Housing a population

Local industry members discuss property ownership, renting during COVID-19

Sept. 5, 2020 — For the past few years, state and federal regulations have exacerbated relations between rental property owners and renters. From uneven responses to the COVID-19 pandemic to state rent-control laws, many owners have begun parachuting out of the rental market as property values rise.

“Rentals in the rental market are being sold, and folks from [all over] are buying them. They are now owner-occupied,” said Jim Hoberg, broker, owner and property manager for West Coast Real Estate Services. “It used to be folks were buying property to someday retire. That day’s gone. They’re buying today to get out of [states like] California, diminishing the rental supply. And I mean considerably.”

According to Elliott Wood, owner and principal broker for Windermere Real Estate Lane County, prices are now at levels that haven’t been seen in Lane County for decades.

“The activity is up about 10 percent year-over-year, which is just showing the strength and pace of the market,” Wood said.

He explained that, coupled with record-low interest rates and national relocation trends, some homes are selling within just days of listing.

Primarily, buyers are out-of-state retirees with no interest in keeping rentals. As a result, displaced renters are also looking to buy.

Prior to the pandemic, securing a home loan was not guaranteed. But the current economic uncertainty has only made matters worse. With loans denied, more displaced area renters are finding themselves homeless for the first time — or are forced to leave town altogether.

“I feel for people that are trying to buy but they can’t, and they don’t have a home to live in anymore,” said Kim Erickson, Vice President, Manager of Residential Lending and Oregon Pacific Bank. “If I can’t give them a mortgage loan and there’s no rentals out there, I don’t know what the answer is.”

And as federal and state lawmakers remain entrenched in partisan arguments, answers grow more distant.

“Neither party will talk to one another on any issue — on any level — that is to benefit us, the working people,” said Barry Nivilinszky, Coastal Property Management co-owner. “That’s the only way this will get fixed —if they’re able to start talking to each other.”


Even before the pandemic, homeownership was already a tricky prospect for workers in the Siuslaw region. One of the most popular loans for a low-income buyer has been the FHA, which requires a low three-and-a-half percent down payment for a $250,000 home. That equals $7,000 for a down payment. But even if they can manage the down payment, the bigger problem can be the monthly payment itself.

For a home worth $250,000, Erickson calculated a 3.5 percent interest rate for 30 years, taking into account mortgage insurance and taxes.

“The monthly payment is $1,596.66 a month,” she said. “For an average person making a minimum wage job with kids in the home, that’s pretty tight.”

At $14 an hour working 40 hours a week, a person will average around $1,588 a month in take-home pay — $8 less than Erickson’s estimate. Single low-wage workers are priced out of the market, and couples with children can be overwhelmed.

“We see it frequently,” Erickson said. “They wait for the perfect house, come in, and you feel like you just burst their bubble and shattered their dreams.”

If a loan can be done responsibly, Erickson said she will do everything in her power to get it.

“I’ll say ‘I can’t get you a loan right now, but here are the five things we need to do to get you moving in that direction,” she explained. “Maybe they have an ATV payment of $300 a month. That’s really hurting — so pay your ATV off.”

While Erickson helps map out fiscal discipline, there are other financial considerations like deposits for services, moving costs — and what if, in a year, the hot water heater goes out or there are plumbing issues?

When the cost of homeownership is prohibitive, the only option left for low-wage workers is rentals.

“But the situation is desperate for renters,” Nivilinszky said.


In 2019, Oregon passed a first-of-its-kind statewide rent control law, which limits increases for existing tenants. Rent can only be increased by 7 percent, plus the consumer price index from the previous year. The law also prevents landlords from enacting “no-fault” evictions during the first year of a rental.

However, the law has caused issues for both renters and owners.

“It’s my strong recommendation that if you raise rents, you raise it to the cost of living, plus a percent or two,” Nivilinszky said. “But once that law was passed, owners asked, ‘Why am I not raising it to the full amount?’ Yeah, you can do that — but you're penalizing people. Some owners respond, ‘They’ve got nowhere to go, and I should be able to capitalize on that.’”

In the past three years, he said local rental prices have gone up by 25-30 percent.

“We’re getting a slew of owners raising to the cap,” Nivilinszky said. “Their contention is ‘I’ve not made money in 10 years because of the housing situation, and now I finally have an opportunity to make some of that back.’ They’re trying to recoup money.”

The one thing the law doesn’t restrict is raising rental prices after a tenant leaves.

“If your unit goes vacant, you can raise it to whatever you want according to what the market is,” Nivilinszky said. “Single-family homes I had going for $1,050, I now have owners asking for $1,350 — and I tell you, they’re getting it.”

But property owners have been experiencing their own frustrations with eviction restrictions put in place by the state law.

“Now, our hands are tied when we’ve got a bad tenant who's living within the guidelines to a degree, but not taking care of the property they are renting,” Nivilinszky said. “The state is doing away with constraints we once had in order to take control of our properties when there was a troublemaker.”

It can be especially difficult when trying to sell a house that is currently a rental, since property owners cannot evict tenants until the property has an actual signed offer.

“The renter doesn’t want out. They don’t work with the realtors. They refuse to allow them in,” Nivilinszky said.

With the real estate market as hot as it is right now, more and more property owners are selling rather than renting. And the people buying those homes aren’t looking to offer them as rentals.

Real Estate

What people are looking at when they’re selling investment properties is how strong the market is right now, and now is an amazing time to sell if you’re looking to liquidate an investment,” Wood said.

While he had seen property owners selling for reasons Nivilinszky stated, most were selling to capitalize on high prices and low interest rates. Some sellers just want a change of scenery for their vacation home, while others are cashing out for retirement.

