Despite the construction of more new apartments this year than in any year in the past two decades, rent prices in King and Snohomish counties have continued to rise while vacancies remain low, according to a leading research firm.
While the price bump doesn’t bode well for renters, the relatively seamless absorption of more than 2,000 new apartments indicates a healthy rental market, said Tom Cain of Apartment Insights, an industry analysis firm.
Average monthly rent rose to $1,190 during the last three months, a 3 percent uptick from the previous quarter, and a 5.8 percent jump from a year ago, Cain’s report shows.
Cain said he had expected the new crop of apartments to increase the vacancy rate, but the rate is at 4.41 percent, down from 4.58 percent the previous quarter and 4.83 percent a year ago. Five percent is considered a market that favors neither the renter nor the landlord.
“I’m pleasantly surprised,” Cain said.
King County’s vacancy rates dropped to 4.31 percent from 4.53 percent, and Snohomish County’s rate remained at 4.79 percent, according to the report.
Besides the overbuilding, Cain also had been concerned that renters might leave the market to buy new homes. That didn’t happen either, he said.
Mortgage rates have been at historic lows and prices have started to creep up.
Cain attributed the “resilient” rental market to recent employment growth — Amazon, for example, hiring thousands in the area — which has generated renters.
Ashley Hayes, director of operations of Seattle Rental Group, has seen this firsthand.
Hayes said Amazon, Microsoft, Boeing and Google, among other major corporations in the area, have created an increase in demand for employee housing. Finding housing for relocated workers is one of Seattle Rental Group’s biggest functions, she said.
Combine the influx of new employees with the many accidental landlords — people who couldn’t sell their houses during the mortgage crisis and are now selling or leasing them — and you have a thriving market, she said.
“There are just so many new employees moving to the area,” Hayes said. “And condos and homes are being taken off the market for lease.”
Sandy Asdourian, a leasing consultant for Metropolitan Tower in South Lake Union, said her building is 94 percent rented. Asdourian said it’s a mix of some longtime renters and people coming to Seattle to work for Amazon.
Capitol Hill’s popularity is evident in Cain’s report. The average rent there has increased more than in any other neighborhood — by 8.2 percent, to $1,395 a month, he wrote.
Downtown Seattle rents rose 3.1 percent, bringing the average to $1,707 a month and making it the most expensive market per square foot at $2.30.
The average Bellevue rent rose 3 percent to $1,797 a month, surpassing $2 per square foot for the first time. On average, Bellevue units are newer and larger than apartments in downtown Seattle.
Where the relocated employees want to live tends to depend less on price than on location, Hayes said. Recent college graduates or engineers moving out by themselves are more likely to be interested in downtown, while families usually gravitate toward neighborhoods outside the city, she said.
Hayes said she hopes a handful of additional apartment buildings due to open downtown soon will ease the pressure on the market a bit.
“We’re as busy as we’ve ever been,” she said.
In his report, Cain called the increase in rental prices “reassuring,” and said the rates should act as a buffer against a potential drop as more new units enter the market.
While this news is good for developers, it also means renters will continue to see less in rental incentives.
In both counties, incentives dipped about $7 to $14 per unit, the report said, noting that only 23.3 percent of the properties are offering incentives at all. That’s a 30.4 percent drop from last quarter alone.
Still, while fewer incentives increase the cost of living, a high demand and higher rent prices tend to be good signs for a city, Cain said.
“I’m impressed at how well it’s doing,” Cain said. “I’m encouraged.”
Colin Campbell: 206-464-2033 or firstname.lastname@example.org