2023 was an adjustment year for the residential property sector. The previous three years saw dramatic increases in rental rates for housing in the Central Oregon region. During 2023, the rising interest rates, and subsequent decline in residential sales and shrinking inventory did not have the impact on the rental market that one might expect. One might expect rental inventory to be more limited as there were fewer buyers in the market and thus more people renting. However, during 2023 there were a fair number of new multi-family rental units that came into the market, driving supply up and prices down. The market stabilized, softening prices in most areas.
So, what do we see for 2024 in the residential rental market for Central Oregon? If we assume the housing market will stay tight this year — as is the general consensus — we should see rents remain flat and stable during 2024. We have seen a trend to move away from Airbnb to a more short-term rental basis (one to three months) over the past 12 months. We are also seeing higher demand for smaller units with no roommates, and as is the case with most everything in life… location is still king! The continued growth of our local colleges will also be a strong play in our market. As COCC and OSU-Cascades continue to enhance their programs as they have in recent years, more students will be drawn to the region. With the added housing coming online during 2024, and the demand factors noted, we do not see a significant increase in supply during 2024, as we saw in the latter part of 2022 and 2023. Supply and demand for rental housing should stay more stable this year than it has in previous years. Which for us means… hang on to your good tenants.
What we are telling our clients is, if you have good tenants, keep them, even if you believe your rental is under market by a bit. It’s better from a cash flow standpoint to keep the good tenants. The saying “no news is good news” does not hold true in the rental market. A good tenant is someone who not only pays timely, it’s someone who alerts you promptly to issues with the property, acting as your eyes and ears for your property, therefore helping you protect your investment. You want someone who will openly communicate with you about concerns they are seeing.
Central Oregonians love their pets, at nearly three times the average for the State of Oregon. Homeowners looking to rent to a tenant with pets should take the time and do a proper pet screening, including taking the time to meet the pet and make sure the pet is suitable for the living environment.
2024 will be a good year to look at your investment property and see if there are any improvements you can make to enhance the value of your investment. Things such as installing energy-efficient appliances, windows, rain-sensing sprinkler controllers, xeriscape landscaping, HVAC, etc. are all things that you should look at. There are government incentives that are still in play to help augment the costs of some of these improvements.
