While the local rental market remains tight, it appears rates are starting to flatten out.
Monthly median rental rates in Bellingham hit $1,467 in March but have slowly trended downward, hitting $1,439 in August, according to data from Zillow, an online real estate database company. Zillow uses a proprietary formula to come up with its estimates in metro areas across the U.S. The company is predicting that rents will rise 2.1 percent in Bellingham by August 2017, a slower increase than in recent years.
Last year rental rates were rising quickly, with some months seeing 6 to 8 percent increases compared with a year earlier, according to the data from Zillow. Monthly rates continued to rise into the first quarter of 2016 but have slowed since then.
This is a trend that Tom Follis, a Bellingham real estate appraiser at Follis Realtors, is also seeing. He doesn’t see rates going down significantly, but, at least, they’re not going up.
“Rents have more or less maxed out,” said Follis, who also noted that rates “rose like crazy” in 2015. “I think landlords were pushing the envelope because the demand was so strong.”
It’s possible that the recent addition of several multifamily buildings is finally having some impact on demand. Last month, the housing facility NXNW opened on Lincoln Street, just south of the Lakeway Fred Meyer. Focused on housing for college students, NXNW was 100 percent occupied when it opened, housing 640 people, said Aaron Cohn, assistant general manager at the facility.
“We already have people wanting to renew their lease for next year,” Cohn said, noting that parents and students have been pleased Bellingham has a new facility that includes amenities such as being gated, furnished with a fitness center, game room, a study lounge and shuttle service to Western Washington University.
964 Number of multifamily units approved to be built in Bellingham from the beginning of 2014 through September 2016
Construction of other multifamily buildings in Bellingham has been strong for the past two years. According to data from the Bellingham planning department, permits have been approved for projects totaling 964 units from the beginning of 2014 through September 2016.
Even with the influx of new residential units, the market is still tight. Follis said there are still parts of Bellingham, particularly around Western Washington University, where the vacancy rate is still around 1 to 2 percent for rentals.
“There is still a lot of pent-up demand,” Follis said, adding that he expects the market to remain tight for the next 18 months.
The recent pent-up demand has had an impact on neighborhoods. Anne Mackie, a longtime resident of the York neighborhood and co-owner of Nelson’s Market, said the area continues to see an increase of homes being sold and converted into rentals for student housing. In doing some research in the residential area of the neighborhood, Mackie found that 54 percent of the single-family homes are now rentals. Of those rentals, more are going to students rather than families because more landlords are charging rent by the bedroom rather than the whole building.
She said the neighborhood is welcoming of students, but she is concerned that balance between owner-occupied homes and student rentals is being tipped more toward student housing. She’s noticed more historic homes in the neighborhood being purchased and converted to rentals even though they weren’t really designed for student housing.
Mackie said she supports the recent openings of student-housing facilities such as NXNW and believes more are needed in Bellingham.
“We aren’t quite there yet,” Mackie said when talking about the supply of new student-housing facilities.