Apartment Rental Rate Hikes Expected in 2009

Andrew Patterson - Associate Finance Officer, Seattle

A recent article in the Puget Sound Business Journal highlights a third quarter apartment market report from Marcus & Millichap with predictions of Seattle area apartment rents rising among the highest in the nation in 2009, by almost 6%. The article notes the Puget Sound area’s solid real estate fundamentals coupled with a long-term population growth outlook as key drivers to the region’s booming apartment market. The report projects that the area will add about 3,500 new units in 2009, representing a 66% increase over the previous 5-year average. As the median home price in King County softened to $392,000 in October, the average family income is still short of what is needed to afford a monthly mortgage payment, making apartment rental a viable option.

Although apartment sales have slowed by almost 30% in 2008, financing is still available at attractive rates and loan proceeds. Apartments continue to be the "property of choice" for the active lenders.