Apartment Dwellers Staying Put?

It’s harder than it used to be to buy a house. Banks have reverted to their conservative ways when determining who they will trust to pay their bills on time, and the cost of other important consumer commodities Americans spend their money on (of course gas, but also food like eggs and milk) has gone up. If you do have good credit and solid income, your buying power is still less than it was.

And just yesterday I read that vacancy is down and rents are up in the Seattle area. In short, downtown Seattle rent is up nearly 8% (to $1,350 from $1,253) and vacancy is down to 3.2% from 5.3%. For the broader area including King, Snohomish, and Pierce counties the numbers are similar: rent is up 7% to $981 and vacancy is down to 4.5% from 5.2%. Apartments are more expensive and harder to find around Seattle.

This isn’t conclusive evidence, of course, that the first situation above caused the second. Maybe there has been a recent hiring boom of out-of-towners who are eating up apartments. Or perhaps these are people who are in between homes waiting for their new house to be built or vacated. But I do wonder to what degree the housing problems have driven would-be homeowners back into apartment life–or foreclosures have sent them there. It could be that people who are in apartments and hope to make the leap to home ownership have decided to stay for the time being.

  • http://www.teamreba.com/C_home.php Michael P Lindekugel

    During the housing boom, cheap capital or loans made it possible for more people to buy. That demand coupled with low supply created price pressures and an increasingly unaffordable housing market.

    Some developers began to build less expensive housing such as town houses and condos. Some builders chose to capitalize on condo conversions. The return on capital for a condo conversion was higher than the return on capital for maintaining a rental asset and higher for building condos. As a result +5000 apartment units were converted to condos. That had a huge impact on the rental supply.

    After years of higher vacancy rent rate stagnation, the rental market changed. The housing market was booming to a point that ownership was not possible even with the cheap credit. The rental boom is experience very low vacancy and very high rent. With the housing slow down some condos are reverting to apartments because the tide has turned. The return capital for apartments is higher than condo development. There is still a rental supply shortage. Apartments are being built but not fast enough to have any significant impact on supply to lower rent rates. Housing prices are still too high for renters to buy. Those who bought condos or single family homes zero down, low down, or as investment (bad) can’t rent them for enough to cover the mortgage despite the hot rental market.

    Expect the low vacancy and high rents to continue for a few more years.

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  • unknown

    I think it may be a simple answer: 19-28 year olds are graduating, stabilizing, and staying in the area only to find home ownership an impossible dream.

    Seems some are stubborn enough to stay in the area and rent. Me being one of them…