Seattle’s rental market is constantly shifting, and for a long time that market has been hot. Rental rates have gone up, while the availability of rental housing has gone down. Seattle is a desirable place to live for the tech employee and the retiree alike. With the change in the presidency and other trends in the US housing market, will Seattle’s rental market change in the upcoming year?
In July of 2016, the New York Times noted that Seattle’s rental rates had grown faster than any other major US city in the past year. With an inflow of newcomers into the city, rising home prices that have priced people out of the buyers’ market, and new housing stock that focuses on the higher-end market, many tenants have felt the pinch.
Will Renters Choose to Buy?
According to a report by Fannie Mae on PR Newswire, there is evidence that consumers were optimistic about future purchases immediately after the election. However, experiences in other countries such as the UK show that changes in consumer optimism can be fleeting.
It’s possible that rising mortgage rates could have more of an impact on consumers’ purchasing behavior in the long term. Home purchase prices in Seattle have been rising, and nationwide, mortgage rates are also rising. Higher mortgage payments and a higher overall purchase price can send consumers to the rental market instead. If consumers are turned off of the housing market by rising prices, Seattle rentals will continue to be a hot market.
How Will Foreign Investors React?
As mortgage rates rise, investors may choose to reduce their investments in particular real estate markets. Uncertainty about the change in government could also impact foreign investment. According to Apartmentality, foreign investors in particular are feeling uncertain about the impact that the new president will have on their real estate investments. If investors pause and decide not to purchase or build properties and convert them to rental housing, this could impact the availability of rental housing.
What Can Local Investors Expect?
For those locals looking to invest in real estate, rising mortgage costs will be a factor. According to the Realtor.com National Housing Forecast, “inventory is currently down an average of 11 percent in the top 100 metros in the U.S.,” so investors can expect a tight market with a lot of competition for homes.
What Will Developers Do?
Will having real estate developers involved in the White House be a boon for developers across the country? It could lead to investments in infrastructure and encouragement of real estate development. However, with tougher immigration policies, many cities may lose a portion of the workforce that works on building new housing stock, and this could slow the development of rental housing units.
Uncertainty is prevalent in the US housing market right now. In part, that’s due to potential changes in mortgage rates. It’s also due to uncertainty about what the next few years will bring: will the Trump presidency invest in infrastructure and encourage development, or will it reduce the labor force available to developers and reduce investors’ interest in investing in the US market?
No matter what the year brings, Lori Gill and Associates is here to help you successfully navigate the world of Seattle rentals. Connect with us and see how we can help you manage your Seattle properties.