Renting has it’s perks, such as not worrying about replacing the water heater or, gulp, roof. It also has downsides we’re all too familiar with, such as being randomly subjected to your landlord’s decorating tastes and having to put up with other tenants. I live in a duplex that was built in 1905 and has been steadily falling from grace ever since. It’s shabby-chic, centrally located, and I could never afford it. But sometimes I look at the all white walls and beat up molding and start to daydream.
According to this May 2008 report from the Center for Economic and Policy Research and the National Low Income Housing Coalition, Portlandia ranks 23rd on a list of 100 cities where you’re better off renting than owning. San Fran is 12th, Seattle is 15th, and New York is numero uno, no surprises there.
However, they count the entire PDX Metro area, including Vancouver, so the numbers are a bit off. The study also uses the 2008 Fair Market Rents (FMR, check em’ out), generally much lower than the true rental rates, which we should start calling Craigslist Market Rents (CMR). Monthly cost of a two bedroom is calculated at $757, while I suspect it’s closer to $900 here in the city (renting friends, opinions?), and the cost of ownership ranges from $1,462 to $1,668 to $1,964 (owning friends, opinions?).
Renting vs. owning is a debate I started with my parents right around the time the “settle down into a career” vein entered our conversation. I do not want to settle down in a place. I do not want to save for a downpayment on a fixer-upper. I want to travel to Israel on a whim and save money for cute accessories (done and done). My future plans involve saving to open a boutique, or move to Croatia for a year, or go back to school, or all of the above. This data makes me feel better about those decisions. For homeowners, the projected equity loss for a home purchased in 2008 and sold in 2012 (counting a %6 loss for realtor fees and a 30 year mortgage at 6%) is in the -$70,000 range, and that’s a lot of calamari and necklaces.
But still, there’s a logic to Portland trends that government data can never accurately reflect. As long as the New York Times keeps gawking over us, and Sam Adams becomes mayor and pushes sustainable living, we’re going to be nationally popular with people living in crummy places, and those people are going to throw down their Tivos, declare themselves Locavores or Members of the Creative Class or Greenies, and drive into town to buy craftsmans. (Though they may find a home, it’s sketchy whether they will find a job. Someone should look into Portland’s bounce rate.)
And then there’s the real wild card: our quirky tastes. Someone bright eyed and better organized than me will open a french fry cart or vegan donut shop or gourmet salt store and suddenly an overlooked neighborhood will be wildly popular and prices will skyrocket.
See you at the fry cart, I’ll take the poutine.
Read the PDF for yourself:
Ownership, Rental Costs and the Prospects of Building Home Equity.
Extra Credit:
It’s Lovely! I’ll Take It! A Collection of Poorly Chosen Photos from Real Estate Listings.
Tags: ideas about home
wow. it’s been ten years since i’ve seen a 2 bedroom rent for $757, anywhere considered even remotely to be “close in” Portland.
You mean my $800 five bedroom house or the $500 three bedroom house I just left aren’t typical?
I can testify that it’s waaaaay off on LA and New York. I have friends paying more than that for the cheapest places they could find.
And can you splain the equity loss graph? Aren’t homes supposed to appreciate except in [insert overused media expression about state of $$$ in US/World].