Should I buy a house or keep renting? (Portland, Salem: real estate market, apartments)

[formosa]

I am a single female. Currently rent a one bed room in SE Portland.

My landlord keeps increasing my rent every 6 months.
500 -> 535 -> 575 -> 615
I can’t tolerate the rent anymore so I started to think about buying my own place.

I have been observing the housing price for awhile. The price is really high now.
Many analysts said the Portland housing price will drop this year; however, the drop will be minor. Rather than paying $615 to my landlord every month, I prefer to put the money in the home mortgage as early as possible.

I still have some doubts of getting my own house, such as:

1. Is it a good time to buy now or should I wait for a while?

2. Can I afford to own a house with the annual income 45k-48k and 20k down payment?

3. What area can I afford? I prefer a townhouse with no HOA fee or a single family home in the west side. However, NW and SW are so expensive. Maybe I should consider Beaverton? I really don’t want to live too far out from downtown since I work there, and I don’t mind to sacrifice some space to live closer to downtown. My ideal commute time is no more than 20 mins.

Any suggestion is appreciated. Thank you.

[2austin]

Based on the latest RMLS numbers, the month-to-month inventory is decreasing and prices are up in most areas. Infact Portland is one of the three major cities nationwide where prices have increased during the last year and are still increasing. On the other side, the inventory is twice as it was last year at this point -- which means you have more choice today.

You may wait for a 5% price drop but also consider that interest rates are very attractive at this point and inventory might keep going down.

But in the 500-1000 / month range, you are priced out of most Portland areas...

[BLAZER PROPHET]

My wife & I struggled with these same thoughts a few years ago. We ended up buying. Since then we have replaced the fence ($3,800), the stove & refer ($1,800), the roof ($3,600) and a few smaller misc items. This year we will paint the house ($1,800) and next year replace the deck ($2,000).

The payments are easy, but the maintenance is forcing us into bankruptcy.

My point is that it is one thing to afford the payment and another to maintain a house. Electrical, plumbing.... it can get very expensive.

Next, consider how long you want to live there. The shorter the time, the poorer the investment- on average. There are both buying & selling costs to consider.

Renting can be a pain, but it certainly has its advantages. For one thing, you can budget much better and save money better.

All that said, if you plan on being in the house for a long time, you can decorate the house, work the yard any way you want. Also, if you pay it off someday, you are now rent free!

So weigh your options carefully.

[bliss60]

Seems some Portland property management companies are asking their tenants to buy a liability insurance policy to occupy their apartments. WHAT?!

Presumably, this began on March 1, 2008

Essex Property Trust, Equity Property, Cass River Stone and Affinity are all asking tenants to obtain about $50,000 liability insurance. They say you can go through their insurance company or you can get it through your car insurance company.

I haven’t done the research but combined, one can only imagine the thousands of renters affected in the Portland area. The above names are just the property management companies and not the potentially hundreds of buildings they own.

Liability, for those who may not know, is insurance that pays for damages if the tenant causes fires, accidents, etc. This type of insurance should not be confused with homeowners/property insurance that the tenant should have to protect his property. Liability insurance has always existed but it has always been paid by the property owner.

So, check it out...there can only be a few reasons why this is happening in Portland. One: the buildings are fire and injury hazards or landlords have chosen the wrong tenants who created lawsuits.


Whatever was the problem, if you are asked to do this...go straight to the attorney general's office in Salem. This is a consumer affairs issue for them to straighten out.


Here is my story: I applied for an apartment at Mediterranean Manor – Affinity Property (Beaverton) from Craig’s List (and by the way, there were not interior photos of apartments online). They ran my credit application and THEN came back with, "sorry, we forgot to tell you. You need to get a liability insurance policy to live here".


I have no apartment and my credit score is lowered and you know, if this happens enough times, your score may not be high enough to rent an apartment.


Portland is one of those places...it creates the rules as it goes along...then gets mad when the government steps in. This was going on before California got there (I know, because I was born in Portland).


So, in addition to out of control rents (watch for those $100.+ monthly increases, when your lease expires), you are now paying the owners insurance.


Quality of life is relative.

[2austin]

Originally Posted by BLAZER PROPHET

My wife & I struggled with these same thoughts a few years ago. We ended up buying. Since then we have replaced the fence ($3,800), the stove & refer ($1,800), the roof ($3,600) and a few smaller misc items. This year we will paint the house ($1,800) and next year replace the deck ($2,000).

The payments are easy, but the maintenance is forcing us into bankruptcy.

My point is that it is one thing to afford the payment and another to maintain a house. Electrical, plumbing.... it can get very expensive.

Next, consider how long you want to live there. The shorter the time, the poorer the investment- on average. There are both buying & selling costs to consider.

Renting can be a pain, but it certainly has its advantages. For one thing, you can budget much better and save money better.

All that said, if you plan on being in the house for a long time, you can decorate the house, work the yard any way you want. Also, if you pay it off someday, you are now rent free!

So weigh your options carefully.

Thanks for adding sanity. You are right, maintenance must be factored in.

With the household income mentioned here, it would be really difficult to afford anything in/close to Portland.

[esya]

I would look around for a better landlord. There are landlords who only want decent tenants and are willing to sign a lease for a year or more.

[formosa]

Thank you very much for all of your responses.

I just found some brand new condos under $150,000. Some are just as low as $110,000. For the rent I am paying currently, I can just add a couple of hundred dollars to buy a cheap condo in a less desirable area.

However, location is a very important thing. Even those condominium I found are brand new and affordable, but they are in bad locations such as SE 122nd and St. John.

Is it a good idea to buy an adorable property in an undesirable location?

[oldtintype]

I don't know but if I was going to buy in one of those areas I'd choose St. Johns over SE 122!

[lucero32]

I recently paid a visit to Cathedral Park under the St. Johns Bridge and was blown away by how scenic it was. Also,there were some town homes and condos there, adjacent to the park that were in the $150K range. The small village feel of St. Johns was pretty neat too, what with all of the cafe's and shops.

As for the right time to buy? Well, as others have posted the cost of maintaining a place can be significant. Still, if you buy a newer condo or townhome, than maintenance should not be an issue. Just do all of the numbers regarding property taxes, hoa fees, etc... and see if it makes sense. Oh, and of course one of the biggest perks to homeownership is the tax-write off for all of the mortgage interest paid. Since just about all home loans are frontloaded with interest, you'll be writing off basically your whole annual mortgage payment every year for awhile, really decreasing your taxable income.

[John Shaft]

Originally Posted by formosa

Is it a good idea to buy an adorable property in an undesirable location?

In general, not from an investment point of view. However, being within the city might mitigate this as Portland is pretty built in and that will eventually cause greater desirability inside the city and higher house prices...it has already happened somewhat.

As far as buying, there's virtually NO chance that prices will be higher at the end of this year than they are now. My totally-off-the-cuff guess is that Portland is some amount of time behind the rest of the real estate market--the boom happened sooner elsewhere, and so did the bust. So this year will probably result in price declines. Don't let the 1.3% appreciation that basically happened in January-March of last year fool you.

That being said, you still have to do the math of whether you're willing to "overpay" on something that might be worth less in a year (knowing that if you own it long enough, it will most likely go back up) vs increased rent. There's probably not a definitely, absolutely-right answer.