Could Rent Control be coming to Seattle?

According to the National Association of REALTORS®, over the last five years in the Seattle Metro area, rents have increased a whopping 22.26% between whereas wages for 25-44 year olds (which comprise a good number of renters) only increased 15.3%. This time period reviewed was quarter 3 2009 to quarter 3 2014 for the rents whereas wages were reviewed 2009-2014. According to Dupre+Scott Apartment Advisors, that number is even more staggering when looking only at Seattle and since spring of 2013 – 18% higher.

This disparity along with comparisons to tech-driven job markets such as San Francisco have many wondering if Seattle could be the next city to jump on the rent control bandwagon.

According to the Puget Sound Business Journal, there was a town meeting at City Hall on April 23rd to discuss this hot topic and Mayor Ed Murray has even created a housing affordability task force to tackle the problem. The hurdle is a big one – rent control is currently illegal in Washington State.

Seattle Magazine reports that renters make up 52% of Seattle’s population, so the effects of such a law – or not passing a law – will be felt by the majority of Seattle’s residents. With the average market rent for a one bedroom, one bathroom apartment in the city of Seattle going for $1,445 per month, there are a number of renters and would-be renters who are going to have to start finding housing further away from the city center.

People for rent control point to issues like transportation that become a bigger challenge when workers cannot afford to live near where they work and have to commute in. However, those who oppose it indicate that rent control will hamper development and reinvestment in the buildings that may be in need of updating.

Whether you are a proponent of rent control or not, this debate and rent increases are driving some to turn to home ownership, even with the inventory shortages that challenging the real estate market.

However, the economics of it make sense. If you are paying $3,000 per month for a three bedroom apartment in Capitol Hill and you can buy a 3 bedroom home in Wallingford for $600,000 (even taking into account multiple offers driving up the price from $500,000 to $600,000), depending on your down payment, that mortgage and principle may only come to $2,300 per month. Add taxes and insurance on there and you might be at $2,800 per month.  Remember, this is just an estimation, and prices vary, but if you are pounding your fist, hoping rent control is passed before your landlord decides to raise the rent again, you owe it to yourself to take a look at home ownership.

And remember! If you have a 30 year fixed rate mortgage, your monthly mortgage payment is your monthly mortgage payment – next year and 25 years down the road. Furthermore, you are building equity which could mean money in your pocket when you are ready to sell. Try doing that while renting!

I would be happy to give you additional information on how to make your housing dollars go further. Give me a call: (206) 226-5300 or send an email to:!

Seattle’s Tech Employers May Be Contributing to Home Buying Frenzy

I am sure by now you are aware of the home buying frenzy that is happening in Seattle right now. Your neighbor may have sold their home with 10 or more multiple offers with the final sales price 15% above what was asked for it. Buyers who need or want to buy have to be prepared to be very competitive with their offers if they want the house.

But why? What is leading this home buying frenzy?

Real estate is a supply and demand-driven market. When there is an abundance of supply (such as at the low point of the recession) with low demand, prices have to come down to the point where people will buy those homes. However, the market that we are seeing right now is driven by very high demand and historically low supply – both of these factors are hard at work.

In the two graphs below, I show inventory of residential homes (in gold) and the number of homes under contract, known as pendings (in black) for each March going back 10 years with the line being the median number of homes available. You can see that our supply is well below even what it was at the height of the last fast market in 2004-2006:


The current demand can be contributed to many factors, one being the increase in population in the Seattle area. Technology companies such as Amazon have gone on a big hiring spree in the last few years, encouraging workers to move here. Many of these employees are young and prefer to live in hip downtown areas (such as South Lake Union, Capitol Hill, Queen Anne, Beacon Hill, etc). In fact, The CoStar Group which provides commercial real estate information indicated in a special report, “Amazon Remaking Seattle in Its Own Image”, between 2000-2012 Seattle’s downtown population increased by more than 26% as compared to Seattle as a whole (17%) with the 25-44 age group dominating that growth.

Because there is a shortage of rental spaces in the urban centers, the price for rentals has increased, leaving many looking at buying their own home as a solution.  Since a percentage of these renters are becoming property purchasers, this has been one of the recent drivers of demand.

According to the Seattle PI, Amazon has amassed 3.4 million square feet of office space and employs 18,000 workers locally. The CoStar Group indicates that in the next few years, Amazon may hire 22,000 additional workers and hold 8 million square feet of office space.

Amazon is certainly not the only big employer in the area and not the only tech company in town. However, as long as there continues to be growth in these industries in the Seattle area, there will be a demand for housing that needs to be met.