Taking the measure of Bend rental vacancies

It’s hard to spend much time looking for a home or apartment for rent in Bend without hearing about the city’s vacancy rate, but there’s more to the persistently low figure than meets the eye.

Spurred by thousands of new arrivals and a shortage of multifamily housing, the vacancy rate for units in Bend and throughout Central Oregon has stayed below 2 percent since 2012, according to the annual rental survey produced by the Central Oregon Rental Owners Association.

While the survey and accompanying numbers have dictated affordable housing policy and rental rates in Bend and beyond, they capture a relatively small percentage of properties in Bend.

“Our survey is just a snapshot of one day in one year,” said Arleigh Santoro, president of the rental owners association.

The Central Oregon Rental Owners Association, founded in 1979, is one of 14 regional chapters of the Oregon Rental Housing Association, a Salem-based organization that advocates for owners of rental properties. Santoro said the Central Oregon Rental Owners Association began issuing the survey to its member properties about 25 years ago, primarily as a way to determine the average monthly rate for the region.

The survey is typically sent near the end of winter to the association’s approximately 475 members in three counties in its monthly newsletter, Santoro said.

Respondents fill out how full their units are, and how much they’re charging in rent at the time they complete the survey. Those responses are then aggregated to create data on average rents and vacancies for six different categories of housing units in the cities and towns of Central Oregon. In 2016, the overall vacancy rate in Central Oregon was reported as 1.04 percent, its fourth consecutive year below 2 percent.

“Anyone who’s been searching for housing knows how hard it is,” said Patti Holmes, housing and resident services director for Housing Works.

Still, there are significant gaps in the survey’s coverage. In 2016, 4,996 units were included in the survey. By contrast, the U.S. Census Bureau listed 28,880 renter-occupied units in Central Oregon in 2015, the most recent year for which data is available.

Santoro said the survey is administered only to members of the rental owners association, which she said skews toward smaller properties. Owners must pay membership dues, which begin at $65 per year, according to the association’s website.

Santoro added that surveys are issued in late winter because most of the movement in the Central Oregon rental market has historically occurred between April and October. Still, she said that’s changing, and the survey doesn’t count the busiest part of the rental calendar.

“It’s a snapshot; it’s a tool we’ve used for years,” Santoro said. “It’s just gotten a lot more attention lately.”

Katrina Holland, executive director of Community Alliance of Tenants, a tenant-rights organization based in Portland, said the shortage of available data is a big challenge in assessing rental markets, and can lead to rental owners taking advantage of vulnerable populations of renters.

“I think it’s ridiculous that we don’t have a better data on the number of units,” Holland said.

For her part, Santoro rejected the idea that the survey is a tool that allows landlords to justify higher rents, saying it’s an internal metric that the association has made public to increase awareness about the state of the market.

“I don’t think it’s any different from any other tool in the real estate industry,” Santoro said.

Holmes said local appraisers often record the vacancy rate in larger markets through quarterly and semiannual surveys. An appraiser for the Redmond-based Beacon Appraisal Group did this work in Central Oregon previously, she said, but no longer does. Consequently, the rental owners association survey is now the most cited metric in the region, despite its flaws.

“Does it guide our policy? Sure it does,” said Jim Long, affordable housing manager for the city of Bend.

The consolidated plan for the city of Bend, which laid out guidelines for how public funds could be used to help low- and moderate-income residents with housing, quotes the 1 percent vacancy rate several times. The plan, which Long helped write in 2014, uses the vacancy rate, and concurrent uptick in rents, as cause for action.

“These are not actionable numbers, these are crisis numbers,” the report reads.

Long confirmed the figure was coming from the rental owners association.

“I’ve yet to see someone offer something substantially different,” Long said.

Ron Ross, principal broker with Compass Commercial Real Estate Services in Bend, said the vacancy rate is well-known in residential real estate circles, particularly in multifamily development.

“That’s really the only source that tracks vacancy,” Ross said of the association’s survey.

The American Community Survey, produced by the U.S. Census Bureau, listed the rental vacancy rate in Deschutes County at 6 percent in 2015. Kristina Barrett, public affairs specialist for the Census Bureau, said the American Community Survey relies on individual surveyors to determine that a home is vacant if no one at an address responds to the survey, which could lead to more units being classified as vacant.

Both Ross and Long said the Central Oregon Rental Owners Association’s survey comes closer than the census data to matching the reality in Bend.

“I would be shocked if the vacancy rate were 6 percent,” Long said.

Regardless of the specific numbers, it’s clear that Bend and Central Oregon have a shortage of rental housing. Long said Bend continued to grow during the Great Recession, even as developers stopped building additional housing. By the time the region’s construction industry began to come around, Bend was already faced with tremendous demand for housing.

“We’re going to be playing catch-up for a long time,” Long said.

Still, there’s hope on the horizon. Aaron Henson, senior planner with the city of Bend, said that developers added 213 rental units between summer and fall. An additional 1,045 units are under construction in the city, and 845 more are in the initial planning process, he said.

“This community is starved for multifamily (housing),” Ross added.

Despite its imperfections, Long said the Central Oregon Rental Owners Association’s survey helps developers identify and quantify needs in a challenging market. He said a vacancy rate below 5 percent is the benchmark at which developers may start building multifamily housing. Additionally, Long uses the average rental rate from the survey in order to determine affordable housing policy.

With more housing coming online, Ross added that he expects the vacancy rate to rise slightly for the 2017 survey, perhaps breaking the streak of years below 2 percent.

“It’s the data,” Ross said of the survey. “And you can poke holes in it, but it’s what we’ve got.”

— Reporter: 541-617-7818, shamway@bendbulletin.com

Spurred by thousands of new arrivals and a shortage of multifamily housing, the vacancy rate for units in Bend and throughout Central Oregon has stayed below 2 percent since 2012, according to the annual rental survey produced by the Central Oregon Rental Owners Association.