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Seattle Times worries about apartment boom

The Seattle Times shares some analysis that indicates there may already be signs that demand for a still-increasing supply of apartments around the city will not be strong enough to keep up with the new construction:

After trending mostly down for two years, vacancies at larger complexes in King and Snohomish counties jumped significantly this fall, from 4.74 to 5.25 percent, according to his company’s analysis.

Average rents fell a hair after six consecutive quarterly increases.

It also reports that there are more than 6,000 large apartment projects underway in the region — half of them on Capitol Hill, it seems. 

Times doesn’t get around to saying what the problem with this predicament is. For you and me, we could end up with choice new apartments at lower rents. The risk is that bank lending slows for similar projects and planned projects around the Hill get shut down. For a space where a building is demolished and people and businesses displaced for nothing but economic limbo, that would be bad news. But for other scenarios, not everybody would be sad to see the construction boom slow down.


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Michael
12 years ago

More gets more. This is the treatment for congested roads. The more people who live in the urban core the better the urban core becomes which means then even more will want to live in the core. The places that should be worried are the suburbs. Have you checked out the complete transformation of south lake union in just a couple of years? Stunning.

JayH
12 years ago

As I wander about the Hill looking at these projects under construction I get the sense that a lot of these projects are being built as apartments so the builder can get financing. I expect a whole lot of these units will be converted to condos within 5 years.

Assumption
12 years ago

Condo conversions necessitate there being enough potential buyers with

a. downpayments
b. credit worthiness

during the bubble where conversions were rampant, a and b were thrown out the window.

jfd
jfd
12 years ago

The problem with these new buildings is that they are either broom closets with no ameneties, charging FAR too much than apartments that size have any business charging, or more ‘normal’ sized apartments being WAY overpriced with no ameneties. Landlords need to reality check themselves and bring the cost of a 1 bdrm down from 1450 to 790.

Adam Parast
12 years ago

The Times takes the completely wrong take on this issue. If apartments are overbuilt rents will drop. In an area where people are constantly complaining about high rents, and I personally have had my rent increase, I say “build baby build!!!”. Market forces apply to housing just like they do in any other market. Increase supply above demand and prices drop. I just don’t see how this is a bad thing.

http://seattleslandusecode.wordpress.com/2011/12/26/solve-tr

Adam Parast
12 years ago

Depends on your definition of “far too much”. If your definition is how much you want to pay then yeah, I think most people would love to pay as little as possible. However if your definition of “far too much” is how much people are willing to pay (and do pay now), then you’re wrong.

For landlords their reality check is when they can’t fill a vacancy. If they can fill it at that price then that is their reality check. Only way to reduce prices is to build more housing.

Linda
Linda
12 years ago

These new apartment complexes may seem bright and clean, but give them a few years of wear and tear, and they will become less desirable. People will migrate to other areas, and these areas will become even less desirable. Eventually, maybe 20 to 25 years, they will either need extensive remodel (open rooms up) or be looked at for full replacement. Another problem has been the lack of planning for traffic needs (yes we have light rail coming, but people drive though or to shop), and roads are not being revised to add turn lanes, etc. I think we are looking towards a possible major loss of a once desrable neighborhhod shopping and living area.

AbstractMonkeys
12 years ago

The problem isn’t so much building too much as building too fast. Infrastructure upgrades to support a ton of apartments take a lot of time and money to plan and build, and they aren’t generally obvious to the public. They’ve done it right in SLU, with several years of infrastructure improvements before they started putting up buildings, because Allen plans on holding on to that property for decades.

Most builders just want to put up the building then cash out after a couple years and leave the infrastructure problems to the new owners and the city. That’s a real problem and it’s a lot tougher for city planners when the developers are doing everything in their power to undermine the planning efforts for short term gains.

cheesecake
cheesecake
12 years ago

what infrastructure are you talking about? and what evidence is there that we are building too fast for it?

calhoun
12 years ago

Jfd, just one question: If you owned an apartment building, would you voluntarily reduce the rent, when you know you could rent your apartments at a higher rate?

aaron
12 years ago

i manage a building that i also live in off pine on belmont.

the prop. managers have tried to raise the rent about $200 every time there’s a vacancy. The units sit empty for an average of 41 days before they’re rented, because it takes them three weeks of constant showings to realize they need to lower the rent. Then they lower it maybe $35-$45 dollars, rinse, repeat.

One unit that was vacated at $950 (600 sq ft 1 bedroom with no view of anyhthing) was raised to to $1150, and was vacant for 3 months before finally being rented at $975.

all this to say, they’re not getting the message