It seems that the real estate market in Portland often has a good and a bad side. When the market is down and nothing is selling, we definitely hear all about the ramifications. Now that the Portland real estate market has rebounded quite heavily, it has impacted the cost of affordable housing in the Portland metro area in negative ways for many. Though many are calling this real estate market condition a “Portland housing crisis” and for good reason, there may also be opportunity within Portland real estate.
Is there a positive side to the Portland housing crisis?
According to new research from BiggerPockets, a real estate social network, information hub and marketplace, Portland’s lack of affordable housing has a silver lining for real estate investors. The study looked at major cities across the United States in an attempt to rank them related to overall real estate investment returns, appreciation, and rent to value ratios. Real estate investing in the Portland area appears to be a very good opportunity indeed!
Real Estate Investing In Portland Is HOT!
You will often hear the term HOT attached to a specific industry, product or market, but as it relates to Portland area real estate investing, it goes further than just activity. According to the BiggerPockets research, Portland is now ranked number two in the country for real estate investment opportunity.
The 2016 real estate investment market index analyzed 50 of the largest metropolitan areas in the United States in order to establish which of them were most likely to achieve residential real estate investment returns over the last year. The report pegged Portland as the second-best market for real estate investors. Portland landed just behind Dallas Texas, which garnered the number one spot in the country for residential real estate investment.
Why is Portland great for real estate investors?
There were three main rankings that were measured in the study and Portland real estate investing came in number two overall.
1) Appreciation: Portland’s overall second-place ranking was driven largely by the almost national best of 14.6% year over year home value appreciation. This reflects the current annual home value increases that are some of the highest in the country. To give you a perspective, Denver came in second on appreciation at 13.76%, nearly 1% lower than the top-rated Portland market for property appreciation.
These real estate appreciation numbers are certainly good for investors and homeowners alike, however, they are also what is driving the current affordable housing crisis in the Portland area market.
2) Rent to Value: One factor that residential real estate investors pay close attention to is the rent to value ratio a given market or specific home within that market has, as it reflects the cash flow ability that an investment property can achieve for the investor. The rent to value ratio is calculated with the home price as compared to annual rental rates. The Portland market currently has a rent to value ratio of around 6%, as compared to the top market (Memphis, TN) at just over 10% rent to value ratio.
3) Total Real Estate Investment Return: There are many factors that go into determining the top ten cities for residential real estate investing, appreciation and cash flow from rent to value. These combined real estate segments were combined with other real estate factors to establish the best cities with an overall real estate investment return. Portland was ranked number two.
The Top Cities For Residential Real Estate Investment
Here are the top 10 cities for residential real estate investment based on the total real estate investment calculation for the top 50 cities in the U.S.
- Dallas, TX
- Portland, OR
- Denver, CO
- Miami, FL
- Tampa, FL
- Seattle, WA
- Nashville, TN
- Atlanta, GA
- Houston, TX
- Austin, TX
So, as Portland is experiencing increased housing costs for homebuyers and renters, real estate investors have an opportunity within the residential investment climate. The Portland market represents one of the best opportunities for real estate investors in the country.
Google’s data gives a date of Oct 19, 2019 for this post. Yet the data referenced here are from 2016. If in fact this post is from late 2019, well….much has happened in three years. Rent control for one, as well as many other regulations that significantly affect the housing market.
If there is a series of unforeseen events, like three months of rioting in Portland, does this affect people’s attitudes about investing in rental properties in Portland?