Ten Days of Buzz: August 17-26, 2013

Ten Days of Buzz - Rental Market News from SeattleRentals.com

“The 7½- story project at 2217 Third Ave. will be done in just seven months. That’s about half the time it would take to construct a building of this size using conventional construction methods.”

Marc Stiles, journalist. Here’s how to build a 7½-story building in 7 months, Puget Sound Business Journal, 8/17/13.

“U.S. developers broke ground on new homes at a faster pace in July. But the rise was all due to apartment construction, which is typically volatile. By contrast, builders began work on fewer single-family homes.”

Christopher Rugaber of the AP. Apartments drive up U.S. homebuilding increase in July, CPA Practice Advisor, 8/19/13.

“When the survey questioned tenants who lived in apartment units without a smoke-free policy, 85 percent of those tenants were in favor of their landlords adopting a smoke-free policy.”

Journalist Sara Rehmer. Smoke-free housing avoids the dangers of secondhand smoke, Billings Gazette, 8/20/13.

“The generative idea is that a plant-rich setting has restorative qualities that are not found in the typical office.”

A new Amazon report. Amazon updates look of proposed spheres, The Seattle P.I., 8/21/13.

“The number of renter households continues to grow, increasing by 1.1 million last year (as well as a net loss of 161,000 homeowners), leading to a second-straight year of double-digit increases in multifamily construction.”

UNITS journalists. Harvard’s State of the Nation’s Housing: What to Know, from the August edition of the NAA’s UNITS magazine, 8/13. Look for our full recap on Harvard’s 2013 State of the Nation’s Housing soon on the blog!

“We really started seeing the shift in the past 10 years with people working from home and doing a lot more traveling. Buildings are being built with a lot more services or amenities.”

Leslie Piper of Realtor.com. Rental apartment amenities go ultraluxury, MarketWatch.com, 8/22/13.

“What we’re starting to see now is that construction costs are starting to really hit apartment builders even though there’s a lot of demand; workers know they can charge more. But it’s such a cyclical business.”

Brendan Coleman of Walker & Dunlop. Multifamily construction pushes housing starts, HousingWire.com, 8/23/13.

“It’s almost a perfect storm, and we haven’t seen any change in weather on the horizon.”

Billy Pettit of Pillar Properties. Soaring rents force lifestyle changes, Seattle Times, 8/24/13.

“The monthly city by city data show the pace of price increases is moderating. With interest rates rising to almost 4.6 percent, home buyers may be discouraged and sharp increases may be dampened.”

David Blitzer of S&P Dow Jones Indices. Home price increases may be moderating in Seattle, nationwide, Puget Sound Business Journal, 8/26/13.


Trend Alert: What Student Renters Want

Trend Alert - SeattleRentals.com reports on the latest trends in the rental marketWelcome to our newest column, Trend Alert! We’ll report here on what the numbers are telling us about rental housing trends in Seattle and across the country. Since it’s that time of year when the college students start flocking back to school, we thought we’d make todays’ focus student housing. Because while not all of us have a dorm to run (thank goodness!), plenty of us rent units to student renters–let’s see what unit types and amenities they’re looking for these days.

Today’s data was prepared by J Turner Research and first reported here. The info was gathered by surveying over 7,000 college students, both graduate and undergrad.

Housing preference: Mid-rise buildings most popular

When asked what type of building they preferred to live in, the response showed that college students still prefer to have a sense of community in their living spaces. Mid-rise buildings were the most popular, with micro-units coming in last:

  • Mid-rise building: 38%
  • Community cottage/townhouse: 33%
  • Single-family home: 13%
  • High-rise building: 9%
  • Micro-unit: 7%

Apartment design: The future is now

When it comes to the design and decor of their apartments, students are all about modernity. An overwhelming number preferred to live in a modern-styled space, while some responded that they didn’t care at all:

  • Modern design: 50%
  • “Homey” or traditional design: 34%
  • “Funky, eclectic community” design: 6%
  • No preference: 10%

Communal spaces: Fitness center most utilized

Students were asked to rate communal spaces on a scale of one to nine, with one being very likely to use, and nine meaning unlikely to use. Surprisingly, bike storage came in at the bottom of the list (which we have abbreviated):

  • Fitness center: 2.49 (most likely to be used)
  • Study areas: 3.76
  • Computer labs: 3.89
  • Coffee shop: 4.08
  • Game room: 5.86
  • Bike storage: 6.97

Apartment size vs. cell phone service: the showdown

Finally, we’ll contrast two factors students look at when selecting housing. While just 27% of respondents said that apartment size was extremely important, a whopping 49% stated that cellular reception was extremely important. Looks like cell service trumps apartment size by quite a bit! It’s good to know where students’ priorities lie.

For the rest of the numbers and some very colorful graphs, check out the full report here. And have a great weekend–we’ll see you again next week!

Apartment Advisor Recap: Measuring Rental Performance

Apartment Advisor Recap - News from Dupre + Scott (www.duprescott.com)We always love it when a new Apartment Advisor comes out–the monthly digest from Dupre + Scott is chock-full of all the stats and data we rely on in the apartment industry. This month’s edition is all about measuring the performance of local properties. Since Dupre + Scott size up the rental market on a regular basis, you can utilize their data to see how your own property is doing against comparable rentals nearby. Here are some of the main factors to consider. Note that all data mentioned below is for buildings completed in or before 1999.

