April 29, 2013

Rental demand in Portland is through the roof

The city hopes to see at least 800 more apartments built as demand forces up rents.

By Randy Billings rbillings@pressherald.com
Staff Writer

PORTLAND - When Eva Bradford and her boyfriend began looking for an apartment in Portland's West End a few months ago, they didn't think the search would be that difficult.

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Brit Vitalius, who owns 20 rental units in Portland, sits in a studio apartment similar to one he rented for $695. He said demand is so high he’s getting more tenant applicants than he needs.

John Ewing/Staff Photographer

Bradford, a 26-year-old medical student, and her boyfriend, a financial analyst, have a good rental history with references, a clean credit score and cash to pay the move-in costs upfront.

"We thought that would be a shoo-in for finding the right place," Bradford said.

But it hasn't been. The Biddeford couple is looking to relocate at the end of May, but they have to fight swarms of other prospective tenants just to view available apartments. They're even stretching their budgets to expand their housing options.

"We've contacted a lot of different landlords," she said. "We just don't get calls back."

Such is the state of Portland's rental market, where vacancy rates have dropped from 7.5 percent to roughly 2 percent over the last five years and the average monthly rent for a two-bedroom apartment has risen from $850 to $1,050 over the last four years, according to landlord surveys. Current online listings show that rents are climbing even more in 2013.

The Portland rental market has been a hot topic, with the proposed "midtown" development poised to add 190 market-rate units in Bayside in the short term and 675 over a 10-year period, units that the project's developer argues are crucial to the city's future.

Whether the Portland rental market is truly as tight for tenants as surveys indicate, and how the market will be affected by the Bayside project, depends on whom you ask.

"I've been successful placing everyone," said Michael Smarc, a local rental agent who manages more than 75 units.

There are more than 17,000 rental units in Portland, according to Mary Davis, the city's housing director. Nearly 11,000 of those are on the peninsula.

The Maine Real Estate Development Association partners with real estate companies annually to collect rental information through landlord surveys. According to those surveys, vacancy rates have fallen drastically since the onset of the recession.

In 2007, landlords reported vacancy rates at roughly 7.5 percent. Those rates dropped to between 1 percent and 3 percent in 2012.

That's much lower than the rates beyond Greater Portland. Saco and Biddeford landlords reported a 10-15 percent vacancy rate last year, while those in Lewiston and Auburn reported a 15 percent vacancy rate.

Meanwhile, rents in Portland are rising along with demand. In 2008, landlords reported the average monthly rent for a two-bedroom apartment as $850. Last year, they reported the average monthly rent was $1,050.

A quick review of apartment listings online, however, shows a more drastic increase. On April 26, the asking rent for a top-floor, two-bedroom apartment with laundry and parking in the West End was $1,750, and a two-bedroom apartment in the East End was listed for $1,325.

Demand for rental units increased as the housing market crashed in 2008, when people lost homes to foreclosures and lending for new buyers was tight, said Harper Lee Collins, a Re/Max Realtor.

Collins said the housing market has recovered in Maine, with current inventories being lower than they were in 2005. Property owners who rented their homes out of necessity are suddenly able to sell them, putting renters back into the market. That is still feeding the rental demand in Greater Portland, Collins said.

Maine's housing market recovery mirrors a national trend. Last December, there were about 1.8 million homes on the market, according to the National Association of Realtors. That's a little more than half of the 3 million homes that were on the market in December 2010.

(Continued on page 2)

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Today's poll: Apartment hunting

Have you had trouble finding an apartment in Portland?

Yes

No

View Results