A new year is approaching, and it’s a new housing market. What’s coming around the corner for Seattle rentals in 2017? Is this is a good time for you to invest in a rental property in the Seattle market?
What’s Going on With the Housing Market as a Whole?
In 2017, what will happen to the national housing market? According to RealtyTrac, “rapidly rising home prices and tepid wage growth have dampened single family rental investment returns and growth potential in many markets….” However, you can still find deals on homes, and there are still strong rental markets. It just depends on where you look in the country. Areas such as Georgia, Maryland, and South Florida remain strong.
Look at Your Return
In Gord Collins‘ article on the best-performing cities, Seattle is listed as #6 in the top 80 cities with passive income ROI. What does this mean? It means that Seattle’s housing prices are relatively high so experience and know how will be key to making the most return for your housing investment dollar.
There’s a fine balance that comes into play when you’re looking at investing in rental markets. You need to examine the rise of rental rates and compare it to the rise in home prices. RealtyTrac states that rental rates in Seattle rose 6 percent annually while home prices grew 10 percent.
If you want to invest in the rental market but housing prices are rising and your ROI isn’t as good as it used to be, should you buy now so that your ROI doesn’t get even worse? According to The Mortgage Reports, home appreciation will “slow nationally to approximately 5% in six months and to 3.5% in 12 months.” It sounds like housing prices will continue to rise in the new year, but they won’t have the extreme growth that you’ve seen in the past.
Look at the Housing Market
The other side of the housing investment debate is the rental market. It feels good to look at cities with an excellent return on investment, but you also need to ensure that the rental market there is strong so that you can rent the properties you own. According to RealtyTrac, Seattle wages have only risen 1 percent while rents and home prices have gone up much more. That means that some people will still need to rent, even if they want to buy, since property ownership will feel out of reach.
The success of your rental investment also depends on what type of rental you purchase. In the new year, some renters may go back to becoming buyers. They’ve lost their homes in the past and are now qualified to get a mortgage again. These families are interested in single family homes, so interest in these types of rental homes in certain areas could drop. Additionally, Millennials and retirees tend to be less interested in single family homes, and they will keep the urban, multi-family rental market moving. If you choose to invest in smaller, urban properties in Seattle, this market remains promising.
At Lori Gill and Associates, we’re here to help you navigate Seattle rentals with ease. Whether you need support managing your existing properties or you’re adding to your property portfolio, we’re here to help. Connect with us today for more information about our property management services.