There are countless indicators to judge the health of an apartment market, though many are difficult to understand or provide too much detail for the average participant. Below are four macro indicators that we track to judge the overall health of the market, and only one is apartment specific. We’ve also added some commentary on how they apply to the Portland apartment market.
- Interest rates - I think most agree that interest rates are not going down. Eventually rising interest rates will begin to push cap rates.
- Employment - Portland MSA employment remains very strong. We have gained 31,000 jobs year over year, and unemployment remains at record lows
- Home ownership ratio - Exact figures are tough to nail down, but there is a general consensus that home ownership is increasing, which hurts apartments, especially apartments with high rents. Keep in mind that a 1% increase in home-ownership in the Portland MSA means 8,000 fewer households in the market for rental housing
- Apartment Construction - Portland has reached peak levels of apartment construction not seen since the 1970’s. Some oversupply is likely in the near term.