Renting vs Buying in Portland, Oregon

If you’re looking into moving to Portland, at some point, you might ask yourself, “Should I rent or buy a house in Portland, Oregon?” In this post, we’ll address the pros and cons of buying versus renting in the Portland Metro.

Renting in Portland versus Buying real estate in Portland

Let’s say you just want to rent. You’re definitely not down to buy anything at all. Renting is your thing. Can a real estate agent help you find a rental in Portland?

Unfortunately, no.

Real estate agents can’t help you find a house to rent, because rentals in Portland are not listed through the MLS. You’ll find that almost all Portland house rentals are listed on Craigslist, rent.com, apartment.com, and other rental platforms. So, that’s where you’ll want to start.

What if you’re not sure whether renting or buying a home in the Portland market is the right move. If you’re coming in from out of state and you’re looking for a way to figure out which parts of the Portland Metro best suit your lifestyle or are even waiting for your home to be built, short term rentals are an awesome option. For this, you can expand your search to short term/vacation rental agencies like VRBO, Airbnb, and other similar short term house rental sites.

One thing to keep in mind is that almost every single tenant or landlord on Airbnb is negotiable on their timeline. So if you need to have a place to stay for two months, contact them directly and see if you can negotiate more favorable terms.

If you’re going to take this route for 1-2 months, you can put your belongings in storage and have the freedom to find a great space that fits you.

Learn More: Cost of Living in Portland

Portland, Oregon renting or buying – which is right for you?

Next, let’s look into the process of renting versus buying. If buying seems costly, time-consuming, or just straight-up scary, you’re not alone in thinking these thoughts. There are a lot of inaccuracies out there about how hard it is to buy a home, how much of a down payment you need, how hard loans are to close on, and what the real estate market will be doing next year.

The fact is, there are plenty of bad investments and loans out there that could get you on that buyer’s remorse train in no time at all.

Having a great real estate agent and a clever local mortgage lender on your team is the way to go about easily finding a good investment that’s tailored to your situation.

So, should you consider spending money on renting versus buying? Our question is: Why would pay for someone else’s mortgage when you can pay for your own and build wealth at the same time? As Portland real estate agents who know our territory well, we’re huge fans of building wealth through the thriving real estate scene here.

Of course, it’s important that you find the right investment, pick a good local lender, have an agent who isn’t afraid to negotiate properly, and buy in an area that makes sense for you.

Learn More: Top 5 Neighborhoods to live in Portland, Oregon

Currently searching for a home in the Portland area or would like assistance navigating the area?

Please reach out to one of us today.

Understanding the Portland Real Estate Market

There are a ton of great housing options in Portland, but we’ll start by saying that the Portland real estate market can be tough. Knowing more about the Portland real estate market will give you a huge advantage when it comes to finding the right home.

There are five remarkably different districts in the Portland metro that each have their own style, and you’ll want to research them and/or contact us to help you.

How about the Portland real estate market in a recession? Is there a recession coming? We often get people wondering what happens to their real estate investment when a recession comes along. The recession that we tend to remember was the one that took the equity out of everyone’s houses.

The problem with the recession that happened back then was that it was a huge financial collapse, the housing market was propped up on bad loans, and the government wasn’t doing their part to stop it. At that time, the banks were doing very bad things. They were giving loans out to people that couldn’t even qualify for loans, and everyone was basically using money to leverage more money. That was such an amazing mess that things had to change—which they did.

What it typically means to be in a recession is just that the economy isn’t growing as much or as fast as it had been growing during the years leading up to any given point.

A regular recession doesn’t mean that the equity in your home is going to be wiped out. Right now, the Portland housing market is extremely stable. The value of homes in this ultra-desirable destination has been increasing in the range of 1-5%.

Inventory is currently very low, which means that Portland is still in a seller’s market. However, interest rates are low, and homes are staying on the market a little bit longer at the moment. With this, we’re able to get our buyers a really good deal. It’s the best-case scenario for a borrower at this specific time (2020).

When you look at the home values between today and when the market was at its peak back in 2007/2008, before the collapse, we’re actually 20% higher in value here in Portland than we were back then. So, our market has not only fully rebounded but has done so with a vengeance.

If you’re waiting to buy a home until the market collapses, you’ll be waiting for a really long time.

Portland mortgage rates

One major concern that we often hear is, “I don’t have enough money to buy a house right now.” And, it’s completely situational but usually very doable. Many people believe that you need to have at least 20% down to buy a home, but there are actually plenty of 3%, 5%, or even 0% down loans.

90% of the loans we see are within the range of 5-10% down but, depending on your situation, you can also get 3% down. For example, if you don’t own any other houses, have decent credit, and you’re a first time home buyer, it’s extremely likely that we can get you onto a first-time home buyers program for 3% down.

What about investment properties in PDX?

We’re 100% believers in keeping as many liquid assets available as possible to build a diversified portfolio as well as having a safety net. Typically an investment property that isn’t your secondary home or vacation home is usually 20 to 25% down.

Having said that, we see plenty of investors buying secondary homes at 10% down. It usually comes down to knowing the rules and knowing how to get creative with your financing.

What about your credit score?

While a higher credit score will always be more favorable for the borrower, we’ve seen people buy homes that have had credit scores as low as 550. The lower the credit score, the higher the risk the loan is for the lender, so they charge more to cushion it. The better the credit score, the better interest rate you’re going to get.

We work with our partner lender to get your credit in the best possible place before you buy. It might even be making one small little tweak that takes you from 660 up to a 700, for instance. And it can save you a significant amount of money over the life of your 10, 15, or 30-year mortgage.

Conventional loans require a certain credit score, but an FHA loan can work off of a much lower credit score. We recommend trying for a conventional because it presents a lot fewer hurdles to jump through than an FHA, and the rates are typically pretty similar.

Veteran’s VA loans are phenomenal. We’ve worked with so many VA loans, and they’re actually one of the best loan products to work with.

As real estate agents in Portland, we tend to field those questions all the time because people are fearful of starting a conversation with a lender. We have a preferred lender who specializes in people moving in from out of state, has seen every type of loan and doesn’t get all salesy. They have simple conversations about how to improve credit, just what score you’ll need and how much you need to put down.

Our clients will literally call us afterward, thanking us to the moon and back because that conversation with a great local lender just simplified everything for them. It makes people feel so much more confident in moving forward.

Learn More: How much money do you need to buy a home in Portland?

The benefits of buying a home in Portland

Whether you’re moving to PDX soon or looking to invest here, this round-up of 2019 Portland Oregon real estate trends should help.

If you’re still left wondering whether or not you should rent or own a house, we highly recommend that you buy property. Rents are very likely to rise, while mortgage payments will remain consistent—and are already lower than rents. This means that not only will you save money immediately by choosing to buy, but that these savings will compound as your income grows and your mortgage payment doesn’t.

The one thing that is for sure is that, unlike some spots around the US, in Portland, you’ll pay just as much if not more to rent than you will on your mortgage. You’ll also generally get less for your money when renting vs. buying in Portland.

We’re of the opinion that renting in Portland instead of buying in Portland is like dousing your hard-earned cash in gasoline and immediately setting it on fire. Every month you make that rent payment, you also get to watch your money go down in a blaze without the glory.

As licensed real estate agents in Portland, Oregon, we specialize in helping people who are looking to move here. Our combined experience and vast number of connections in the Portland real estate market are hard to beat.