Seattle Courant Archive

Apartment rental rate hike expected in Puget Sound area

Apartment rental rate hike expected in Puget Sound area

By Jeanne Lang Jones
November 04, 2008

Marcus & Millichap expects that Seattle area employers will add 19,000 jobs this year, a 1.1 percent increase. The firm also projects apartment developers will add approximately 3,500 new units this year. That compares with a five-year average of 2,100 additional units per year. The spate of new apartment construction will outpace demand, bringing the 2008 vacancy rate to 5 percent, according to the report.

Still, with tight credit barring potential home buyers from the market, more people are staying in the rental pool.

According to Marcus & Millichap, the median household income in the Puget Sound area is still about $20,000 short of what’s needed to buy the median-priced home, at $365,600, in the third quarter. Marcus & Millichap calculates the typical traditional mortgage payment at $680 a month more than the average asking rent for a premium Class A apartment, at $1,200 a month.

With rents increasing, Marcus & Millichap anticipates apartment construction will accelerate in coming years. The firm estimates 5,800 apartment units are under construction, with an additional 16,000 units in the pipeline.

Roughly half of the new units will be in downtown Seattle, the close-in neighborhoods of Capitol Hill and Queen Anne, and in downtown Bellevue and Issaquah.

That reflects increased interest among renters in living near employment hubs.

Meanwhile, apartment complex sales have slowed as the credit crunch takes a bite out of investment. Sales are down 29 percent during the past 12 months. The median price paid per unit increased 6 percent to $123,100 per unit as investors stuck to higher quality apartment complexes. | 206.876.5426