Summer Market Report

By William Zimmerman

As your trusted property management partner, Real Property Associates believes in keeping you informed about the latest developments in the Seattle Metro rental market. Here is an overview of the current trends and factors affecting your properties. 

Analysis of the market depends entirely on what data set you use. We used Zillow’s rental data to put this analysis together. Market rent varies wildly based on location, condition, square footage, and other similar factors, and it is not unusual for specific properties to buck the trend. However, this broad data can still give us insight.  Zillow shows that the Seattle rental market has experienced a city-wide drop in rental rates by approximately 3.2% over the past year. Certain neighborhoods, such as Belltown and Downtown Seattle, have seen marginal increases, while West Seattle has faced the most significant decline at around 8%. 

At RPA, we have observed similar trends within our 4500+ door portfolio. Market rents have declined, particularly with studios and micro-studios. The only property type that has shown a year-over-year increase is the 2-bedroom single-family home. This slowdown in market prices has resulted in properties staying on the market for longer periods of time when the asking rent doesn’t match the lower market. We advise dropping the rent if a property is on the market for more than two weeks with no applications. Every month a property is vacant is equivalent to an 8% reduction in annual rent and those months add up.

The RPA portfolio as a whole has experienced a rise in rents between 5% and 8%. This seemingly contradictory data is because rent increases lag behind market rent. This lag is due to notice requirements for rent increases (180 days in Seattle) and term leases that can only be increased when the term ends. As such, this rise in rents in our portfolio is due to under-market properties being brought up to the market at lease renewals. 

We’ve seen a 10% increase in notices to vacate over this time last year. Anecdotally, this increase seems to be primarily tenants finding cheaper rents elsewhere. Other reasons for the increase in move-outs include tenants looking for more space, moving out of the area, or buying their own home. This trend is not unique to RPA, as Seattle recently ranked second in the nation for households considering relocating, with one out of ten residents considering a move. 

As we move forward, it is essential to consider the changing economic landscape. While rental rates have seen slight increases over the past two months due to the usual summer market trends, we anticipate that rents will stabilize as the broader economy and inflation slow down.

Our team remains vigilant, continuously monitoring the market to help you navigate these shifting dynamics. We will continue to adapt our strategies to optimize your investments and maximize returns. Rest assured that we will keep you informed about any further developments in the Seattle Metro rental market. Together, we will secure the success of your investment properties.

Thank you for your continued trust and partnership.

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