Apartment Realty Advisors
Specialty: Apartment brokerage firm focused on multi-housing nationwide
Seattle’s housing market is uniquely positioned to avoid much of the downturn seen elsewhere in the country, said Jim Claeys, a partner with Apartment Realty Advisors.
Claeys said because of Seattle’s tight urban grid (which limits building area) and time-consuming permitting process (which slows growth), the city has been spared the overbuilding that is now saturating many other markets and dragging prices down.
“There’s just not enough permits and land to keep up with the demand in this area,” Claeys said.
Demand will also likely remain high here, Claeys said, keeping prices higher here despite tighter lending everywhere. Boeing and Microsoft are still expanding and the Port of Seattle, another market indicator, is also doing well, and that makes for more people moving to the Seattle area, he said.
This is all bad news for Seattle renters, Claeys admits.
“The apartment market here is going to see a good long run,” Claeys said. “From a renter’s standpoint, the rents are just going to keep going up.”
Clouds on the horizon
And there are some clouds on the horizon for building owners as well, Claeys said. Interest rates will go up after the election next November, Claeys said, and that will slow buying.
“There won’t be as many sellers on the market,” Claeys said. “It’s a good time to rent it out not a good time to sell.” Claeys said the national mortgage crisis has had some impact on deals in Seattle. He said there are fewer lenders and tighter lending practices.
“Some of the lenders have stopped doing interest-only loans,” Claeys said. “There are transactions right now that are either not going through or have been repriced.”
That hasn’t affected transactions much for stronger players with capital, Claeys said, just some of the speculative players.
The slowed transaction rate is still higher than the traditional average, Claeys said. He said even past boom markets were significantly slower than the past few years, and Claeys still believes the market is above equilibrium.
“What it really comes down to is developers have gotten smarter and they’re starting to track absorption rates more,” Claeys said. “The (banks) are only loaning to a real select amount of builders.”
The relative strength of Seattle’s multifamily housing market amidst falling prices elsewhere has made it a stomping ground for some major national players who aren’t slowed by tougher lending practices, Claeys said.
“The majority of the transactions that are going on right now are from out-of-state builders and investors,” he said. “We’ve got every major national player looking to allocate funds here.”
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