How are your Seattle properties doing? If it feels like the property market is speeding up exponentially, you’re right: Seattle’s property market is the fourth-fastest growing rental market in the country. Rental rates are up and vacancy rates are down. What are the details of this constantly shifting local market, and how will they impact your business?
Where Are Prices Changing?
The rental price impacts what tenants are willing to pay for your specific property. According to Curbed, right now, the downtown area is the most expensive area, closely followed by Pike Place. Belltown, Capitol Hill, and First Hill are also charging higher rental rates, while Denny Blaine and North Beacon Hill are currently on the lower end of the rental market. The quickest rental price growth is occurring in the Pike Place and Eastlake areas. Rent Jungle states that the average rent in Seattle has “increased by 8.2 percent” in the last 6 months.
Why Are Rental Rates Increasing?
In 2016, the story about rental housing has been a story of scarcity. New home construction is not adequate to meet the needs of new households and second home buyers. Older homes need to be torn down or repaired. According to Inman, while vacancy rates have been low in the past, this trend will continue, pushing up housing prices and causing the rental market to tighten even further.
Wage Growth is a Factor
Wage growth is a factor in the rental market. If wages aren’t growing at the same pace as housing prices, people get further and further behind. They find it difficult to live in an area where rental housing is tight and the rental competition is driving rental housing prices up. Wage growth will be the key new ingredient for the housing recovery. According to Inman, “2016 will see clear and convincing evidence of rising wages. This will help with housing affordability….” Higher wages allow young people to move into the rental housing market for the first time, so this can further tighten the housing market for your Seattle rentals.
Demographic Shifts Influencing the Rental Housing Market
On the other side of the housing market, there’s the increasing demand. Millennials are getting jobs. Other households have lost their purchased homes in the past and they need a place to live. They’re turning to rentals as an alternative. As Baby Boomers age, they’re also moving out of their larger homes and looking for accessible rentals that are close to entertainment, medical care, and other opportunities that they want to pursue in their retirement.
There are other nationwide trends that are changing the way rental housing works in Seattle. Since 2010, 70,000 tech workers have joined the Seattle market, many of them renters. Many people are also moving from San Francisco’s pricey housing market to the relatively less expensive market in Seattle.
According to SLOG, “rental real estate here offers some of the highest returns on investment in the nation, compared to all possible investments.” While housing prices have risen, rental prices are also rising, and the rental market is strong. Seattle rentals continue to be a valuable investment.
When you’re looking for guidance on your Seattle rentals, contact Lori Gill and Associates. We know the Seattle market, and we’re here to help you manage your Seattle properties. Connect with us to discuss your rental property management needs.
