Marc Stiles reported in a recent Puget Sound Business Journal feature that “More than a fifth of renters in Seattle could afford to buy houses,” a fact that is contributing to the seemingly ever-rising cost to rent in Seattle.
Seattle’s rent is currently growing faster than any other city in the U.S., this according to the Seattle Times as June 2015 vs. June 2016 rent comparisons revealed a staggering 9.7% increase. What’s more, “rents are soaring so fast that June’s 1.1 percent monthly price gain in the Seattle area beat out the growth that Chicago and Washington, D.C., have seen in an entire year.”
As Stiles says, “there are various reasons why apartment rents are soaring in the Puget Sound region, and an overlooked one is that Seattle has a relatively high number of renters who could buy but are not necessarily looking to do so.” This statistic, as the article outlines, puts “Seattle fifth on a new Zillow list of markets with the highest share of renters who are qualified to buy.” And when these potential buyers choose to rent, it “increases competition for apartments,” which drives rents up, “hurting lower-income households the most.”
So why are qualified potential homeowners choosing to rent? The Puget Sound Business Journal points to low inventory and increasing home prices, but looking to the booming “Silicon Forest” in Seattle also provides some insight.
“The reality is that much of the demand for apartments in Seattle comes from newly transferred job seekers that prefer to rent for a few years before deciding to buy,” said Dean Jones, President & CEO of Realogics Sotheby’s International Realty. “They want to be comfortable in their new city and ensure the job is sustainable before making larger commitments. The result is that these downtown apartment towers where qualified homebuyers currently rent act as incubators for future condominium demand.”
A graph recently released by JLL reveals that millennials are drawn to Seattle for the abundant job prospects, relative affordability compared to other markets, and no state income tax, a vastly different climate than found in an area such as San Francisco. This allure is one of the factors contributing to Seattle’s fastest growing rents and second fastest growing median home prices.
While there are many potential buyers currently renting, those who do choose to leverage current market conditions are facing steep competition, as new condominium development projects slowed following the 2007 economic downturn. When the opportunity to reserve or purchase an in-city condo arises, consumers are jumping at the opportunity as NEXUS Condominiums, which will be delivered in 2019, are over 80% reserved.
There is still an opportunity to secure a home at NEXUS, and Michael Cannon, Director of Sales, welcomes all current and prospective homebuyers to visit the interim Preview Center at 2715 1st Avenue in Seattle for more information.