(Source: Dupre+Scott Apartment Advisors)
Analysis is one thing but what is the market currently showing? Our latest pull from Craigslist reveals the median rent for this week’s ads is basically unchanged from a month ago. As for the unit mix, 77% of ads in this week’s sample were for 1BR or studio units. (Image: CHS)
Your rent is still going up, but the unrelenting construction on Capitol Hill may soon start to pay off in reducing the rate.
Excluding brand new units, average rent in central Seattle (Between the stadiums and the ship canal, and Puget Sound and Lake Washington) went up just 3.9% over the past year — down from 8.4% a year earlier, according to a September rental market report from analysts Dupre+Scott Apartment Advisors.
While pricey new units push up the overall average rent, new construction is starting to help tenants of older buildings. And the trend could continue. Following a spike of new units coming online in 2014 Capitol Hill is poised to add at least 560 new apartment units in 2015 and more than 1,500 more in the next three years, according to Dupre+Scott. In all likelihood, the number of units added in the coming years will be even higher than projected as Dupre+Scott doesn’t count microhousing, subsidized/nonprofit housing, or buildings that have under 20 units in its report. It’s also worth noting that projections differ from report to report as projects get delayed. In a CHS sample of recent Craigslist ads for Capitol Hill buildings, 28% of units were described as “studios.”
Relief could also be on the way from the demand side: Job growth is expected to slow in the region over the next few years, according an analysis from Conway Pedersen cited in the Dupre+Scott report.
While different data sets reveal different rental landscapes on Capitol Hill, everything still points to faster rising rents than almost anywhere else in the region. According to Dupre+Scott data, average rents on Capitol Hill rose 6.7% since this time last year, putting the typical rent for a 1-bedroom apartment at $1,554 a month.
According to our Craigslist sample, the median rent for a 1-bedroom “Capitol Hill” apartment is down slightly to $1,795 a month. A renter would need to make a pre-tax salary of at least $74,000 a year for that apartment to remain affordable, assuming a 30% affordability threshold. Last year, Seattle had the fastest rising rents among major U.S. cities and rents on Capitol Hill were rising even faster.
In the meantime vacancy rates on Capitol Hill remain low, hovering around 3%. And if the job market continues to rise, all the new construction may still not be enough to meet demand. According to Dupre+Scott, the influx of new residents continues to skyrocket:
The number of people in this region who turned in out-of-state licenses is up 9% in the first eight months of this year compared to the same period in 2014. And it’s up 17% compared to 2013.
In June, Dupre+Scott repositioned their analysis to point out that the recent rent spike was actually part of a less alarming trend. According to the analyst, their dataset shows rents in Seattle went up around 2.3% a year on average since 2000 while owner/investor costs like property taxes and utility expenses rose at higher rates. Rent increases also ebbed and flowed during that time, especially during the Great Recession.
Meanwhile, City Hall is busy trying to figure out how best to meet Mayor Ed Murray’s call to create 20,000 affordable housing units over the next decade. Making developers pay for it is one option. The City Council wants the authority to implement rent control. Another idea recently came out of a little followed race for King County Assessor.
On Tuesday, candidate John Wilson proposed a tax exemption program that would encourage landowners to make their existing units affordable. According to the announcement from Wilson, the Affordable Housing Tax Exemption would not require new construction or rehabilitation, allowing units to come on line much quicker:
Like other exemption programs, County Assessors would continue to value property in the AHTE program at market rates, then apply the tax exemption to provide the property tax benefit to the property owner. Property owners could receive as much as a 60 percent reduction of their property tax obligation for making new or preserving existing affordable housing. Wilson estimated, in Seattle for example, that if 2,000 AHTE units were added annually, it would cost the typical taxpayer about another $10/year in property taxes.
The tax exemption is similar to a recommendation that came out of the Housing Affordability and Livability Agenda report and would require action by the State Legislature.
To all of the Capitol Hill neo-marxist socialist Sawantites, once again the free market proves much more powerful than your backwards ideology.
You can try all you want to use the populist sentiment of the day to advance your sinister agenda, but the capitalist market on which the success of this country is based will never allow you to reign supreme.
My fellow Seattleites, I see a beautiful future without the likes of Sawant ahead of us.
Dude, rent control works. Look how they provide affordable housing in SF and NYC.
Uh, “Dude” — I don’t know about NYC (save for the fact that incredible fraud is committed in order to secure rent control apartments there) but since I am from SF, I KNOW for a fact that it has most assuredly NOT stabilized rents there nor has it created more affordable housing. Do a little research on SRO (Single Room Only) rentals now taking advantage of renters in SF.
If I were a betting man, I’d wager Matt was joking. Then again, Sawant has pointed to SF as a rent control success story, so who knows.
Like so many things, it sounds like a good idea, but the reality is far different.
Crucially, they provide affordable housing to *some*. The lucky few.
Yeah, I rented in SF for years during the dot com boom (I’ve written other posts about this issue). The only thing rent control ever got us was sub-standard living conditions (mold, damp, single-paned windows, no central heating) until the landlord could afford to kick us all out and “remodel” to raise the rent to market rate all over again. As long as ample notice is given, it is well within the landlord’s right. Rent control gets you a slum.
Rent control works, James. It doesn’t matter whether rents go up for new residents — they’re all rich techies who can afford whatever a landlord says. The important part is that the real heroes, the persons who have chosen never to move, will be rewarded for the loyalty they’ve displayed by receiving much smaller rent increases.
