Oregon rent hikes capped at 'relatively tame' 9.9% in 2022
Landlords across Oregon may jack up rents as much as 9.9% in 2022, state officials say.
The Department of Administrative Services approved the statewide maximum increase, which takes effect next calendar year, under an emergency rent control law enacted by lawmakers three years ago.
Since then, the max rent hike had been 10.3% in 2019, 9.9% in 2020, and 9.2% in 2021. The law doesn't apply to new construction — or any rental built within the last 15 years.
That might seem like a steep increase to some, but the rise is actually "relatively tame," according to state economist Josh Lehner, considering rollercoaster inflationary trends.
"I know some of you may be scratching your heads given inflation is currently running hot," said Lehner.
Citing data released by the Consumer Price Index this month, Lehner says inflation in non-auto and hospitality sectors is running at about a 4% clip, roughly double the 2% target sought by the Federal Reserve.
But the rent increase formula uses a 12-month average that includes low-inflation months from the depths of the COVID-19 outbreak.
"The current bout of inflation will mostly be reflected in the 2023 maximum allowable rent increase," said Lehner. "The ultimate economic risk lies in inflation proving more persistent than believed, such that the Federal Reserve steps in and raises interest rates to cool the economy. Not only would this slow economic growth, but in some historical periods, it has even caused a recession."
Of course, not every landlord will issue the steepest rent hike allowed by law, but the rental market will likely keep the squeeze on.
The vacancy rate for multifamily apartment buildings tightened to just below 5% in the third quarter of 2021, according to Willamette Week. CoStar, a commercial real estate info broker, says asking rents across the metro area have hit a record high — $1,508 per unit — which is about a 9% increase compared with last year, and includes many new buildings not subject to the cap.
While the state has promised to bail out tenants who stopped paying rent during the pandemic — the vast majority of renters are still waiting for the check.