As Portland navigates through 2024, the city’s real estate market is witnessing a remarkable transformation, underscored by increased affordability, robust demand in key submarkets, and significant economic shifts. This new era is particularly pronounced in Vancouver, WA, and Portland’s core, where changes in the tech sector and office use have reshaped the landscape, presenting unique opportunities for investors and renters alike, according to a recent 2024 Multifamily National Investment Forecast by Marcus & Millichap.
Affordability and Demand Drive Growth
The past few years have seen a structural shift in Portland’s rental market. The average effective rent, which once soared above the national average, has adjusted to nearly 4 percent below it, reflecting the city’s response to changing office dynamics and a broader economic transformation. This adjustment has made Portland more accessible to a wider range of household incomes, setting the stage for substantial net absorption of apartments in 2024. The forecast anticipates a near doubling of the city’s long-term annual absorption average, signaling strong and sustained demand for rental units.
Vancouver, WA, stands out as a beacon of growth within the Portland metro area. Its appeal is bolstered by Washington’s lack of a personal income tax, drawing middle- and higher-wage earners across the state line. This fiscal advantage, combined with Vancouver’s strong net absorption figures, underscores the area’s prominence on the West Coast rental scene. Meanwhile, Portland’s core has seen a narrowing gap between its average effective rent and the citywide mean, enhancing its attractiveness and affordability.
Investor Focus: Vancouver and Southeast Portland
Investor activity is increasingly concentrated in areas like Vancouver and Southeast Portland, driven by these regions’ growth prospects and rental dynamics. Vancouver, in particular, is expected to see household growth outpace the broader metro, keeping rental demand and investor interest high. The rise in Class C transactions, especially in areas outside of Portland’s Urban Growth Boundary like Damascus, highlights the growing appeal of more affordable rental options. This trend is supported by robust rent growth in the Class C segment, making these areas hotspots for investment.
2024 Market Forecast: A Positive Outlook
The Portland real estate market’s outlook for 2024 is positive, with several key trends emerging:
- Employment: While overall job growth moderates, the construction sector remains a strong employment driver, reflecting ongoing demand for housing.
- Construction: New construction is set to accelerate, particularly in Central Portland, contributing to a 2.1 percent increase in the city’s housing stock.
- Vacancy: Portland is poised to be among the few major metros to experience a vacancy rate decline, with rates expected to drop to 5.9 percent by year-end.
- Rent: After a period of decline, rents are on the rise, with the average effective rate projected to reach $1,775 per month, maintaining Portland’s position as a more affordable option among West Coast cities.
Additionally, Amazon’s recent expansion into Canby with a sizable 500,000-square-foot logistics facility underscores the economic vitality of the region, likely to spur further investment in nearby residential properties.
A New Chapter for Portland’s Real Estate
As 2024 unfolds, Portland’s real estate market is entering a new chapter characterized by heightened affordability, strategic investment opportunities, and sustained demand across various sectors. These dynamics present a promising landscape for renters seeking value and investors looking for growth, marking Portland as a key player in the West Coast’s real estate narrative.
