Monthly rent remains higher than mortgage payment in Whatcom County

THE BELLINGHAM HERALDFebruary 24, 2014 

bellingham, whatcom, real estate

Tom Follis, an appraiser with Wm. T. Follis Realtors reviews paperwork before photographing a property on Roland Street as part of a field analysis for a rent study Oct. 17, 2007 in Bellingham.

THE BELLINGHAM HERALD

With local residential rental units remaining in high demand, a national report indicates that the typical monthly payment on a mortgage is slightly less expensive than rent.

RealtyTrac, an online database for real estate property information, released a report last week about monthly house payments. Taking a variety of factors into consideration, including insurance, taxes, maintenance and subtracting the estimated income tax benefit, the study estimates the average mortgage payment for a median-priced three-bedroom home in Whatcom County was $1,201 a month at the end of 2013. That's up about 6.5 percent compared to the end of 2012.

The average rent for a similar home in Whatcom County was $1,306 a month at the end of 2013, according to the study.

Tom Follis, a local real estate appraiser at Wm. T. Follis Realtors, said those numbers are around what he would estimate the current situation is in Whatcom County.

"The margin is slightly in favor of the mortgage payer compared to the renter," Follis said.

Follis said two big factors are at play: The supply for rental units is very tight, particularly around Western Washington University. Also, the low interest rates are helping keep mortgage payments down.

Vacancy rates for rentals have remained low locally for several years. In Bellingham, Follis estimates apartments and duplexes have vacancy rates of under 1 percent while single-family home rental vacancy rates are around 1.5 percent.

"It wasn't that long ago when landlords were offering incentives to get people to move into a rental," Follis said. "Now there is no competition in the rental market, so rates are going up. There is not much negotiation between the landlord and tenant right now."

Follis noted that several large apartment projects are currently underway or in the planning stages in Bellingham, but not many new units have come onto the market yet. Even when the current projects are built out, it may not be enough to balance the rental market with Western Washington University continuing to grow and the local unemployment rate remaining below the national rate, he said.

Monthly rents being higher than a mortgage payment is a trend that's happening across most of the U.S., according to RealtyTrac. The study shows the average mortgage payment was less expensive than rent in 296 of the 325 counties analyzed.

However, most of the 29 counties where average mortgage payments were higher than the average rent were high-population areas, including Seattle, San Francisco and Los Angeles.

Across those 325 counties studied, the estimated monthly mortgage payment increased 21 percent from a year ago. One reason is because of rising home prices and interest rates.

"The monthly cost of owning a home is still less than renting in the majority of markets, but the cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes," said Daren Blomquist, vice president of RealtyTrac, in a news release accompanying the data.

Details of the report can be found at realtytrac.com.

Reach Business Editor Dave Gallagher at 360-715-2269 or dave.gallagher@bellinghamherald.com. Read the Business Blog at bellinghamherald.com/business-blog or get updates on Twitter at @bhamheraldbiz.

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