Average rent for existing apartments in King County rose 6.9 percent over the past 12 months, compared with a 9.3 percent spike a year ago. In Seattle, rent for older apartments gained 3.9 percent over the past year, compared with 8.4 percent a year earlier.
After years of sizzling growth, rents could be headed for a cool-down.
The average one-bedroom rent in King County is $1,350 a month, an increase of 9.4 percent over the past year, according to a new survey of properties with at least 20 units by Dupre+Scott Apartment Advisors. The rate doesn’t include utilities or parking.
But that increase is skewed by a record number of new upscale apartment buildings. When new units are excluded, average rent in King County rose 6.9 percent over the past 12 months, compared with a 9.3 percent spike a year ago.
The slowdown in rent growth for the older units is even more striking in or near downtown where most of the new units are being built: There, rents gained 3.9 percent over the past year, compared with 8.4 percent a year earlier.
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Mike Scott, co-owner of Dupre+Scott, said he expects rent growth will be slower over the next three years and could even turn negative. If developers keep building legions of apartment units, he said, that could extend the cooling-off period after an intense growth period for rents.
That may be cold comfort to residents who’ve already been priced out of Seattle. On Monday, the City Council passed a resolution endorsing a repeal or modification of a 1981 state law that bans cities from regulating rents.
Only about a third of landlords in Dupre+Scott’s semiannual survey expect to raise rents by March, compared with about three-quarters a year ago. And while few properties offer move-in incentives, among those that do, the total amount is growing.
While the City Council heard organized protests against profiteering landlords, Scott says the picture for investors in apartment properties is not pretty over the next decade.
Since 2000, rents have gone up just 2.8 percent compounded annually, while real-estate taxes and utilities have increased 5.4 percent over the same period.
“The problem is that taxes and utilities are eating up more of the total rent,” Scott said.
Investors have been able to cut back other expenses, such as property management, insurance costs and advertising costs, he said, while taxes and utilities seem to rise regardless of the economy.
The Seattle City Council also passed a measure that requires owners of some rentals to provide notice to the city and the Seattle Housing Authority when intending to sell.
The other measure it passed requires rental-property owners to provide tenants with a longer period than currently mandated.
In January, The Seattle Times documented how the rising number of sales of older market-rate properties coincided with substantial rent increases for tenants.
The recent Dupre+Scott survey shows how much rent can vary for a one-bedroom unit.
Rents in Seattle ranged from $1,105 a month in Rainier Valley to $1,948 in downtown Seattle.
On the Eastside, the average one-bedroom rent ranged from $1,247 in Bothell to $1,796 in West Bellevue. In South King County, the average was $935 in Kent and $1,121 in Renton.
SeaTac and Auburn, both in South King County, shared the county’s lowest average rents, at about $830 a month.
The direction in which rents go largely turns on vacancies and job growth. Overall, King County’s vacancy rate is 3.6 percent, tight by historical standards, according to Dupre+Scott.
In Seattle’s major submarkets, the lowest vacancy rates were in Rainier Valley, at 1.4 percent, and Green Lake/Wallingford, at 1.5 percent. Downtown Seattle had the highest vacancy rate — 4.6 percent.
Tom Cain, head of Apartment Insights Washington, said the Edmonds and North Snohomish County were among the best submarkets for landlords because their vacancy rates are under 3 percent.
His firm’s third-quarter survey of apartments with at least 50 units in King and Snohomish counties indicates the overall vacancy rate is 4 percent, virtually the same as the second quarter but lower than a year ago.
The asking rate for new leases in the two counties was $1,451 a unit, up 10.1 percent over the year.
Developers have more than 22,000 units under construction in King and Snohomish counties, the majority of which are in Seattle, Cain said. His firm is tracking a total of nearly 64,000 units at various stages in the pipeline.
And developers don’t seem worried about overbuilding. For example, in a recent filing with Seattle’s planning department, Miami-based Crescent Heights increased the number of proposed units at its two-tower development in Denny Triangle from 780 units to 943.
The rent surveys come as national experts issued a warning to policymakers about the future challenges for renters.
Nationally, the number of households spending more than half of their income on rent is expected to rise at least 11 percent from 11.8 million to 13.1 million by 2025, according to a new report from Harvard’s Joint Center for Housing Studies and Enterprise Community Partners.
The groups most affected: Those over age 50, Hispanics and singles.
Over the next decade, the number of households headed by someone age 65 and over that spend more than half their income on rent is expected to rise by about 40 percent to 2.4 million.
“Given these data, it is critical for policymakers at all levels of government to prioritize the preservation and development of affordable rental housing,” Christopher Herbert, managing director of the Joint Center, said in a statement.