Do you understand, James? Rent control is a means to thank existing residents for their intransigence. New residents are unimportant and so they shall be disregarded.
I hope your comment is satirical. But if not, please provide evidence to prove that all new residents are “rich techies.” And do you really think that new residents are “unimportant.” Pretty darn condescending.
More white collar taxpayers does not equal diversity.
Wrong thread, sorry.
“Sinister Agenda?”
Oh. Brother.
Ease off the meth there, Mr. Free-market.
Slavery, poverty, racism, economic inequality, housing instability, redlining, the great depression, the great recession, the savings and loan crisis, eroding retirements and pensions, the prison industrial complex, CHINA, austerity worldwide, the Gulf War, the war in Afghanistan, etc., etc. THANKS CAPITALISM! Too easy James. Try again bruh.
Shocker – supply and demand actually works.
Long-time residents have been forced to leave because of the rising cost and most people can’t afford to live on the hill anymore. It’s not the same diverse, vibrant neighborhood it was 20 years ago or even ten years ago. If this is “supply and demand” at work, there must be a better way to do things.
Having been raised on capitol hill and having lived here for most of my life I can say hands down that it is better now than it has ever been. It is far more diverse now than before…guess what, people with white collar jobs that pay the bulk of our taxes have every right to live here too.
I’ve lived on Capitol Hill/First Hill for 30 years, and it isn’t anything like it once was. Sure, there has to be change, but gentrification doesn’t diversify a neighborhood, just the opposite. It used to be mixed income, white collar and blue collar, popular for young people starting out but also having families and older people. I can live with the change, but it hasn’t been what’s best for the neighborhood. Unless you own property there.
I was referring to the article. Supply is increasing and rents increases are slowing down. We need a hell of a lot more units to really make rent stop rising at craze rate, or less new jobs.
Rents will drop even further once the tech bubble bursts in the next year or so.
Don’t hold your breath.
Amazon and Microsoft aren’t going out of business anytime soon.
Layoffs are inevitable though, unfortunately. Especially for Amazon.
The most important piece of information in the article is the fact that rents have increased modestly, on an average annual basis, since 2000. Policy should be set based on long term trends, not trends reflecting only eighteen months of market information. So why the call for rent control?
Obviously you have zero empathy for those less financial established than yourself. Besides, statistics don’t pay bills.
And other grand assumptions with no basis in fact. Those who lack real ideas slander whenever they are confronted with opposing viewpoints.
And data may not pay bills but it should inform public policy decisions. Sorry if the data does not support your views.
I lived on the hill for almost 20 years. I took advantage of cheap rent during that time, had roommates, and never paid more than $500/month for decent apartments. There was time landlords paid you to sign a lease, and waived deposits, even throw in a tv for free. Did I expect that to last forever? No. I took full advantage it all, lived like a monk and saved. Rent control was unheard of until a couple of years ago. When I saw the canary in the coal mine a few years ago I took that saved money and put a down payment on a rambler fixer in Tukwila. I was getting old and rather live in tukwila than step into the 8 bus again. That bus is more pain than rent. Soon the light rail station will open, all I have to do is jump on it from my hood to eat at Dick’s with yall.
Meat is murder.
“the median rent for a 1-bedroom “Capitol Hill” apartment is down slightly to $1,795 a month.”
Why use this “median rent” nonsense? That gives extra weight to the most expensive units on the market and that’s not useful to anyone! If you’re going to talk about the price of a 1-bedroom, you need to talk about a “typical rent” as in, if a reasonable person doesn’t want to live in a pit or something brand new and super expensive, what does a 1-bedroom cost them?
I’ve been looking at apartments this month and, $1300 gets you something that isn’t awful and $1500 gets you something pretty nice.
Pick your poison. Here are the averages:
1br $1,863
2br $2,474
studio $1,437
Average rent gives an even more skewed picture than median rent. Closer to what CHJ is asking for is the mode, the most frequently occurring number in a given set. But given the large number of new high-end apartments in the current market, that figure might be misleadingly high as well.
Do you know what median means? Half of the sampling is over the median, and half is under. The /average/ might be skewed, but the median is just the middle point. In this case, it’s pretty close to the average.
Yes, I know what median means. Do you know what “not a useful metric” means?
Saying the median rent for a 1 bedroom is $1800 is misleading to readers who don’t have a background in statistics and irrelevant to those of us who do.
Do you want to give people the idea that you can’t live on the hill if you can’t afford to pay $1800 a month? Because that’s what is being expressed by casually referencing the median rent. It’s a shame because it distracts from the useful discussion to be had around the rent increase issue.
For example, the 600 sf 1 bedroom I rented in 2002 for $925 is now renting for $1425, which means rent has increased $38 per year. That’s not crazy, but it would force out someone with an income that has stayed flat.
My friend’s similar apartment, which is in a building run by a huge property management group, was $850 five years ago and now it’s $1495. An increase of $129 per year. An obvious money grab with no consideration for existing tenants or the community.
I love how in so many other forums dealing with affordable housing (they mean affordable RENT not housing for purchase, which actually is supposed to be part of the equation), we see so many entitled comments about needing to build, build, build new affordable units. All the while, the rest of us are telling these folks that the older units ARE affordable and shouldn’t be torn down. Guess now that there’s a media source stating the obvious, they’ll have to re-think earlier comments.