Excerpt from “Market Close-up: Seattle Multifamily Market”

October 23, 2010 in Uncategorized | Comments (0)

From The Linneman Letter, Volume 6, Issue 2 (Summer 2006)

Overview and Economy
The Seattle multifamily market is currently undergoing a rapid recovery driven by the recent economic rebound. The region’s current economic prosperity has spurred a return to a 1.5 percent rate of population growth, the same level as before the economic downturn. With the influx 45,000 new residents annually, occupancy rates are on the rise and apartment rents are following, with overall market improvement expected through the end of the year. 

Employment in the Seattle area is expected to expand by 4.1 percent by year end, continuing the strong 2005 employment growth of 2.8 percent.  At this rate, 52,000 new jobs will be added in the Puget Sound area by year end, with the largest expansion in the professional and business services sector. This employment growth reflects a continuation of trends from 2005, including a resurgence of white collar services, rising demand for office space in downtown Seattle, increased construction, and hires at Boeing to fill a greater demand from airlines.  The Seattle region unemployment rate is currently 4.5 percent, slightly below the national average of 4.7 percent.  This reflects a 30 basis point improvement from the fourth quarter of 2005. 

Even with an improving job market, however, increasing home prices and interest rates are making home ownership a less viable alternative for area residents, who are instead opting to rent apartments.  The median home price has risen 1.5 percent since last year to $325,000, while median household income is $56,000.  Coupled with rising interest rates, these factors have compounded to make homes less affordable, driving the growth of the multifamily market as potential home buyers are choosing to rent apartments instead.

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