The supply and demand equilibrium has tilted the rental housing market in Seattle’s Puget Sound region into a renter’s market, and this trend is anticipated to continue for the foreseeable future.
According to a recent Seattle Times report, 10.5% of all rental apartments within the city of Seattle are empty — an increase of 9% from a year ago and 7.7% from two years ago.
Similar trends are being experienced region-wide, with the vacancy rate now sitting at 8.6%.
Specific neighbourhoods have seen vacancy rates hovering within the teens. South Lake Union, where Amazon’s presence has particularly been felt, is experiencing an 18% vacancy. Elsewhere in the region, 16% of rental units in Seattle city centre are empty, 13% in First Hill, 11% in Queens Anne-Magnolia, and 12% in Redmond, where Microsoft’s global headquarters are located.
High vacancy rates are being experienced as landlords of older apartments are having difficulty finding renters amidst all the competition from the newly-constructed units.
While the Seattle region is only the 15th largest urban area in the United States in terms of population, it had the fourth-most number of multifamily units approved in 2018 — twice as many units as the larger regions of Chicago or Boston, and a quarter more than the San Francisco region. Permit approval numbers were only higher in New York, Los Angeles, and Dallas.
Given the growing empty inventory, average rental rates for apartments have seen consistent drops, falling 1.4% in the last quarter alone and 2.9% a year ago. Recent listings show landlords have even gone as far as offering prospective renters with USD$2,500 Amazon gift cards and two-months free rent.
But overall, rents are still unaffordable, considering rents skyrocketed by close to 60% from 2010 to 2017, fuelled by the growth of the demand generated by rising tech giants and tech-fuelled spinoff businesses.
Currently, the average asking rents across all home types are now USD$1,924 within Seattle, USD$1,502 in Snohomish County, and USD$1,448 in South King County. Across the entire region, the rent now sits at an average of USD$1,725.
Comparatively, the rental vacancy rate within the city of Vancouver is now hovering at below 1% — far below the renter-landlord healthy range of 3% to 4%.
A lack of supply has also caused rents to soar. As of this month, according to Padmapper’s most recent data, one-bedroom unit rents now average at CAD$2,130 — up 1.4% from the previous month, and up 6.5% from the previous year. Two-bedroom units are now at $3,230, representing a 2.5% increase over the previous month and a 0.9% increase from the previous year.
The impact from recent approvals of new purpose-built rental housing are not expected to be felt until the early 2020s, when these units are scheduled to open.
In 2018, the city saw 12 projects containing 1,364 purpose-built rental units completed.