Whatcom County housing rental rates continue to rise, at a rate even faster than Seattle's.
The median rental rate in Whatcom County was $1,623 a month in February, a 5.6 percent increase compared to a year ago, according to a new report from Zillow.com. Seattle's median rent rose 4.9 percent to $2,204 a month.
Rental rate increases are actually slowing down in Seattle and the Bellingham metro area, but Seattle is slowing down at a faster rate, said Skylar Olsen, a Zillow senior economist.
"Seattle renters are exhausted by poor rental affordability and are looking for alternative, more affordable places to live," Olsen said. "And that could be Bellingham."
While Seattle residents may see Bellingham rents as a deal, they need to consider Whatcom salaries. In the fall of 2017, the average weekly wage in Whatcom County was $858, while in King County it was $1,626, according to the U.S. Bureau of Labor Statistics.
Olsen expects rent in Whatcom County to continue rising in the coming months, but at a slower pace than recent years. With mortgage interest rates expected to keep rising this year, it could further price people out of buying a home, creating more demand for rentals. Housing inventory for buyers also remains low, keeping some would-be buyers in rental units.
Zillow estimates the Bellingham neighborhoods with the highest year-over-year rental rate increases are Cornwall Park (up 9.2 percent in the past year), Columbia (up 8 percent) and Alabama Hill (up 7.9 percent).
One other factor leading to rising rents is the low rate of return rental unit owners are getting in Whatcom County. According to a study by ATTOM Data Solutions, owners of Whatcom County rentals are getting a 5.4 percent annual return on investment, ranking 415th out of 449 counties.
The high cost of buying a rental house is a big factor, said Daren Blomquist, senior vice president at ATTOM Data Solutions. He added that people who have owned rental homes for several years and bought near the bottom of the real estate market during the recession are seeing strong returns.
The low number of homes available for buyers also means new rental home owners will be motivated to continue raising rents. They will have to charge more to recoup their investments, and higher home prices will make it more difficult for renters to buy. Blomquist described this as a double-edge sword scenario for investors and renters.
Whatcom's home prices are also a challenge for renters. Zillow estimates Whatcom's "breakeven horizon" — the number of years a person must live in a home before owning the same home makes financial sense — at 3.3 years. The national rate is slightly more than 2 years, so people moving to Bellingham need to consider how long they plan on staying when deciding to rent or buy.