Oregon’s rent increase cap is 14.6% for 2023

By PETER WONG
Oregon Capital Bureau

A new cap of 14.6% for Oregon rent increases in 2023 has prompted housing advocates to raise concerns about a wave of evictions and landlords to urge calm about the future.

The 2023 cap was announced by the Oregon Office of Economic Analysis, which calculates the cap under Oregon’s 2019 rent stabilization law. The cap is essentially the west Consumer Price Index — the 12-month average is 7.6% — plus 7%.

Previous caps were 9.9% in 2020 and 2022, and 9.2% in 2021.

Landlords cannot charge higher increases.

The cap is determined by the Oregon Department of Administrative Services — the state’s budget and management agency that includes the Office of Economic Analysis.

For a one-bedroom apartment in Portland where the average monthly rent is $1,500, the amount could go up by $200 per month.

A statement attached by senior economist Josh Lehner from the office’s latest economic and revenue forecast, released Aug. 31, says this:

“While overall market rents rarely move at the maximum allowable amount, a larger increase likely strains more household budgets. In reality, renters face the options of paying the higher prices, trying to find a more affordable unit in a really tight housing market where vacancy rates are low, or taking on more roommates to spread the higher housing costs across more people.”

The full forecast report added:

“The increased demand in the rental market is a key issue to watch. Vacancy rates are already low, and if more households find themselves renting due to being priced out of the ownership market, competition for rentals will intensify. This is likely to keep rent increase high, contributing to overall inflation, and impacting household budgets.

“It is even possible that household formation could decline, with fewer new households being formed, and an increase in living at home, or with more roommates.”

Advocates concerned

Housing and tenant advocates have already raised concerns about potential effects of the higher allowable increase.

“For families who are already severely rent burdened, a 14.6% rent increase is effectively an eviction notice,” Loren Naldoza of Neighborhood Partnerships said. “The announcement puts countless families, individuals, seniors, and people with disabilities on notice that their landlords have the express permission to increase their rent by unprecedented amounts.”

Kim McCarty, executive director of the Community Alliance of Tenants, said the burden will fall disproportionately on those most affected since the onset of the coronavirus pandemic in spring 2020. Among them are people of color, immigrants and refugees, and rural residents.

“Already our hotline is ringing off the hook with people who are struggling to afford the rent in our uneven economic recovery, and it’s about to get so much worse,” McCarty, whose organization runs a hotline for renters, said.

“People with housing who are just barely making it are already terrified of being forced to live in cars or in tents and their fears are justified. The leading cause of the homelessness that we see throughout the state is the rising cost of housing, and the lack of affordable housing leading to evictions. Having a job is no longer an indicator of your ability to remain housed.”

The Office of Economic Analysis has reported that Oregon has fallen 111,000 housing units short of what was needed to keep up with population growth in the past two decades — that figure grows when homelessness is taken into account — and people in households earning less than the median area income account for about half the total need.

The prospects of higher rents, and the likelihood that many households will be unable to afford them, may spur the 2023 Legislature to set up a new emergency rental assistance program.

Oregon closed its emergency rental assistance program on Aug. 12 after paying out $400 million in federal and state funds to more than 60,000 households during the coronavirus pandemic.

The Oregon Department of Housing and Community Services estimates that more than 130,000 people were able to stay housed because of the aid. According to its earlier reports, the typical household averaged 2.2 persons, and the average payment per household — which went to landlords — was $6,400.

Evictions rise

A grace period under law ends Sept. 30 for tenants awaiting action on their applications for rental assistance. Landlords can begin eviction proceedings for nonpayment after that date, even if applications are pending. Also, after Oct. 1, tenants have only 72 hours (3 days) to remedy an eviction notice instead of 10 days previously allowed under the law.

The Oregon Law Center reports that August court records show that 2,000 faced court eviction, a 45% increase over July and an increase of 119% over August 2021.

“We’re concerned about the wave of evictions we’re seeing in court,” says Becky Straus, managing attorney of the center’s Eviction Defense Project.

“The eviction court dockets are swamped. The only thing that has kept things from being worse through the pandemic were reasonable and humane timelines so that people had a chance to take the steps necessary to avoid losing their homes. With this new aggressive eviction timeline starting next month, and 14.6% rent increases coming in January, we expect evictions to rise even further for the foreseeable future.”

A differing view

But the board president of Multifamily NW, which represents a number of rental housing providers in Portland and the metro area, said fears of such high increases are unwarranted.

“Based on what we are seeing with our clients, the rent cap will not apply to most renters, and this rent cap formula means very little on the ground when it comes to determining rental prices,” said Renee Larson, who also is vice president of Capital Property Management Services in Portland. “Since the implementation of the law, we have not seen average rent increases even come close to the maximum.”

Many reports track vacant apartments going onto the market for rent. Multifamily NW has its own report, which tracked rents from members prior to the 2021 cost-of-living increase. A statement from Multifamily NW says:

“The Apartment Report tracks vacant apartment numbers, in addition to units that are continually occupied throughout the year. This is important because overall, it shows that housing providers are not jacking up rents to the maximum allowable increase, likely because they want to keep their units occupied and maintain rental income. This survey represents a total of 86,589 units from 1,231 properties. Overall, average rents went down.”