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80% more apartment units across Capitol Hill, CD, First Hill since 1998 — Rents climbed nearly 40%

(Image: KUOW)

(Image: KUOW)

That upward curve above shows the ascent of the average rent for a one-bedroom apartment on Capitol Hill in the 16-year period covered by a simple but fascinating neighborhood by neighborhood analysis from KUOW utilizing housing data from analysis firm Dupre+Scott and Seattle’s Office of Housing.

KUOW: Rent Too High? Compare Seattle’s Neighborhoods

We’ve pulled out some of the key numbers from the report about Central Seattle neighborhoods but it’s worth visiting KUOW for a look at changes across the city.

While Capitol Hill’s average rent in the study climbed 38% since 1998, other areas of the city have fared much worse on the affordability front. Ballard, for example, saw a 75% jump in the same period. “Only the Belltown/Downtown/South Lake Union area has a higher average rent,” KUOW reports. KUOW does note, however, that Capitol Hill’s increase is accelerating as it turned in a whopping 12% jump from 2013 to 2014. This May utilizing a much smaller set of data, CHS reported that the median one-bedroom ad listing in Craigslist had climbed to $1,795 per month.

In Central Seattle, some of the most fascinating comparisons in the KUOW report come in the apartment unit count where the Central District saw an explosion of nearly 300%. The Capitol Hill dataset also reflects our explosive growth — but the Hill and Eastlake only turned in a 90% increase in apartment units in the period. Meanwhile, First Hill was one of the most constricted areas for new housing in Seattle with only 33% unit growth in the period. Combined, CHS shows an 80% increase across the First Hill, Capitol Hill, and the Central District since 1998.

There are more coming, of course. 600+ new units are expected to be completed around the Hill in 2015 and more than 700 are forecasted to be ready in both 2016 and 2017. The forecasted total of around 5,500 units would represent a 57% increase from 2014 and a 192% bump from 1998. At that 20-year pace, the neighborhood would have more than 7,000 units by 2035. At the 5-year pace, we’d be looking at 8,500 units by 2035. City 20-year plan analysts say the area could see as many as 6,000 to 8,000 new units during the period.

The KUOW analysis comes as renter rights have become a significant campaign issue with every seat on the City Council up for grabs this election year. Incumbent candidate Kshama Sawant has made rent control based on a rallying cry of her campaign.

How would it work?

In a rent control program, the percent increase in rent would be determined by economic analysis that would include variables such as cost of living, mortgage expenses, prevailing interest rates, borrowing costs, and maintenance costs. Because of this model, rent control would still enable unit owners to keep pace with inflation and maintain housing. What it would prevent is the astronomical rate of returns to big real estate companies (something that small owners rarely receive anyway).

Meanwhile, the affordability committee convened by Mayor Ed Murray seems unlikely to pursue such a bold approach. The Seattle Times reports that the Housing Affordability and Livability Advisory is leaning to solutions like linkage fees in which developers would “choose to pay the fees or build a certain number of affordable-housing units as part of a project.”

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10 thoughts on “80% more apartment units across Capitol Hill, CD, First Hill since 1998 — Rents climbed nearly 40%

    • I’m a little concerned with KUOW’s data. Median listings reported through other sources, at least for Capitol Hill, are higher. I don’t know what kind of stock their averages account for. Did you come across that info anywhere?

      Using that 60% CPI adjustment, the city would still be “unaffordable” to people earning well above the current minimum wage. There’s no proposal on the table for a Seattle policy, but I would hope that such a proposal would account for the existing disporportionality between rent and income, and determine a more affordable, incremental threshold based on that. Also it’s my understanding that SF’s base rent was already much higher than Seattle’s in 1998, so would we have used a 60% CPI anyway in 98?

  1. So new units rent for more, driving up the average.

    ok. but if you don’t build ANY units then what do rents do? go up waaaay more. The new units aren’t inducing demand they are a response to demand.

  2. Rents are going up because of demand not because of new production. New production is simply a response to demand. The one caveat that I have to this is that I have heard that the Chinese investment for visa program is so strong here that some investors are building buildings irrespective of demand, but I think these are outliers. Most companies are building because so many people, particularly millennials that don’t want to own, are moving here year after year. These folks tend to be higher income, especially working in tech, so production caters to them.

    • Demand for what kind of housing? High-end housing that tech workers of today can currently afford while their jobs are based here in the US and skillsets still valued?

      Meanwhile, on Capitol Hill and in the Central District, and further into Rainier Beach and beyond, anyone with a job or career supporting the infrastructures that support these tech workers (from education, to healthcare, to service industry, to social services) are being economically evicted and force to move further and further away from their source of income?

      More demand at all levels does warrant more supply, no doubt. It also warrants sustainable growth in both wage and cost of living that keeps our communities intact.

  3. Over a 16 year period, a 38% increase in average rents is not that bad. Average annual increase over that period would be less than 2.5% per year, given that the YoY compounds on itself over time. That’s not that out of line with CPI. Its almost as if when you let the market meet demand, prices don’t wind up supra-competitive. Unlike markets in San Francisco, where NIMBYs have killed development and average rents are around $3500 a month.

    • Agreed, not that bad actually.

      I’m certainly making a lot more money today than I did 17 years ago. It would be nice to see an overlay showing average wage increases compared to these rents along with other aspects regarding costs of living for comparison.

  4. It seems like rents will go up even faster if the math is based on rise in interest rates. Prime will surely go up and up shortly – a 3% heloc will be back to 6% by the end of next year. Can I pass that along to the rent ?

  5. In a story like this which only address supply I think it would be appropriate to mention that this supply does not meet the demand.

    Yes there is and was and will be an increase in apartments and rent but why should also be mentioned. I would guess it is mostly because of job growth and associated benefits and that is a very good thing.

    http://www.seattle.gov/dpd/cityplanning/populationdemographics/default.htm

    So until the supply meets or exceeds the demand, the rents will remain too high. until we weigh the value of these short waste of space buildings and replace them with taller ones. You can only fit so many people in a space.

    End the bidding wars and create tall buildings with affordable housing.

    Give the people what they want and need. We need more supply according to these stats. http://quickfacts.census.gov/qfd/states/53/5363000.html

  6. Actually, I take back my comment above. After now having time to read the KUOW article, I see that their graph presented rents in real dollar terms. That is, the 1998 rents are expressed in 2014 dollar terms, so the effects of inflation (CPI) have already been accounted for.

    That puts the average 2.5% increase per annum over that period as the increase over and above CPI increases. Real dollar wage growth has been fairly flat for decades for most workers, so that increase in rents in real dollars terms does mean the average Seattle renter is getting hosed.