ECONOMY

Oregon landlords can raise rent by 14.6% in 2023

Salem residents could see rent increases up to nearly 15% next year under new state rent control rules.

The state Department of Administrative Services announced Tuesday that Oregon landlords can raise rent up to 14.6% in 2023. The 2022 maximum rent increase was 9.9%.

It’s the highest maximum increase the state has allowed since legislators passed SB 608 in 2019, making Oregon the first state with a statewide rent control. The department is required under state law to calculate the maximum percentage increase allowed for rent costs the next calendar year by Sept. 30. By law, that percentage is 7% plus inflation.

The law doesn’t compel landlords to raise rent by that amount. Rent control also doesn’t apply to newly built units – only those first occupied at least 15 years ago are covered.

State economist Josh Lehner said the rent control policy is directly tied to inflation, which has been accelerating for the past 18 months. He expects next year’s increase to be lower, and back to the 9% to 10% range by 2025 or 2026.

Lehner said the larger percentage increase means more households will be strained, and the tight rental market also leaves Salem tenants with little choice. “They can either take the unit that’s offered by the landlord at the price that’s offered, or it’s harder to find something else,” he said.

At the end of 2021, the Salem metro area’s rental vacancy rate was 2.5%, according to data from real estate appraiser Katherine Powell Banz presented at Salem’s 2022 SVN Economic Forum, held in February. She listed the average rent for two-bedroom apartment in Salem at $1,276 monthly.

A 14.6% rent increase would raise that monthly cost by $186.

Jimmy Jones, executive director of the Mid-Willamette Valley Community Action Agency, said the true current figure for a two-bedroom apartment is closer to $1,430.

“For a lot of poor families, working families, this is going to be really devastating because that is an enormous increase,” he said. “I anticipate that there are going to be more evictions, I anticipate that they’re going to be more people struggling to make their rental payments. In a situation of housing instability, there may be folks who go without other things that they need for their basic needs just to get the rent paid, so this is not pretty.”

Jones said for months he has warned his agency’s board and others that the higher rent increase limit was coming as inflation ramped up. A 14.6% increase “may not sound like a whole lot,” he said, “but it is an awful lot to people who are already just, you know, with their fingernails holding on trying to survive.” 

Jones said rising inflation uniquely impacts the rental market. If the price of beef, milk or gas goes up, it may go back down in a month or two. But with rent, leases and contracts set prices for one to two years or more. 

“Once the rent is there, it doesn’t go back down. So you have those increases getting baked into a system, and then they’re just really difficult to address when that happens,” he said.

The decision of whether to actually raise rent by the maximum allowable amount falls to landlords.

“If you look at the market statistics, rarely does that occur for everybody,” Lehner said.

Jones said in his experience, most local landlords have automatically raised the rent by the maximum amount allowed every year since the state’s rent control law went into effect — planning for unexpected costs over the next year.

“Most of them are just going to automatically lock that rent increase in,” he said. “For renters, that’s a really pretty painful thing.”

Jones said local service providers are “very frustrated and afraid” as pandemic rental protections expired and rental assistance funds are greatly diminished statewide. 

Marion County does have $3.3 million of emergency rental assistance to be distributed starting October, according to Jason Icenbice, executive director of the Marion County Housing Authority. That comes from a set of federal funding Oregonians can apply for that went to local governments.

To be eligible, Icenbice said the program requires at least one person in the household has qualified for unemployment benefits or had their household income reduced, incurred significant costs or experienced other financial hardship during the pandemic; at least one household member can demonstrate a risk of experiencing homelessness or housing instability; and the household is at or below 80% of the area median income in relation to household size.

Starting Oct. 1, Marion County residents can request an application either through the housing authority’s website, at the agency’s office at 2645 Portland Rd. N.E., Suite 200, by calling its office at (503) 798-4170, or by emailing [email protected] 

The Department of Administrative Services will calculate and publish the allowable rent increase for 2024 by Sept. 30, 2023. 

Contact reporter Ardeshir Tabrizian: [email protected] or 503-929-3053.

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Ardeshir Tabrizian has covered criminal justice and housing for Salem Reporter since September 2021. As an Oregon native, his award-winning watchdog journalism has traversed the state. He has done reporting for The Oregonian, Eugene Weekly and Malheur Enterprise.