The New Era - All about Sweet Home since 1929

Local housing shortage sends renters down road

 

April 25, 2018



As is true elsewhere in Oregon, property values are climbing in Sweet Home, and so are rental prices.

New apartment complexes are popping up in nearby cities like Lebanon and Salem. New houses are going up around Sweet Home. But finding the right kind of rental housing is getting difficult.

John Drury has recent experience looking for a new three-bedroom rental with a six-member group that includes a couple, three young children and an adult roommate.

“That’s the only way to make it work,” Drury said. The couple works, but they have to have a roommate.

After living for several years in Mountain Shadows, they started looking for something better than their 1960s-era trailer. They owned the trailer but paid space rent of $475, with water and sewer included.

“Rental prices are skyrocketing,” Drury said. “It kind of feels like you’re paying everyone’s mortgages, plus a mortgage on their houses. I was looking for a three-bedroom house. I was having a hard time finding anything in our budget.”

Three years ago, he estimated, rents were $750 to $850. For a nice house, it would be $950. Now finding anything under $1,000 is difficult.

“You’re in luck to find anything under $1,400,” Drury said. Down around $1,100 to $1,200, many homes need work, like a new roof.

Their group couldn’t find a three-bedroom unit in Sweet Home and went to Lebanon to find two apartments, one for about $1,400 per month and another at The Lodges, part of the Boulder Falls complex, for nearly $1,600.

They chose the more expensive option because of the amenities, Drury said. They were brand new and include a workout center and pool.

Across Mountain Shadows, the monthly cost, including space rent and payment on one of the newer manufactured homes that have been installed, would have cost the group upward of $1,200 per month, Drury said.

There are a decent amount of two-bedroom places, even more than one-bedroom units, available on the market, Drury said. “For three bedrooms, there isn’t, and they rent so fast – the cheap ones rent even faster. (Landlords) can be as picky as they want.”

Drury’s experience isn’t unique, said Marilyn Godell, manager of East Linn Property Management, which manages more than 200 rental properties in Sweet Home. She believes the real estate market is behind the increase.

“I have seen a huge spike in rent over the last year, especially the last few months,” she said.

East Linn Property Management has lost several properties when their owners took advantage of high property values and sold, she said. “It greatly lessens your availability of rental property.”

That helps drive up rental prices.

“I feel that they’re too much on the higher end,” Godell said of current rates. “However, the owners are getting renters at these prices.”

Just two years ago, a three-bedroom, two-bath house would cost $950 per month, Godell said. That’s up to $1,200 now. Single-bedroom units are running $575 per month.

Echoing what Drury described, Godell is seeing more people rooming together to cover the higher costs.

Lebanon has greatly expanded its capacity with newer complexes, she said. Older complexes are being remodeled, but prices are higher there than in Sweet Home.

Her company had zero vacancies on Friday, Godell said. “We have on our availability list four commercial properties for rent.”

Owners are in the process of remodeling two properties managed by East Linn, she said. One will be on the market soon, while the other project hasn’t started.

East Linn does not have a waiting list, Godell said. Rentals are first-come, first-served, and she’ll typically have two to five applications on a new vacancy.

The vacancy is often filled before the property is vacated, she said. When she has an opening, it immediately goes on a list of available units, generating a lot of response.

While they always filled them, East Linn probably had more vacancies more often two years ago, Godell said. “There was more to pick from.”

Ten years ago, when East Linn was Thelma Brady Property Management, Godell often had a two-page availability list, with at least one of them completely full.

“There were reasonable rents then,” she said. A three-bedroom residential unit would go for $750. “For $900, you had a very nice home. You didn’t see a lot of property over $1,000.”

She would like to see more property to rent, she said. “There seems to be plenty of people coming in to build homes for sale. It’s not the houses that are lacking. It’s the new addition of rental property.”

If someone were to build a new apartment complex, Godell said snapping her fingers, the investor “could fill their units like that.”

Godell has watched the market move up and down over her years in the business, but this surge seems long, she said. As rents continue to climb, “at some point, people are going to be like, No!”

While the law of supply and demand would suggest that high prices ought to drive more production, it hasn’t happened yet.

“There’s not a lot of multi-unit facilities in Sweet Home,” said City Manager Ray Towry. “My guess is the market hasn’t caught up to us.”

Contractor Gabe McCubbins, owner of McCubbins Cutting Edge Construction, said he “doesn’t know” why no one is building apartment complexes in Sweet Home. His business specializes in custom home construction.

It’s not in his company’s wheelhouse, he said. The developments in Lebanon and elsewhere are multi-million dollar projects. While he’s building a $300,000 home, it’s still small-scale compared to apartment construction.

Sweet Home builders may put up two-unit or three-unit homes, McCubbins said, but Sweet Home’s builders aren’t set up for large-scale apartment construction. He noted that contractors tend to specialize in different types of construction, whether it’s remodeling, pole barns, custom homes or apartments.

His business is booming right now, and it’s that way for contractors all over the region.

School and city officials have worried in recent discussions about whether contractors would even bid on their larger projects, a remodel of Sweet Home Junior High and a remodel of the old Sweet Home Ranger District office to serve as the new City Hall.

“Everyone’s so busy, the biggest problem we have is getting bids back from subcontractors,” McCubbins said. “We’re busy.”

Sweet Home has land to accommodate large apartment developments, McCubbins said, thinking of a Midway-area property listed by Sherri Gregory Home Team, but the builders are busy elsewhere.

City officials have noted a shortage not only of housing but also of builders and tradespeople, and it’s not just in Sweet Home – It’s across the state.

“All the builders are building at breakneck speed,” said Community and Economic Development Director Jerry Sorte.

The issue will be a topic among Linn County’s city managers and Commissioner Will Tucker in an upcoming meeting, Towry said.

Right now, there’s a lot of development, Towry said. People are moving to Oregon, and “builders are struggling to keep up with demand. This is a test for our legislators because Oregon places so much value on open space and wetlands.”

Wetlands are holding up a proposed development in Albany, for example, Towry said. “A lot of buildable land is already built on.”

Anecdotally, he asked and found out that a local roofer was booked out until September.

For the new City Hall, which will require a different kind of contractor, he would like to get plans nailed down to take advantage of a typical winter lull – one that Towry said did not actually materialize last winter. Most of the work will be inside, and it would make a good winter job.

He is optimistic, though.

“The market will catch up,” Towry said. “It’s tough for some people right now, and I get that as someone who’s paying rent right now. It can be tough to get through it.”

Sweet Home is on the outer limits of the metro area, and it’ll be later before construction eases the demand, he predicted. In the meantime, “we’re working to make building easier,” while creating “codes to make our community more desirable to be part of.”

When it comes, it will happen quickly, Towry said, and he wants to be ready so that developers find it a good place to work and are willing to come back.

Sorte echoed Towry’s thoughts, noting that Sweet Home does have vacant high-density residential land available; and he is curious about the impact of a new state law passed last year to address the issue.

The law, which takes effect July 1, allows the construction or siting of an accessory dwelling unit for each primary dwelling unit that conforms to clear and objective standards, a “grandmother’s cottage” or “tiny home.”

“It’ll be interesting to see if the accessory dwellings get anything going,” he said.

 
 

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