Rent VS. Buy a Home in Portland, Oregon – 2024 Update

According to one survey, 94% of respondents considered owning a home part of the American Dream; however, 51% of people who didn’t already own a home worried that they never would. With a rising cost of housing prices, an increase in federal interest rates, and a lack of housing stock, this fear is somewhat warranted.

While getting a house may be difficult in today’s market, renting is far from your only option in Portland. Here, we discuss the financial impact of renting versus buying going into 2024, especially for the Portland, Oregon, area. We also debate the pros and cons of renting versus buying.

Rental Costs in Portland, Oregon in 2024

According to Zillow, the median rent in Portland in 2023 across all housing types is $1,695. While this may seem high, it is 15% lower than the national average of $2,000. Now, Redfin puts the median rental cost estimate at $2,672. Why the big difference? Zillow is including all apartment buildings and Redfin is only looking at detached homes, townhomes, and condos. This means that the average rental cost in Portland is likely somewhere between these two numbers, depending on rooms, amenities, and rental location.

Common wisdom puts affordable housing at 30% of your income toward rent. If you made $4,000 monthly, your rent would be around $1200. As you can see by these numbers, it’s unlikely you’ll find a place in Portland proper within the affordable housing range.

The same Redfin study estimates that the median percentage of income to rent is 53.7%, almost twice the recommended rate of your income. For every 100 low-income households in Oregon, only 23 rental units within the affordable housing window are available, making Oregon one of the worst-ranked states for affordable housing, along with California.

How does this rental cost compare to the median mortgage cost in Portland? Given that the average home in Portland costs $520K in 2023, it should be no surprise that the median monthly mortgage payment was $4,107.

That’s a lot of numbers to consider, so let’s take a moment to break this down. Given the higher mortgage rates, renting costs a lot less than owning a home. However, something to consider is that with a mortgage payment, you’re paying toward owning a property instead of paying directly to someone else for the right to live on their property.

Another thing to consider is if you have a fixed mortgage payment, you won’t see a significant jump in mortgage costs, while rental costs tend to go up yearly.

Rental Increase Cap 2024

Speaking of rental increases, in 2023, Oregon put forth a rent increase cap for any market-rate rental building older than 15 years old. This meant landlords could only increase rent by a maximum of 10% once every 12 months, helping with overpriced rental schemes. While newer housing locations could raise their rent higher than 10%, they were still restricted to one price increase every 12 months, aiding the general rental cost in the Portland area. This legislation will continue to impact renters in 2024.

While these rules helped to keep rental housing from skyrocketing in price in Portland, it doesn’t offset the lack of housing available in the area, ever since Portland declared a housing crisis in 2015. While this fixed price doesn’t compare with a fixed-rate mortgage for financial stability, it does help shrink rising rental costs, making it more affordable to rent in Portland, Oregon.

Increase in ADUs

Another thing in 2023 that helped make renting more affordable and accessible heading into 2024 was an ongoing ADU (Accessory Dwelling Unit) project in Portland, expanding the zoning accessibility for ADUs. This made it more feasible for homeowners and rental owners to create ADUs, adding to the overall number of rentals available in the Portland area. While this doesn’t directly fix the ongoing housing shortage, it can help increase the housing density of many Portland areas, helping to meet housing demand.

For more information on this project, check out our posts on the Residental Infill Project and ADU requirements for Portland, Oregon.

Rental Pros

Cheaper than a mortgage (on average)
Potential to split rent with roommates
Easier to find housing near transit/work
Rise in available rental units due to ADU incentives

Rental Cons

Is “sinking money”, you never get a return on your investment
Rental increase is not locked, what is affordable now may not be later
Less control over housing aesthetics and construction
May have more controlling requirements than homeownership (ex. no pets)

Purchase Costs in Portland, Oregon in 2024

Now that we’ve covered rental unit costs in Portland, let’s look at the purchase price. First, the median sell price for Portland homes from 2023 is $520K. Pairing this with the median mortgage monthly payment of $4,107 from 2023 puts owning a home in Portland twice as expensive as renting, working solely on median costs. This doesn’t mean that every home in Portland costs two times as much as a rental, but on average, you’re looking at an investment that costs twice as much as simply renting. This price barrier is rather high, at least until interest rates come back down, meaning that renting is the only option for many Portland residents.

Another thing to remember is the downpayment requirements for purchasing a home. While some downpayment assistance programs exist for Portland, Oregon residents, this is still a significant cost.

However, unlike a rental unit, a home is an investment opportunity. Part of your monthly payment will pay down your balance. The house will likely appreciate, gaining value over time (especially with Portland’s limited housing supply). The home can be used as a rental if needed. The home provides various income tax deduction opportunities. It is possible to get a HELOC, or loan against the home’s value in times or trouble or when the need arises. The list goes on.

While Portland home prices are high, they are on a downward trend (from 2023) going into 2024, meaning now is a better season to invest in a property than in years past. Even considering high interest rates with the ongoing housing crisis, getting a home in Portland may be a worthwhile investment in the 2024 market. Read our latest monthly Portland real estate market report here.

Housing Supply Issues

One thing facing the Portland real estate market is supply issues. Not only is homelessness on the rise, but the overall inventory of available homes is lower than it has been in past years. This can lead to an increase in housing prices and drive up demand for the available homes, which is likely to happen again once the mortgage rates decline.

Trust your real estate team, and be ready to pounce on a deal when it shows up.

Purchase Pros

A home is a financial tool, offering multiple tax and loan advantages
Potential to build significant personal wealth over time
Working toward paying off a mortgage instead of “throwing away money” like renting
Ability to make changes to the property at your discretion

Purchase Cons

Housing supply is limited
May have to consider HOA requirements and restrictions
Moving means going through the home sale process again
High federal interest rates increase overall cost

Final Thoughts

Renting is cheaper than owning in Portland, Oregon right now, but owning is still the better long term strategy. When interest rates ease (they are likely to some in 2024 and more in 2025) our local Portland real estate market is likely to rise, due to continued lack of housing supply. Investing in Portland real estate is a better long term financial decision than renting.

If you’re in the market for a home in the Portland, Oregon area and are ready to invest in your overall happiness and financial stability, our team is here to help. Navigating the 2024 housing market can seem intimidating, but with our team of top 1% buyer’s and top 1% seller’s agents on your side, you can find your dream home in no time. Reach out to our team, or chat with the bot on our site, to learn more.