The good news is that Seattle is adding thousands of new apartment units in record numbers. It’s a Seattle rental boom. The bad news, however, is that many people won’t be able to afford them.
That's the assessment of Seattle Times reporter Mike Rosenberg who has been reporting on the city's rental and housing markets. Recently, he reported on the Seattle rental boom that is only getting bigger. And 2017 will be a year that will shatter apartment construction records.
“Seattle’s on pace to have more apartments built this decade than the previous 50 years combined,” Rosenberg told Seattle’s Morning News. “Most of those units haven’t opened yet – 2017 is going to be a record year for apartment construction and that’s after we just had four straight record years. Except, this time it’s going to be twice as many units opening than we’ve seen in any other year in the city’s history.”
Related: What are they building?
“Historically, the city sees 1,000 or so units pop up each year,” he said. “And the last few years we’ve seen about 5,000. So there’s definitely been a boom. What we are seeing now though is the demand has just been so intense that rents have gone up so much anyway. The number of units needs to continue to increase for the rents to go down.”
A downside to the Seattle rental boom
The shortage of housing — available houses and apartments — in Seattle has been low. But people keep moving to town, driving up demand for housing. In turn, that has caused rents to shoot so high they’re out of reach for many. Seattle has raced to develop more apartments in recent years. And in 2017, there will be about 10,000 new apartment units coming available. There will be another 12,000-13,000 units in 2018.
The hope is that with so many new apartments, rents will go down as demand decreases. Rosenberg, however, warns against hoping too much. For starters, a vast majority of new units will be luxury apartments.
“That’s a big problem,” he said. “If you’re a middle-class renter looking for a typical apartment, or in a lower income bracket, these new apartments are not going to be something you can afford to rent.”
“In theory, these apartments lift people who are in the upper class out of those typical apartments and reduce competition for regular renters,” Rosenberg said. “But realistically, there’s not a lot of that which happens. You need to wait for the apartments to get older to become more affordable and outdated, that sort of thing. That can take decades.”
“For rents for middle-class renters to go down, it might take a while,” he added.
Another issue is that Seattle is currently experiencing an economic boom, which is attracting more and more people to move to the area. The same people contributing to the increased demand for housing.
“When you have an economic boom like we are having locally, there’s not a ton you can do (about housing),” Rosenberg said. “When you have one company like Amazon hiring thousands or tens of thousands of new workers, that more than balances out the thousands of new apartments coming in.”
So demand will likely stay high, even amid a Seattle rental boom.
An upside, however, is that rents could settle or even decrease slightly because of the new units. Rosenberg points to cities such as New York, Boston or Houston which added more units in recent years. That quelled much of their rising rent problems — some even went down. Contrast that to cities like San Francisco which stopped building new units and has seen rents skyrocket.
Rosenberg also points out that apartments are essentially what Seattle is building. There aren’t many new single-family houses being built, which is an entirely different market. That makes demand for those homes extremely high. In fact, Seattle is the hottest real estate market in the country. That prompted the question on Seattle Morning News: Is the American dream of owning a home possible for many people in Seattle?
“It is still a dream, I think it’s a matter if you can achieve that dream,” Rosenberg said.
It's a dream. But as many Millennials are finding out, for example, they are increasingly less likely to make as much money as their parents. More specifically, it's about a 50/50 shot that a millennial will do as well, or better than their parents.
Cox Media Group