03 Jun Impact of Increased Demand vs Housing Shortage on Seattle Rental Properties
Supply. Demand. When you own or manage a rental property in Seattle, these words can mean everything to your bottom line. The rental market in the Seattle area is constantly changing, and right now there is an increased demand for housing along with a building boom. What does this mean for property owners?
The Rent Slowdown Was Brief
Seattle’s rental trends are always shifting, and for a while in 2016, people thought that rent increases might actually be slowing down. In the last six years, “rents in the city of Seattle are up 57 percent,” according to the Seattle Times. This means that the average renter is now paying $1749 a month. In late 2016, it looked like rents might actually be slowing down. However, now it looks like that was a short-term anomaly.
Rents Are Changing Again
Rents have been going up for a while now. In part, this is due to an inflow of tech workers into the city core and to shifts in Boomers’ lifestyles as they retire. For many tenants, this means that the Seattle area is becoming less affordable. For owners, rent increases can be beneficial. If you’ve owned property in the Seattle area for a while, the rent increases have likely been good for your bottom line. Your existing assets bring in more revenue.
As there is still high demand for rental properties, it doesn’t look like everyone has been priced out of the market yet. However, what is happening is those who find rents unaffordable are moving to the outskirts of Seattle, where rent is less expensive. If you own property in Seattle suburbs, you’ve probably noticed this trend.
Will New Building Change Seattle Rental Trends?
The Seattle Times states that in 2017, “Seattle is expecting nearly 9,000 new apartments…thousands more than any year in the city’s history.” Will increases in housing availability drive down the rent at your existing properties?
With all of this new building, the location of your rental properties has become even more important. If you own property in the downtown Seattle area, Ballard and Capitol Hill, you may already be experiencing lower than usual rent increases. There are many apartments being built in those areas. These apartments are new, and their rental rates will be higher than those in the surrounding older buildings. However, there is still a housing shortage, particularly for those who are looking for more affordable older housing in the core urban areas of Seattle.
While it seems like the increase in available rentals might cause a glut of rental properties on the market, the vacancy rate started to rise in late 2016, but it has now dropped again, as have incentives that landlords were giving to new tenants, such as a month’s free parking. It seems like once again, Seattle is a landlord’s market.
Where Should You Invest?
If you’re thinking of investing in property in Seattle, you could purchase some of those new, hot downtown properties. However, if you own property in an area that has not seen much new construction, the rental market is even stronger as people flee from the higher rents in the downtown core. If you’re considering an investment, look for these suburban areas where the rental market is still very hot and rents are still rising.
At Lori Gill and Associates, we’re here to help you understand your Seattle rentals and the Seattle rental market. Turn to us for assistance with your property management. Connect with us today.