It's not long before college students return to Bellingham and if they don't already have an apartment lined up, choices may be slim for the upcoming school year.
While Bellingham has several apartment projects under construction, vacancy rates remain very low, with average rental prices rising. A recently released survey from the Runstad Center for Real Estate Studies at the University of Washington indicates that the vacancy rate of Whatcom County apartments was at 1.8 percent last spring, down from an already low 2.2 percent a year earlier. The average rent for the apartments surveyed in Whatcom County was $805 a month in March, up from $782 a month in March 2012.
The slowdown in construction during the start of the economic downturn and people moving to the area are factors, but Doug Wight, an associate broker at Windermere Property Management by Ebright Wight in Bellingham, said other trends are leading to less turnover. He's noticed more older renters who are willing to stay in a unit long-term, leading to fewer openings.
Wight keeps track of the vacancy rate for the properties Windermere manages. At the end of June, the vacancy rate for its 653 multi-family units, including duplexes, was 0.46 percent.
"When you get below 1 percent, you are basically looking at 100 percent occupied," said Wight, noting some of those vacancies are during that period when one tenant moves out and another moves in.
Bellingham has more than 450 apartment units either under construction or in the permit phase, but it's unclear how much impact that will have on demand, particularly for the student population. Many of the new projects have waterfront views and other amenities that may put them out of the price range of college students, said Tom Follis, a real estate appraiser at Wm. T. Follis Realtors.
Wight said the current demand is attracting the attention of other developers who are currently working on designs for new apartment complexes. He expects the coming year to be a busy one for new apartment projects, which could relieve some demand and be a boost to the local construction industry. When a period of high construction takes place, it usually leads to overshooting demand, creating a more balanced market between renter and landlord, Wight said.
In the meantime, the low vacancy rates have given more leverage to the apartment building owners, Follis said. More landlords are requiring 12-month lease agreements and the incentives offered few years ago, such as first-month-free specials, have disappeared.
One by-product of this tight apartment market is that it's helped decrease the number of local distressed properties, Follis said. More investors are buying foreclosed and other distressed property and converting the homes into rentals. That way, students can rent a room in a house if they can't find an apartment unit.
According to the Runstad Center report, Whatcom County had the second-lowest vacancy rate of the 15 counties surveyed last spring, trailing Chelan/Douglas counties at 1.7 percent. Whatcom had the eighth-highest average apartment rent. King County had the highest average at $1,173 a month. The lowest average rent was in Yakima County, at $598 a month.