Housing inventory has been tight in our area for years, with a significant portion of residents in King and Snohomish counties renting rather than owning their homes. Affordability plays an important role as well, with many renters simply priced out of the markets in which they would otherwise buy. That being said, the rental market is intrinsically connected to the housing market as a whole. Many renters eventually become homebuyers, and the juxtaposition of rental rates versus mortgage rates certainly factors into those decisions.
With that in mind, this update on recent patterns in the rental market may provide some insight as to our local housing market trends.
Since the pandemic, Seattle has seen a 12% increase in rents and a 2.5% drop in vacancies. This is a strong recovery, especially after 2020 vacancies in apartment units increased by 11.5%. As of Q2 2023, the city had an average rent of $1,532 in smaller apartment buildings between 5 and 50 units, and $2,258 in buildings with more than 50 units. In the smaller buildings, the average rent per square foot was $2.44, and they had a 6% vacancy rate. Larger buildings were renting for $3.29 per square foot, with a slightly higher 7.6% vacancy rate. With inflation a constant issue over the last few years, it’s not surprising that newer and larger buildings had a slightly higher vacancy rate.
East King County, spanning from Bellevue up to Woodinville and east to North Bend, had a similar pattern. The average vacancy in smaller apartment buildings was 5.1% last quarter, and larger buildings had a higher 5.8% vacancy rate. The average rent was $1,967 in smaller buildings, and $2,443 in 50+ unit buildings. The rent per square foot was actually cheaper than Seattle, coming out to $2.09 for small buildings and $2.74 in larger buildings.
Snohomish County had the cheapest rents per square foot overall, at just $1.57 for small buildings and $2.26 in larger apartment buildings. Vacancies were slightly higher in the area, with smaller buildings running a 5.3% vacancy rate and larger buildings at 6.8%. This may also be a contributing factor to the lower average rents in the area, at $1,360 for buildings with between 5-50 units, and $1,971 in larger buildings.
With interest rates still somewhat volatile, it seems likely that many would-be buyers will hold off on purchasing for now. However, as rates stabilize and renters are able to compare the price of rent versus a monthly mortgage, there may be an uptick in renters becoming first-time homebuyers. Until then, the rental market remains strong.
