We’ve known it was coming. It has been impossible to miss the towering cranes while driving through Seattle on I5, and the apartment construction boom has been well documented. We knew it was just a matter of time until the buildings would be completed and the area flooded with new rental options.
Today’s headline in the Seattle times from Business Reporter Mike Rosenberg, “Seattle renters score big as landlords dangle freebies to fill empty apartments,” illustrates the glut of new apartments coming available and the downward pressure they are putting on rents. And ApartmentList.com performed their own survey showing Seattle went from the highest rent increases in 2017 to a drop of 0.9% this year.
But let’s shed some more light on the rental market, since there is more to the story than just apartment rentals. After all, we can’t squeeze everyone into studios, 1 bedroom, and 2 bedroom units.
As someone who owns rental property and has watched the cranes go up across town, I’ve long speculated my 3 bedroom property near Capitol Hill may be somewhat insulated from softening rents resulting from the apartment building boom. After all, they’ve been building apartments, and other than investors purchasing properties and turning them into rentals, there hasn’t been much done to improve the stock of larger rental options.
So let’s sift through some additional data…
Northwest Multiple Listing Service (NWMLS) rental listings help provide data points for rental prices of units that have been rented, instead of just the listed price, because agents are prompted to enter the rented amount when the listing status is changed from active to rented.
Though it’s safe to point out that, unlike properties listed for sale, NWMLS rental listing data represents a small portion of the overall rental market. Still, they do represent data points to consider as well as rental listing options that prospective tenants consider.
Over the past 90 days, there were 353 NWMLS listed rentals in Seattle that secured tenants at a median rent of $2,595. Compare that to the same period last year, when there were 301 NWMLS listed rentals that rented at a median of $2,700. Let's break it down a bit further, comparing the last 90 days to the same period last year:
For two bedrooms in Seattle, the median rent dropped 9.1% to $2,500 from $2,750 last year
For three bedrooms in Seattle, the median rent rose 0.3% to $3,010 from $3,000 last year
For four bedrooms in Seattle, the median rent dropped 11.1% to $3,550 from $3,995 last year.
Sample size becomes an even bigger concern when looking at 4 bedrooms in Seattle, since there were only 36 listings over the past 90 days to compare to 25 listings last year.
So let’s look at NWMLS rental data for King County as a whole, comparing rented prices over the past 90 days to the same period last year.
For two bedrooms in King County, the median rent dropped 6.5% to $2,150 from $2,300 last year.
For three bedrooms in King County, the median rent rose .6% to $2,713 from $2,695 last year.
And for four bedrooms in King County, the median rent was unchanged year over year at $3,400.
So, back to the original question… are rents dropping in Seattle? I’d say it’s pretty safe to say the glut of new apartment buildings has helped push prices down for smaller units, and not just in Seattle, but King County wide as well.
However, apartment buildings aren’t helping the supply of options for those who need more size and bedrooms, and prices don’t seem to be dropping for 3 and 4 bed options.