Friday, March 22, 2019

Vancouver Rental Surge Impacts Market

I have reported recently that the rental market in Portland has dropped dramatically. In fact the once red hot rental market in Portland has cooled to a healthy pace as tens of thousands of new units came online in that city. Now the typical rent for an apartment in Portland is LESS than similar rent in Vancouver. Portland median home prices are still 20-30% HIGHER than Vancouver, yet rents are lower.

Vancouver is also on an apartment building binge and thousands of new rental units are coming online here as well, with many more under construction or planned. Presumably this will soften the rental pricing here as well and that is a welcome change; or is it?

High rents makes owning more attractive. It isn't hard to sell someone on the idea of owning a 'real' house for $1700 a month versus renting a 3 bedroom apartment for the same. Honestly that's just too easy. When rents soften up, it is possible that demand for purchase housing will soften up with it.

There has been much reporting about the trends among millennials to rent rather than buy. Most of the data suggests that mobility is the primary concern. That is fine and well, sure most young people are not certain where they will end up. But the older half of the millennials are now in their 30s. They are settling in to that 'good' job. They are getting married and starting families. That is a stability inducing situation that lends itself to buying a home rather than renting.

Additional data shows that millennials are continuing the trend towards smaller family units having fewer children on average than any previous generation of Americans. Builders are still missing the mark locally producing large 3000 square foot homes with four or five bedrooms for a mass of upcoming families with one kid.

The market is desperate for classic "three 2s" and the builders are not delivering. This is why most of the market is a bit flat with very modest appreciation, but the bottom is still pretty hot with multiple offers on 40 year old 1400 square foot ramblers.

This is a great time to sell your classic ranch house and step up to that larger house or country property if that is your desire since the little rancher will get top dollar and the sellers of larger homes and rural acreage are softened up ready for a discount offer.


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