapping up properties to rent and flip. Or, maybe you hoard houses because you watched Carlton Sheets advertising “Buy real estate no money down!” in the wee hours of your youth circa 1980-something. In those advertorials, every “real” testimonial walked from closing with checks for $25,000 or $65,000 and then turn the house into a tenement, er, an apartment.
Don’t Hate The Players, Hate The Game
The saying is true. It’s not necessarily the flippers who you should blame (no matter how guiltily they quickly change the topic when asked.) Yes, the housing market is manipulated by people who use a basic necessity to build their wealth. It robs others of a place to live.
They would otherwise be with the rest of the population, who are barely holding onto jobs. In a country where 40 to 60% are doing gig work (read paid less than an hourly wage, work-for-hire, have no benefits, etc.) it causes havoc. And, flippers and tenement landlords profit off the backs of people making slave wages.
In all fairness, people in Portland may be shacking up to pay the high rents as some claim too few places to live. Then that means, we have found the common truth. The population may have exceeded capacity. It does not justify overcharging in rent, though. It’s the housing of your fellow community members, not just a business. Even New York City, which has long had a huge population always asserts that it takes all socioeconomic levels to make society run. It is why they invest in public housing. Only, you would not be able to discern its public housing from private. They house their citizens humanely, Portland.
Does Anywhere Else Exist? Move Elsewhere
It is worth noting that Portland is not the only place to live in the area. At some point, people will make their enclaves in the outskirts of town, as they work at Nike, Columbia Sportswear, Visualize Legal – Trial Technology or the gig jobs. It’s what people did before cities were safe. They just visited during the daytime. People keep coming to the city, even if they live on the streets in tents.
If policy changes were brought into effect like the ones for foreign investors in London and Vancouver in British Columbia did, it would put pressure on the opportunists who are manipulating the markets. Tacking on taxes for capital gains or even the purchase of their fifth home might change the math for flippers and hoarders even as domestic buyers go.
The big question is why people are still flocking to Portland now that it has such a sizable homeless population. Surely that alone will decimate the housing prices. And then no one will be claiming that the city is out of space to build, or that they are forced to charge extremely high rents. Honestly, — take heed investors — nothing like a social scourge to send people out of town to sink housing prices and rental rates. Those tent cities, those are your next renters, folks. Good work.
Let’s Bring Up The Past: Cities In America
Do you remember that well through the 1980’s, people avoided cities? They did not live in them, at least not in the rest of America. They became a plight. Sure, back then it had been partly racial, and partly just people who had grown up crammed into tenements wanting the space that suburbia promised. If you have an over-run city, people will eventually spread out again.
It turns out that Portland, Oregon has hit a tipping point. We could imagine all day long why the prices are soaring. Then we look at the surging homeless population and wonder when the tipping point occurs.