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March 16, 2016
Seattle's apartment market is back on track after hitting a rough patch in the last quarter of 2015, according to a new report.
Tom Cain of Apartment Insights Washington said rents in apartment complexes with more than 50 units in King and Snohomish counties increased 1.7 percent in the first quarter, and the vacancy rate fell.
At the end of last year, Cain reported that rents unexpectedly went down in some of the region's most expensive neighborhoods, suggesting that a slowdown might be on the way. Now it seems things have changed.
“Last quarter we expressed concern about where the market might be headed in light of a surprising decrease of rents in the high-priced submarkets,” Cain said. “In light of what has happened this quarter, our concern has been assuaged.”
Rents rose $25 to $1,485 per month, or $1.78 per square foot, in the two-county area, a jump of 10.7 percent over last year.
The vacancy rate — excluding new buildings still filling up — was 4.21 percent at the end of the first quarter, down from 4.32 percent at the end of 2015 and 4.46 percent a year ago.
When you include new projects still filling up, the vacancy rate was 6.34 percent, down from 6.83 percent last quarter.
Four areas had vacancy rates below 3 percent: Des Moines, north King County, Tukwila and neighborhoods northeast of Everett.
The highest vacancy rate is in the University District: 6 percent. Cain noted a renovation project that emptied half of an existing building created more vacant units. Bellevue East, Eastside South, downtown Seattle and South Lake Union all have vacancy rates around 5 percent, Cain said.
Cain reports there are 21,633 units under construction in the two counties, which is about 2,100 more than last year at this time. Of those units, 58 percent are in Seattle, 24 percent are on the Eastside, 11 percent are in South King County and 7 percent are in Snohomish County.
Cain said 13,140 units have been built or are set for completion this year. Some projects could be delayed, but Cain expects 2016 to set a record for most new units.
Cain said preliminary information shows 12,337 units could open next year, and another 4,182 may be added in 2018. The total for 2018 will likely increase as more projects are announced.
Typically, when rents rise as quickly as they have, some renters decide to buy instead. Extremely low inventory and skyrocketing prices have taken that option off the table for many people and are keeping them in the rental pool.
Seattle's single-family rental market remains hot as well. A report by online real estate investment firm HomeUnion predicts only San Jose and Orlando will exceed Seattle when it comes to the expected increase in single-family rents. HomeUnion predicts Seattle's rents will rise 5.9 percent this year.