Seattle rents rising…. we’re in the top 10 nationally for increases July 28, 2007
The anecdotal evidence is out there when we have relocating singles, couples and families contacting us for help in finding a short term rental to stay in as they come to the Emerald City for a new job, school, or otherwise. Some of these folks are also looking for a 1-year lease because they believe they’ll want to get to know the area for a while and then purchase. Most of the time when we ask what the maximum rent is that they’ll pay we get an amount that makes us wince a little bit and think, “you won’t get the size place you want for that much around here.” That’s mostly due to relocaters not yet having done the full research of the difference in cost of living from where they are coming from to the Seattle and surrounding market. You can find online resources such as Bankrate.com and Moving.com. There are lots more if you do a search online using search terms like “cost of living comparison for cities”.
Sure, they may have visited on vacation before, but back then they weren’t checking out housing prices for either buying or renting. You can see the article where Seattle ranks in the top 10 nationally for rent increases here.
I had a similar experience when I moved here back at the end of 1989. My boyfriend at the time and I moved from Wichita, KS to Renton where we’d lived in a nice little one-story post-war 2 bedroom, 1 bath house. Since he had an engineer’s salary at Boeing we were hoping that when we got to Seattle we would buy a place within a year or so. Sad for us though that we moved at a time when Seattle was going through a boom year in real estate that blew that idea out of the water after we started house hunting. I was just starting my career at the time and was managing a small family owned chain of children’s furniture stores (where I cut my teeth on “staging” with all the furniture merchandising we had to do). It took another 5 years before I was in a position to buy a house here and by that time I had a new boyfriend and was on a new career path that covered sales into manufacturing and technology firms.
If you’re considering relocating to our area you might start with research related to your new job. You can find data on salary ranges for various professions at Salary.com. There is also a city comparison for cost of living here as well.
- Posted in : General Real Estate
- Author : Reba Haas
Comments
Ironically, spikes in rental rates is often an indicator that the broader real-estate market is about to face a significant decline. Places like Phoenix, Las Vegas, San Diego, and Miami all saw their rents rise just as their real-estate markets reached their peak and were about to decline.
The reason for this phenomena are simple. When real-estate markets are healthily appreciating the number of renters decrease as more and more people decide to buy and participate in the boom (i.e. no one wants to be priced out forever). The decline in renters actually leads to drop in rents.
All this changes when a given real-estate market peaks, and increasing numbers of people decide that prices are too high for purchasing and decide to rent instead. Also, the trend to condo conversions (which also takes place at market peaks) takes rental inventory off the market further tightening rental supply.
In other words: rents rise when increasing numbers of people decide (or can’t) buy their own homes.
The good news is that history in other previous hot markets shows that rents start declining a year or so after they spike. Many of the speculators buying converted condos wind up having to put them on the rental market when they can’t find buyers.
What synthetik mentions above seems to be borne out by a quick study of the data.
It also seems worth mentioning that there is a temporary reduction in inventory in the rental market right now, due in no small part to the condo-conversion mania that went on over the last couple years in some established neighborhoods. Finding a nice place got slightly more competitive over the summer, and should continue into early fall.
However, it looks like a fair number of these condo conversions were being bought by speculators, and I haven’t seen any recent data that points to whether that trend is decelerating in response to recent economic realities. My ‘anecdotal’ experience as well as my feeling is that a number of these are due to end up back on the rental market.
Some of the condo conversions that got started late into the party might not complete. It appears that Seattle rental inventory, while still pretty healthy, will bounce back up with the supply of condominiums and large multi-unit buildings that are under construction right now.
I don’t do rentals much. The only one I did recently for someone relocating from DC was a rental of a condo conversion, as you mention.
Odd thing was the building across the street, identical but not converted, had not reduced their rent prices to compete with the gutted and remodeled other building. Not at that time anyway.
The were originally one rental complex on either side of the street at Central and 1st in Kirkland. Given they were the same at time of construction, I would have expected the remodeled unit to be more expensive to rent, but it wasn’t. They are pretty pricey, so maybe there’s no room to go up for the remodeled one, and the original condition building isn’t getting enough pressure to push their pricing down overall.
On the other hand, the conversions back near the post office had rents skyrocket from pre-conversion to post conversion. But that was because they were cheap as dirt to rent, for close to Downtown Kirkland, before the conversion. The sad part of those conversions is that many were not only forced out of their units, but completely out of Downtown Kirkland as well. After some conversions, the renters can just move down the street. But those caused people to lose lifestyle and home both.
Anecdotally: My sister in the bay area can confirm this sniglet’s theory. She was looking for a rental last year, but the market was really tight. They got really lucky though and found a really big house for dirt cheap. Fast forward to today where she says that there a lot more choices on the rental market. This coincides with home prices beginning to drop in the area.