“It’s one of the best ways to build wealth over time for your retirement years,” said Wood, who explained that many of those buying homes are from larger cities, such as Seattle, Portland, the Bay Area and Southern California.

“A lot of people love the fact that Florence is a small town, but it’s big enough that it has all the amenities and services people need,” said Wood.

And they’re mostly retirees.

“They’re moving from where they had their careers and raised their children, and they’re finding a sweet little spot on the coast,” Wood said. “Florence has a large community of that demographic — people taking their money from larger markets and shifting it into Florence for their final move, if you will.”

If new buyers do plan on working, it’s mostly telecommuting with their old jobs as they finish out careers. Hence, the majority of home buyers are not looking to continue their properties as rentals which, from a real estate perspective, is good for first-time homeowners.

“The rates, being where they are, have created an opportunity for everybody to have a shot at buying a house, which is a very positive thing,” Wood surmised. “Some can lock into an affordable payment — it’s a phenomenal opportunity.”

But the pandemic has exacerbated the already difficult process of first-time home buying.

And property managers, in particular, are feeling the heat.

The Pandemic

“People were able to get unemployment, and with the $600 kicker, it was normally enough for everyone to pay their bills, including rent,” Hoberg said of the COVID-19 pandemic's beginnings in the U.S. “Everybody banded together and worked through this. … So far.”

When shutdowns began, Congress passed the CARES Act, providing an additional $600 a week for those who lost their employment.

“I think it actually diminished a number of folks who were defaulting,” Nivilinszky said. “I saw couples where both were laid off, one got unemployment and the other didn’t. It helped to have that extra to carry them over.”

But he added that it wasn’t perfect — some still needed rental assistance from organizations like Siuslaw Outreach Services, and a few others just refused help. But most were able to get “over the hump until they were able to get back to work,” he said.

But recently, circumstances have made property owners and renters nervous. First, CARES expired and a presidential executive order providing reduced benefits has so far been turned down by Oregon, which cites the costs associated with the order.

In addition, the state moratorium on rent collections and evictions is scheduled to end Sept. 30. While Brown is expected to extend the moratorium, it’s a double-edged sword.

“The tenant is still responsible for rent,” Nivilinszky said. “The rules say that you make a six-month plan for rent to get paid back. But the reality is, anybody that far behind is not going to be able to pay. They’re going to bail” — leaving property owners with the financial loss.

Meanwhile, the City of Florence has reinstituted late fees for utilities and processing disconnections of service for nonpayment.

“Unlike some electrical utility providers, the federal government has not provided any relief for municipal utilities, and forgiveness of utility charges is not a reimbursable expense through FEMA,” Acting City Manager Megan Messmer wrote in a letter sent out to Florence area residents. “At this time, the city is not able to provide a forgiveness program.”

While Messmer pointed out that the city is able to provide information on financial assistance, some property owners viewed it as inequitable.

“If the city can go back in and charge late fees, and the homeowners are still not able to collect, that’s not really fair, in my opinion. It shouldn’t be unilateral,” Hoberg said, stating that the collection of late fees should not be allowed for one entity, but not the other.

Meanwhile, fears of a second wave of COVID-19 this fall have both homeowners and renters uncertain.

“If we get another shutdown, I’m not sure how it’s going to work without another stimulus,” Hoberg said.

With all the inequities and uncertainties, some property owners are giving up.

“When you have no recourse or anything to do, some people say, ‘It’s time to change and choose somewhere else to have my money.’ And you can’t blame them,” Hoberg said.

So, they sell — leaving renters with few options.


“You just can’t qualify somebody for something at this moment in time,” Erickson said. “It’s awful to say, but there’s not a lot we can do, with the exception of saying ‘We can qualify you, but it might only be for $100,000.’”

But $100,000 homes — if they are available at all — are being sold within days after being listed.

“Now the lowest is $200,000, so the client comes back to us,” Erickson said. “They’re like a pinball, and they get discouraged. It breaks my heart when people come in and say they no longer have a place to live because the home they were renting sold. I have seen it. It’s awful to say, ‘I’m sorry, but I can’t qualify you.’”

So, some workers are forced onto the streets.

“What I have seen is that they’re going out to buy travel trailers,” Erickson said.

Or they just opt to leave Florence altogether.

“With the supply diminishing and nowhere for folks to go, I would say it’s pushing them out of town,” Nivilinszky said.

In the process, an imbalance is being created: An increase in retirees to the area, and a decrease in those who can support the services they want and need.

“We’re getting a larger spread versus more of a solution to it,” Erickson said.

Nivilinszky agreed, saying, “They’re going to need services, but the folks that provide those services cannot afford to live here. That’s what I’ve seen.”

The trends are going that way,” Hoberg said.

The area has seen multiple developments presented in the past year, but the majority are expected to either be age-restricted or simply financially out of reach for the average worker.

And of the affordable housing that has been announced, it may end up just replacing rentals that have been lost to home sales.

We went through the steps as a city, but we just don’t have a lot,” Erickson said, pointing out how local governments have tried a variety of ways to court developers. “In some people’s eyes, there’s never going to be affordable housing. Some people consider affordable housing $400-500 a month. You probably can’t buy a home for that. But we can’t blame that on the homeowners, or the realtors, or the city, or the developer.”

There’s no one single reason that affordable housing is collapsing, and no single solution. But to find the solutions, the prevailing sentiment was that all sectors — federal, state and city — need to work together.

“I hope we all make good decisions and know that everybody is in this together,” Hoberg said. “We all work together, and we all communicate together. And we all have the good of everybody as we work through this.”