- Buy (90%, 133 Votes)
- Rent (10%, 14 Votes)
Total Voters: 147
Is it more affordable to rent or buy in Clark County? A new report suggests it might be the latter.
But those mulling the question have some time to decide, thanks to winter slowing down the housing market. Right now, there’s not a lot of availability whatever you’re looking to do. In December and January — due to the holidays and the weather — not a lot of people move and that means there aren’t many new vacancies, said Carmen Villarma, president of The Management Group, which manages rental properties.
“People are in a wait-and-see attitude,” she said.
Fewer than 3 percent of rentals in Southwest Washington are vacant.
And, there aren’t many homes ready to be purchased, either. Listings of homes for sale fell after peaking in summertime, which is typical. But, the amount of active listings during any given month was less in 2016 than it was in 2015. So, the area experienced record low inventory. In December, there were 1,119 residences listed for sale. Terry Wollam, managing broker of ReMax Equity Group in Vancouver, said we’ll continue to have a low inventory of homes through the early spring. That bodes well for the continued appreciation of home values, he said.
There used to be greater savings in buying a house rather than renting one, but that gap is narrowing, Wollam said. In his view, it’s always better to buy than rent. Homeowners pay toward the principal and build equity.
Better for buyers
A recent report from RealtyTrac also says that buying a house is a better deal this year in Clark County.
This is a reversal of what the real estate website said last year; it made more sense to rent in 2016, RealtyTrac said. Its analysis used rent data from the U.S. Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics and sales deeds to analyze 540 U.S. counties. Its rent/buy recommendations are based on the percentage of income people would spend monthly on housing.
The going rate for a three-bedroom rental in the Portland-Vancouver-Hillsboro, Ore. metropolitan statistical area is $1,968, according to RealtyTrac. The report used the median sale price for a home bought last year in Clark County, which was $280,000.
In Cowlitz, Multnomah and Washington counties, it’s more affordable to rent, the report said. Benefits to renting include convenience, flexibility and little or no maintenance responsibility, Villarma said.
RealtyTrac says buying a home is more affordable than renting this year in 66 percent of the nation’s housing markets. But it’s the opposite along most of the West Coast. The vast majority of California, for instance, is more favorable for renters than buyers. Even in Marin County, Calif., the least affordable rental market in the country with a three-bedroom rental costing $4,250 per month, RealtyTrac said it’s still more affordable to rent than buy.
Villarma pointed out that $1,968 is more reflective of the cost to rent a single-family home, not an apartment. In general, a basic three-bedroom, two-bathroom apartment doesn’t cost that much, she said.
Many homes that were purchased during the recession were turned into rentals. Villarma said she has clients who are general contractors; they build new homes and set aside some as rentals while putting the rest on the market to buy. So, many listings on such sites as Craigslist are newly built houses for rent — not new apartments.
While prices are stabilizing, Villarma doesn’t think rents will go down. Rather, rental increases will be more incremental, rather than big price jumps that some renters have experienced in the past.
She estimates about 1,800 new units will become available now through 2018.
There are thousands of apartment units in Vancouver alone that are in some phase of the planning process. Complexes are slow to come on the market.
While most projects are still under review by the city, some are currently under construction. The Uptown, a 167-unit apartment complex, takes up an entire city block between Main and Washington streets south of McLoughlin Boulevard. Those apartments won’t be available until fall. The 92-unit 13 West and 48-unit Midtown are under construction downtown. Avenue 66 Apartment Homes, located near the Vancouver mall, is advertising its new units on Craigslist.
Despite the new units that will come online, Villarma said it’s possible they won’t make much of a difference. She said they may get absorbed by people who otherwise would’ve purchased a home if it weren’t for rising costs, particularly rising interest rates.
Mortgage rates rise
Interest rates are at 4.32 percent, having already gone up more than half a point since late October, Wollam said. Any bump in interest rates decreases the home buyer’s budget, because monthly payments will be higher.
“Interest rates should be the driver for buying decisions,” Wollam said.
A buyer who could afford a $300,000 home before the half-point rate increase can now only afford a $282,000 home, he said. So, the recent increase in interest rates decreased a buyer’s price ceiling by about 5.6 percent. If interest rates go up a full percentage point — from 4.32 to 5.32 percent — it would be comparable to an 11.2 percent jump in house prices, Wollam said.
It’s unclear just how much interest rates may increase in the coming months, but he said it’s definitely something for buyers to keep in mind. Wollam advises people to buy now if possible before any additional interest rate hikes. Given the lack of inventory, home prices will likely not go down.
“We still have a low vacancy rate. New construction has not been able to meet the demand,” Wollam said. “Inventory is still at record lows.”