Why is it so hard to find an apartment in Bellingham?
Despite the recent surge in construction around Bellingham, a new survey indicates it’s still hard to find an apartment to rent.
That’s down from 0.6 percent in the fall of 2017 and well below the 5 percent that typically represents a balanced market, meaning neither renters nor landlords have an advantage.
In raw numbers, the lack of vacant apartments in this survey shows the extent of the shortage. Of the 17,413 apartment units surveyed, only 42 were available. Of the 2,234 one-bedroom apartment units surveyed, only one was available last fall.
Government-assisted housing units were not a part of this survey. And many of the apartment units in the survey are in established buildings, said James Young, director of the center. He acknowledged in an interview that Bellingham has built many new units recently that might not have shown up in the survey. That’s because vacancy rates can be volatile in the first few months of a new building, so they wait before surveying them.
If all the apartment units in this area were surveyed, Young believes the vacancy rate would be only slightly higher.
Tom Follis of Wm. T. Follis Realtors in Bellingham believes the apartment rental market is a smidge tighter than it was last year, a time when it was already very tight. However supply is definitely chasing demand, with plenty more large projects in the planning stages, he said in an interview. It will still take time for that new supply to start raising the vacancy rate in the area, particularly in Bellingham.
The average vacancy rate across Washington state was 4.3 percent last fall, according to the report. Skagit’s vacancy rate was 0.47 percent, while King County came in at 5.24 percent.
Why does the rental market remain so tight?
Several factors are in play for the rental market being tight, generally revolving around low supply and high demand. Young believes one big factor that’s recently made the crunch worse is that hardly any condominiums are being built.
He said it’s a statewide problem that is becoming acute in Western Washington, including Whatcom County. With so few new condominium units on the market, potential buyers are instead entering the rental market, creating more demand.
Why aren’t condos being built? Young said regulations in place make it likely for contractors and developers to be sued by future condo associations. That’s discouraged commercial lending as well as created unaffordable insurance premiums for these kind of projects.
What about rental rates?
Despite the ultra-low vacancy rate, the average rent last fall was down slightly compared to the fall of 2017. According to the data, the average monthly rent of surveyed units was $985, down from $990 in the fall of 2017. The average rent for a two-bedroom apartment was $1,048, down from $1,109 the previous fall.
That small drop probably isn’t leading to a trend of further declines, Follis said. He expects rental rates to rise again later this year, something that could continue if the vacancy rate remains low.
Is construction keeping up?
Bellingham had a busy construction season last year when it came to building apartments and duplexes. According to city data, permits were issued for 578 multi-family residential units, the largest total in three years.
Several projects are already in the works for this year, including 174 units near Costco, the 513 beds for the Stateside residential building on North State Street and projects near Bakerview Road. A proposal recently submitted to the city calls for 65 units at 500 32nd St., near Western Washington University.
Follis said he expects the new projects will help supply finally catch up with demand. Once that happens, the shift will tilt in the renters’ favor.