Last week I was interviewed by Angela King at Q13 about current rental market conditions and it looks like it surfaced this morning- click here for the entire clip!

I am glad the interview came up when it did because our rental market has been severely impacted by the decrease in sales activity and financial crisis.  Hundreds upon hundreds of owners in the Seattle area have recently taken their condos and homes off the sales market and placed them into the rental pool in hopes of benefiting from our “stellar” rental market…but only to find out they are about 4-5 months too late.

Every Monday morning, SRG agents get together to discuss market trends/experiences and for the past 3 months, we have all been feeling the pressure of an oversupply, decrease in demand, and the dreaded reduction in rental rates.  I personally started to feel this crunch in August when there were a couple properties that just wouldn’t move- properties that would have leased for $2500 months prior (and in mere weeks) were below $2000 and still sitting.

Here are a couple issues that come up during our discussions, please feel free to comment or contact me with questions.

Tightened Pocketbooks: Due to the financial strain and economic state, renters have definitely been paying more attention to their bottomline and planning for the worst.  The most common scenario is that people are trying to consolidate and downsize in order to rent a 1 bedroom + den instead of needing a 2 bedroom or a townhouse instead of a home.  Renters are more price sensitive than ever and in some cases lower rental rates are the motivating factor rather than quality of building or home finishes- could come down to a difference of $50!

Apartments vs Condos/Homes: We have two rental markets- the private market with individually owned condos and homes, and the apartment rental market.

One of the challenges the private market has in competing with the larger apartment buildings is the ability to offer specials like “1-2 Months FREE” or “waived security deposits.”  Private landlords have the flexibility to reduce the rental rates to compensate tenants for such specials but in no way should reduce standard security deposits as they take on more liability when renting their property.

Some advantages the private market has is that the monthly rental amount often includes utilities, parking and additional storage.  These items are covered in HOA dues and therefore passed down to the tenant in a lump sum or included in the monthly rental amount.  This is easily missed by renters when searching so be sure to clarify what is included!

Note: Over 6600 apartment units are supposed to come on the market in 2009 and even more in 2010- just one of the many items discussed at the IREM Forecast Breakfast last Friday.  One of the better Forecast Breakfasts I have attended!

Where Are All the Renters? What we could be experiencing right now is an extreme case of the cyclical blues in combination with all the above.  We are approaching the dead of winter and typically Spring and Summer are the most common months for moving- so lets just hope that activity bursts in March!  We are seeing signs of this and have been getting a lot of inquiries for Feb/March move-ins…just hoping that the properties available NOW, don’t have to wait that long.

So in short, we are advising all of our clients to be market sensitive and price aggressive.  Renters have been starting their searches a lot earlier than in the past (1-3 month prior to their desired move-in) and rental rate negotiations are occurring left and right.

I hate to be a total pessimist so I will depart on this note… although this all may sound grim, relative to other markets, Seattle is still amongst the top in the nation!

Tom Cain of Cain Inc. recently reported that the average vacancy rate for properties of 50 units or more in the King and Snohomish counties are currently sitting at 4.44%- just a slight drop from last year.

The lowest vacancy rate found in both counties was in Seattle’s First Hill neighborhood at 2.6%. This could be attributed to the new hirings at Swedish Medical Center, the limited availability of newer apartment buildings, very convenient access to the downtown core/freeways and reasonable rental rates.

Cain also sited over 7,613 new apartments are under construction, 3,124 of which are located in Seattle- a 32% increase over the last quarter!

Click here to read more.

RHA ……..Call to Action……..
December 14, 2007

UPDATE: Inspections in Seattle
Dear RHA Member,

The Seattle City Council’s, Urban Development and Planning Committee voted to unanimously support Resolution 31031, allowing for a study to analyze and recommend implementation strategies for a Seattle Rental housing inspection program. The rental housing industry is not a proponent of any type of rental housing inspection program.

We urge you to contact your Seattle City Councilmembers to voice your opposition and request the following amendments to Resolution 31031.

1. A task force be created that would structure the scope of the study and review and comment on the findings of the city’s inspection consultant. This task force should include representatives from the rental housing industry.

2. That the study also review and comment on the existing law and other models to include those:

- That target rental housing that is known to be substandard;
- Regarding boarding room housing;
- That strengthen the existing complaint-based system;
- Improve the ability of the City to enforce its retaliation ordinances;
- That educates tenants on their rights and responsibilities.

If the City of Seattle chooses to move forward with a study we hope the city of Seattle will make the stakeholders part of the process.

This will go to the full council on Monday, December 17, 2 p.m. at City Hall. You are welcome to attend this meeting.

It looks like I did miss some exciting news while I was away?

NEWS
Seattle-based REIT, The Schuster Group, launched a $100 million private real estate investment fund called Schuster Realty that will focus on the Seattle area.

Zillow.com signed a real estate advertising deal with 282 U.S. newspapers through 11 major publishers

CONDOS
The Cosmopolitan Community Committee wrote a letter to Mayor Nickels

Mosler Lofts will get certificate of occupancy on the 16th of November

The Parc now has two model homes and a 360 degree tour of the units, lobby and homeowner?s lounge on their website- check it out!

