Monday, January 23, 2017

Reported Avg/Median PDX Rents are All Over the Place. Zillow Median Rent Much Higher than Others.

A recent Oregonian news story HERE reported that the current Zillow median Portland metro rent was $1,805. (I dug a little deeper and found that the Zillow median rent for the City of Portland was even higher at $1,861). 

Both of those rents are much higher than the Portland metro 2 BR HUD FMR of $1,236.  [Note that HUD FMR's also include a utility allowance, so the cost of rent alone is less the FMR]. 

The Portland Zillow median rent contrasts with another RealPage report the same week (HERE) that shows the median Portland metro rent as $1,242, 31% LESS than the Zillow estimate.

The December 2016 State of Housing In Portland report from the City of Portland (page 60) puts the average City of Portland rent at $1,347, 28% below the $1,861 reported Zillow median rent for the City of Portland.  The Portland report also provides useful breakouts by bedroom size, with the average rent for 2 BR units at $1,520, again substantially higher than the HUD 2 BR FMR of $1,242. 

The 2015 American Housing Survey for the Portland metro area says that the median cost spent for rent was $920. (Even if that was increased by 20% to adjust for differences in timing the result would still only be $1,104).

While I realize there is a difference between median and average rents and timing can also cause differences, the Zillow rent appears to me to be an outlier perhaps because it does not use only actual rent transactions/listings but instead adds a projection of what units might rent for IF they were available. 

To their credit Zillow does provide an explanation of their methodology (HERE) and access to a wealth of rent data (HERE) broken out by market segment (MF, SF, 1 BR, etc). AND 7 levels of geography. The median rent found in the Oregonian news story comes from their Zillow Rent Index series, which they explain uses models that "estimate rental prices on all homes, including those not presently for rent." [It isn't clear to me what mix of SF and MF rental units and bedroom sizes are used to arrive at the Zillow median rent estimate].

Rent surveys that only use listed rental prices have their own limitations as rent concessions reduce effective rents, especially in markets where there is excess supply.

Originally created and posted on the Oregon Housing Blog.

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