Thursday, June 28, 2018

Zillow report: Seattle rental market weakness continuing

We’ve all seen the sea of cranes across Seattle for the past few years, and all that building is now turning into new units coming on the market rapidly.  We scoured Zillows most recent Rent Index Report which confirms that Seattle's rental market shows continued signs of weakness due to the glut of new units in urban core areas.  

How much of a glut?  The first 6 months of this year saw 24,554 apartment units under construction and an additional 35,009 units in the development pipeline.

As a result of this huge influx of supply, rents in the Seattle metro area increased by just 3.3 percent from May 2017 to May 2018, down from 5.8 percent the year before, and so much competition means that existing units and those without newer amenities are seeing price pressure and taking longer to rent.

How does this supply and demand work? When supply (units available) increases more than demand (renters looking for units to rent) market prices fall until supply is fulfilled.

Rent appreciation is still strong in outlying areas, with four of the five fastest-appreciating rental neighborhoods in Tacoma, and the fifth in Everett between the Boeing plant and Everett Mall.   These areas are seeing continued demand for lower-cost apartments and have supply has been much more constrained than urban core neighborhoods where the bulk of new apartments have been built.  

Zillow's data backs up other reports showing the Seattle rental market softening, several of which show rent growth for single-family homes slowing to less than 1 percent for the first time since 2012.

Apartment markets in other pricey metros like Boston, Los Angeles and Portland also weakened- the Portland metro area rents grew just 1.5 percent year over year, down from 3.6 percent in May 2017.

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