Ben Kakimoto?s update for Seattle condo sales performances in October

EVENTS
IREM?s 22nd Annual Forecast Breakfast (11/29, 7:30-9:30am, Meydenbauer Center) - I really enjoyed last year?s breakfast so I will be attending again this year. Martin Selig, Mayor Degginger, Mike Scott, John Curley and Jamie Moyer are a few of the speakers this year, click here to reserve your spot!

23rd Annual TRENDS Rental Housing Management Conference and Trade Show (12/11, all day, Convention Center) - This year we are not sponsoring a booth but I will still be volunteering and attending seminars throughout the day. AGENTS: You can earn clock hours! Click here for more information.

According to the Dupre+Scott Apartment Vacancy Report, Seattle?s apartment rates have jumped 12.2%? the highest annual increase anywhere in central Puget Sound. The Eastside wasn?t too far behind at a 10% annual increase.

Vacancy rates aren?t the lowest ever but are sitting at 3.8% for King County and are as low as 2.6% from the Ship Canal up to the county border- FYI ? 5% is considered a balanced market but anything above would be considered a Renter?s Market. (Click here to read more)

A lot of the condos and homes I leased last year are being rented this year for $75-$200 more per month. There are still some neighborhoods and property types that are not experiencing quite the increase but for the most part I think that the private rental market will follow the overall trend.

As we go into the ?slowest? time of the year for real estate in general, I have a feeling that we might all be surprised at how sustainable the rental market will be- I leased 15 properties in September alone!

Typically you don?t see this issue come up in the condominiums downtown but it never hurts to educate yourself!

For all those landlords who are curious about Section 8, there will be a workshop on Wednesday, July 25th from 8am-4:30pm held in Ballard (907 NW Ballard Way, Suite 200). It costs $25 per person to attend which includes manuals, handouts, breakfast and lunch.

Topics, I must say are a bit discouraging, but will touch on screening, lease agreements, Section 8 complications and evicting. Workshop contributors include representatives from the Seattle Housing Authority, Rental Housing Authority of Puget Sound, Seattle Police Department and Seattle Neighborhood Group.

To register or to get more information contact Lois Grammon-Simpson at (206) 323-3150 or email lois@sngi.org.

But if you don?t pay your rent on time, Landlord Pearl may visit you!

This afternoon I was interviewed by Rachel Belle with KIRO News Radio. The interview was primarily aimed at the rental market and what we (being investors/landlords and renters) should expect from this point forward. It will be airing tomorrow morning if you are interested in listening.

As I have said before, summer is our busiest time of year and the market is expected to tighten as we head into June. I have had several people inquire about my listings for July and August move-ins (listings that are unfortunately available NOW), but I anticipate July is going to be the most competitive month for finding that perfect apartment or condominium.

We are finally starting to see more and more new employees coming through the corporate channels- which is typical for May and June. This will bring in new BUYERS and RENTERS to the playing field as well.

Rental rates ARE increasing but I advise those landlords who are approaching the end of their lease terms not to overzealously increase rental amounts. If you take advantage of your current tenants you could risk loosing a month of rental income plus time and money spent on marketing. Even a vacancy of a week or two can potentially set you back!

In glancing over my listings…I am down to 2 Live2200 units! The rental market has settled a bit but I still see 37 units listed for sale on the MLS. (Aria- 4, Azur- 9, Arte- 24)

The spotlight has now shifted to The Cosmopolitan. Honestly, it is getting a little out of hand with the differences in pricing, the number of units for sale/rent and the competition- the games have just started! Tomorrow I will be listing 3 more condos in the Cosmo including a penthouse (that is absolutely phenomenal) so I will have 6 total units for lease. There are currently 64 condos listed for sale on the MLS!

Obviously these buildings affect the downtown/Belltown market (as well as the owners trying to rent/sale their units) but given the forecast ahead I think everything will even out during the summer months.

Please feel free to email me with any questions or leave comments if you would like to add anything to the topic.

I was indeed on the news last night…I missed it, but they have it posted on Komotv.com if you are curious!

Yes, rental prices have increased over the past year. Last year I rented a studio in Belltown for $975 and this year it rented for $1095- in just 4 days! I have noticed that those vacancies priced around the $1000-$1200 range have been renting the quickest, while one bedrooms in the $1600-$2000 stay on the market for just a bit longer. A year ago, higher-end 2 bedrooms in the $3000+ range were on the market for nearly two months, but this year I have experienced them going as quickly as 1 week and have rented unseen!

The average rental price increase in the downtown area has been affected by the new condominium projects- higher quality, higher rents. Most importantly, our typical renter is not so typical anymore. Over the past year, I have noticed that there are a lot more people selling their homes and moving downtown with the plans of renting for a couple years. Some have already purchased condominiums and are just waiting for their buildings to be completed. Not to mention that the local corporations have continued to hire new employees and relocate many of their executives to the area. The typical renters in the downtown area are more than willing to pay a bit extra for the location, building amenities and finish level.

As we get closer to summer, the market is expected to tighten up a bit, making it even harder to find that perfect place!