There is no question that apartment values have seen incredible increases since 2013. The increases are unprecedented in Portland. The annual value increases since 2013 are by no means sustainable, but have the underlying fundamentals of the Portland rental market shifted, and maybe THIS TIME IS DIFFERENT.
It's a difficult question to answer. Real estate is a cyclical industry and most of the time, a reversion to the mean is a predictable outcome. But to many, Portland feels different this time around. However, quantifiable data to help support this shift in underlying fundamentals has been hard to come by.
Josh Lehner, an economist with the State of Oregon, recently published an article which helps support this notion. In the process of looking around the country for cities that may be the "Next Portland", he has revealed a shift in the underlying fundamentals which impact the Portland rental market. He notes the following major changes.
- Since 2007, Portland moved from 32nd to 19th in highest median household income among large metros
- Portland has a unique ability to attract and retain talent. Our migration rates among young college graduates now compares with San Francisco, Denver, Raleigh, DC and Seattle
- Since 2007, Portland moved from 27th to 16th in highest share of working age residents with a college degree (34% in 2007 vs. 40% today)
- Since 2007, Portland high wage jobs have increased 35%, or 5th best in the nation
- The college educated migrants coming to Portland have STEM degrees, which is a shift from arts/humanities degrees
If you're interested in the full report (2 pages) and accompanying slides, they are included at the link below.
Portland in Transition:
The region is far from over; there is no “Next Portland."
Josh Lehner
Oregon Office of Economic Analysis
September 28, 2017