Paul's Bellingham Blog

My thoughts on Bellingham, the Real Estate market, and more

Renting May Get Pricier

No Comments »

I have read multiple reports in the last few months forecasting that rental rates will be increasing soon. Nationally and locally, demand is picking up, which is expected to put upward pressure on rental prices.

Peggy Alford, president of Rent.com said:”The demand for rental housing has already started to increase,”Young people are starting to get rid of their roommates and move out of their parents’ basements.”

By 2012, Alford predicts the vacancy rate will drop to 5 percent, causing prices to rise.

In Bellingham, the rental market is always strong, driven by the simple laws of supply and demand. The population continues to grow, while we don’t see much new development (especially in the last 3 years). Western Washington University will always be an additionally driving factor towards the steady demand for rentals in Bellingham.

So this reminded me of one of the best benefits of long term home ownership that is often overlooked. The simple fact that when you lock in a 30 year mortgage, your payment is fixed. Where as renters have to deal with small incremental rises in rent, year after year–and renters are completely exposed to inflation.

Today the same 3 bed 2 bath home in Bellingham might be $1,300 to rent, and $1,500 on a mortgage payment (with a low down payment). But what will the rent be in 3 years? Or 6 years? It may be $1,600, and now the buyer with the mortgage payment of $1,500 has the lower payment..Not to mention the owner is getting the tax deduction, and they are paying down a mortgage and creating equity for themselves…But everyone knows about these other benefits…

The point is simply that the stability of a fixed mortgage payment is an incredible benefit of home ownership too often overlooked!