Rents in Seattle and Surrounding Area Go Up...Again

In 2018, Seattle saw the housing market slow and home prices steady.  This steadying also leveled out the rental market, a relief for many.  Rental rates dropped in Seattle by 1.5% between June 2017 and June 2018.  King County rental rates fell as well by 0.5%.  This ease on rental rates isn’t going to last.  Seattle rates are climbing, slowly and steadily, but not for long.

Analysts have been watching rental rates in Seattle.  It started off slow, rising below the average from the nation.  We’re starting to see a different story this summer.  Rate are creeping back up as vacancy rate plummet.  In Seattle, the vacancy rate in 2018 was 4.1%.  Now?  It’s 2.2%.  And in some neighborhoods, rates dropped to 1%.  Many neighborhoods in Seattle, and even in cities and neighborhoods outside of Seattle, are seeing rates drop consistently year over year. 

A tight supply in availability causes rates to go up.  The median rate for a rental in Seattle in June was $2,569.  Not far behind is all of King County, which saw median rates for a rental at $2,469. 

So what is the cause of the low vacancy?  Economists believe it is due to the lack of new apartments getting built.  According to a housing market data firm, Seattle has only 19,345 apartment units in the pipeline.  This time last year?  It was 24,000.  Even with nearly 20% less apartments getting built, Seattle still ranks the 5th highest in apartment construction in the nation. 

Another cause is demand.  We are seeing more people move to the Seattle area and greater King County.  As mentioned before, Amazon is expanding, Expedia is moving their headquarters to Seattle, and many other companies are buying more office space.  In 2019 alone, Seattle will have 3.3 million square feet of new office space.  Next year expects to see 2.8 million.  Analysts are forecasting with high demand and low supply; median rents will continue to grow significantly.

As housing prices and rental prices continue to grow and outpace some wages, more and more people are looking to live further from Seattle.  Areas like Renton, Kent, and even Everett are seeing rents increase significantly.  Everett saw rents increase 7.4% from last year, to $1,935.  Their vacancy rates have dropped as well, from 4.1% to 3.2%. 

However, ease may come as renters turn into homebuyers.  As interest rates continue to be well below average (just 20 years ago, rates were nearly 10%), hovering below 4%.  We can start to see more mortgage applications as the housing market and rental market continue to rise.