Ever since the pandemic-era moratoria on increasing rents lifted, renters across the country have been feeling the impact on their wallets. Combined with more recent pressures caused by inflation, some renters are finding it harder to justify staying in the rental market when a regular mortgage could offer them some security against fluctuating prices.
While this is a national occurrence, renters in the Seattle area saw prices increase for the seventh month in a row in September. Part of this is due to steps being taken by the Federal Reserve to prevent inflation levels from rising even higher. By maintaining high interest rates, the Fed strives to push down buyer demand, thus stemming inflationary pressures on the market.
Since rents tend to make up anywhere from 30-40% of household budgets (or even more in some cases), they are a key measure of inflation. Additionally, rent or other housing costs are non-negotiable, which according to the Seattle Times means “the cost of shelter tends to be one of the most-persistent, least-volatile components, which means it rarely — if ever — ends up getting filtered out” during periods of higher inflation.
Additionally, rental inflation is “high now in part due to a strong economy — historically, rents and wages have been tightly linked, and average hourly earnings have been rising,” according to the Seattle Times.
Recent increases in wages notwithstanding, Seattle Met writes that “since March 2020, when the onset of the pandemic caused prices to plunge, rents are up 17 percent” in Seattle. Since September 2021, the city experienced a 5.8% increase year-over-year. Currently, the median rent for a one-bedroom apartment is $1,720, and two-bedrooms are going for $2,080. That being said, the increase from August to September was only .7%, suggesting that things may be cooling off slightly.
Bellevue also mirrored this, with rents actually decreasing by 1.1% since August. However, the city still saw a hefty 10.7% increase year-over-year, with the median rent for a one-bedroom surpassing that of two-bedrooms in Seattle at $2,170. Two-bedrooms in Bellevue are going for a pricey $2,420.
Within the greater Puget Sound area, Redmond saw the greatest increase year-over-year, with an increase of 15%. The median rent for one-bedrooms is $2,200 and the median rent for two-bedrooms is currently an eye-watering $2,500.
Since most tenants don’t move every year and in many cases rents can only be increased when a lease is up, it’s likely that rental inflation will lag behind other sectors of the economy, meaning we may still see these median rents increase, albeit more slowly. For those who can afford it, taking the plunge into home ownership is a strategic hedge against future inflation. Once an interest rate is locked in, the monthly payment will not fluctuate, even if the economy does.