Multifamily brokers are tracking a downturn in sales volume in the Portland-metro area to see if it’s merely a dip from the historic highs of last year, or the portentous start of a more serious downturn.

Multifamily sales volume in the city of Portland fell 14.7 percent for the year through May to $82.3 million, according to RMLS, a listing service. In the wider, five-county Portland-metro area, sales were down 9.7 percent to $123.5 million.

“There seems to be a little bit of a slowdown,” said Greg Frick, a partner at HFO Investment Real Estate.

The multifamily landscape has changed dramatically in the past year. Regulatory changes in Portland and statewide have brought rent caps and tenant protections that limit evictions. Also, state legislators passed a bill that enables developers to build duplexes, triplexes and other middle housing types throughout residential zones in Oregon cities.

Meanwhile, thousands of multifamily units have come to market. Some leasing agents have offered concessions such as a month’s free rent for new tenants to help stabilize the properties.

Rents have flatlined. June marked the third consecutive month of declining average rents in Portland, according to Apartment List. Rents slipped 0.1 percent from May, but were still up 0.4 percent compared to a year previous.

In contrast, the nine other Oregon cities tracked by Apartment List saw rent increases.

Investors may be reacting to a flood of similar apartment buildings on the market, brokers said.

“Right now, probably the toughest thing to move is new construction under 60 to 70 units in the city of Portland,” said Steve Morris, principal broker at SMI Commercial Real Estate. “There’s just a lot of that out there.”

Meanwhile, rents and corresponding multifamily sale prices have grown so much in recent years that there’s a sense there isn’t much room for growth remaining in this economic cycle.

“Portland pricing has come pretty far, pretty fast, and people are wondering what the upside is going to be,” Morris said.

Portland should see more sales as new buildings stabilize, or reach nearly full occupancy, Frick said. The first quarter tends to be slow, and newly opened buildings will push some sales into fall or winter as tenants move in and make the buildings attractive to buyers, he said.

“I think we’ll see velocity pick up,” he said.

Tertiary markets outside of the metro area, including Salem and Corvallis, are doing well, brokers said. Camas, Washington, had the metro area’s largest multifamily sale in the first quarter, with Trio Pointe, a 240-unit building, going to Goldman Sachs for $58 million, or $232 per square foot, according to Rider Levett Bucknall.

Regulations have changed the formula for some multifamily investments. Gov. Kate Brown in February signed a bill that caps rent increases at 7 percent plus inflation annually. The law has an exception for buildings younger than 15 years old. That has made flips of older multifamily properties less attractive for investors, brokers said.

Still, investors have money to spend for the right opportunity.

“On the investment side, there’s still a lot of capital looking for yield,” Frick said.

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