Portland’s rental market technically is not “red hot,” but figures released Thursday morning by the Metro Multifamily Housing Association suggest it’s getting close.

• Vacancy rates dropped below 4.5 percent in every submarket of the city.

• Income is rising for the first time, though offset by rising insurance, utility and taxes.

• Investors are solidly interested in the area’s multifamily properties, but their interest is not blistering.

The city’s vacancy rate dropped to 3.8 percent in a spring survey of 735 properties representing 49,011 rental units. The association’s bi-annual survey is one of the city’s leading indicators of the health of the apartment market.

The spring survey shows the vacancy rate dropped five percentage points since last fall, when the association reported a four percent vacancy rate in its survey of 546 properties representing 35,091 units.

Average rents climbed to 94 cents per square foot, up 4 percent from last fall’s 90 cents rate.

It’s not surprising Portland’s already-tight rental market is getting tighter. Economic indicators suggest the economy is rebounding and adding jobs, a key factor that drives apartment rentals.

Oregon is posting solid economic returns on almost ever measure, said Amy Vander Vliet, Portland area economist for the state. Residential housing permits climbed slightly while unemployment claims fell and employers reported an increase in temporary hiring, which economist see as a precursor to formation of permanent jobs. Consumer confidence is up, and businesses are ordering more capital goods, which is good news for a state that depends on business spending.

“Our companies make stuff that other companies want to buy,” Vander Vliet told a crowd of apartment owners, managers and brokers. On the down side, she said it will be several years before Oregon recovers the 120,000 jobs that have disappeared since the recession began. Economists expect the state to add 22,000 jobs this year.

Kelly Cassidy, vice president and loan officer for Q10 National Mortgage Co., said lenders are increasingly interested in financing multifamily projects. Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development were the only lenders for the past few years; now, insurance companies, banks and conduit lenders are eager to buy multifamily debt.

“It’s been a while since we’ve been able to say that,” he said.

The vacancy rate in key submarkets:

• Downtown Portland 3.9 percent

• Northwest Portland 4.5 percent

• Inner and Central Southeast 4.0 percent

• Southwest Portland 3.7 percent

• Clackamas 3.4 percent

• Lake Oswego/West Linn 3.6 percent

• Milwaukie 4.4 percent

• Aloha 3.1 percent

• Beaverton 3.3 percent

• Hillsboro 3.1 percent

• Tigard/Tualatin 3.8 percent

• West Vancouver 3.8 percent

• East Vancouver 3.3 percent

• Troutdale/Fairview/Wood Village/Gresham 4.4 percent

Read more: Rentals getting tough to find | Portland Business Journal