Operating Expenses

  • These vary due to many factors, including property tax rates and rent amounts.
  • If you’re looking for low operating expenses, head over to Pierce County–they’re averaging just over $4,600 per unit. Compare that with Eastside just over $5,700 on the Eastside!
  • Over the past 12 years, operating expenses for units built before 2000 have jumped over 40%. While actual costs vary, the increase remains fairly constant–compare Seattle at nearly 50% with Snohomish County at just 40%.

Investment Trends

  • Let’s talk sales. Currently, apartment sale prices are highest in Seattle, where the average is $160,000 per unit so far this year. Meanwhile, Pierce County units are selling at just $66,000.
  • Think Pierce County is a bargain? Keep price jumps in mind–the prices on these units climbed 83% over the past 12 years. Compare that with just a 74% climb in Seattle.

Rents: Trends, Inflation & Cap Rates

  • You might think Seattle is king when it comes to rents, but they’re actually highest on the Eastside right now–they’re averaging $1,250, compared with $1,090 in Seattle and $785 in Pierce County. Again, although rents in Pierce County look low, keep the climbing in mind. They went up 34% over the past 12 years, which makes the county second only to Seattle, where rents climbed 36%.
  • When comparing rents over time, don’t forget to factor inflation into the picture! Raw data, for instance, would have us thinking rents have shot up 800% since 1969, when in reality, they haven’t climbed much at all.
  • Finally, remember the important role cap rates play. As cap rates have fallen in recent years, buyers have been able to pay more for a set amount of income.


  • Last but not least, we’ve got development trends. In Seattle, apartment stock has climbed 40% in the past 12 years; meanwhile, Snohomish and South King counties actually didn’t add any net stock.
  • For  numbers on how development is affecting your building, check out the report–it’s got info on all of the new units in King, Pierce, and Snohomish counties.


The Numbers | End-of-2013 Forecasts from Marcus & Millichap

The Numbers: Rental Market Statistics from SeattleRentals.comWelcome back to The Numbers! This time around, we checked in with Marcus & Millichap for a  mid third-quarter update on apartment demand and development in the Seattle area. With so much of the year behind us already, the firm is ready to forecast the numbers for 2013–let’s see how they compare with last year’s stats. Will apartment demand keep pace with development?

3.3% projected job growth in 2013Good news from the employment sector–according to Marcus & Millichap, over 48,000 jobs have been added over this time last year–that’s already a 2.8% expansion, and it means jobs aren’t that far from 2008’s Q1 all-time high. By the end of the year, it’s predicted that job expansion will top 3.3%, or a total of 57,000 added jobs. So where are the gains coming from? The biggest gains are coming straight from the trade, transportation and utilities sector–that sector alone added over 12,500 jobs over the past four quarters.

Rental units opening in Seattle through 2015

Then we’ve got construction. According to this report, over 3,800 new units have been added to the market this calendar year–but development is easing a bit over last year, as 19% fewer multifamily building permits have been issued, compared to this time last year. Don’t expect too much of a drop in the supply, however; Marcus and Millichap are expecting 8,000 units to be completed by the end of 2013. Of the 20,000 units currently planned, developers have announced 2013 construction start dates for just 900 of them. We’ll see what pops up around town!

North Seattle / Shoreline vacancy is at just 1.5%

Oh vacancy, you’re the best–what with the way you’ve just kept dropping quarter after quarter lately. Strong job growth has lead to a vacancy rate in the Seattle Metro area of just 3.6%, and that’s an even smaller number in some submarkets–the North Seattle/Shoreline market wins the prize at just 1.5%. Vacancy is expected to rise a bit over the next few quarters, as new units come onto the market. Metro-wide, vacancy is expected to rise to 4.6% by the end of the year; we’ll find it to be a little lower or higher in certain submarkets.

Second quarter Seattle rent was $1,179

Finally, there’s rents. While vacancy has been dropping, rents have been growing–during Q2 of this year, available effective rents in the Seattle metro area jumped up 4.7%, to an average of $1,179 per month. The West Bellevue/Mercer Island submarket is where rents are highest at the moment, with an average of $1,865; meanwhile, rents in the Capitol Hill/University District/Ballard market hit $1,614. For the entire Seattle metro area, Marcus and Millichap estimate that available effective rents will jump a total of 4.9% by the end of 2013, to an average of $1,155. That’s a little down from last year’s spike of 6.1%, because of new construction; but it’s still a nice healthy increase.

That’s all we have for you this time around. Want more of the numbers? Check out Marcus & Millichap’s Third Quarter 2013 report on their website.

Events Calendar: August and September 2013

Events CalendarCan you believe it’s August already? This summer is flying by; Labor Day will be here before we know it! Looks like it’s time again to check in on the rental real estate events being held over the next couple of months. Maybe we’ll see you there…

August 14th | WMFHA’s 2nd Annual Reverse Trade Show

This show runs from 2:00 to 7:00 p.m. at the Cedarbrook Lodge, in Seattle. You may be wondering what a “reverse trade show” actually is. We would describe it as a little bit like speed dating for suppliers. From WMFHA’s site: “Property management representatives will be assigned a private table, and will have a booklet of supplier bios provided to you. During allotted slots of time throughout the afternoon, suppliers will tour your table and will be answering your questions and providing information about their services for you.” Sound like fun? Check it out here.

August 15th | The RHA presents: Getting to the Top with 1031 Exchanges

This seminar runs from 4:00 to 6:00 p.m. at the RHA office in Seattle; registration costs $45.00. Lead by Dennis Helmick, the seminar will cover everything you need to know about 1031 Exchanges–multi- and single-family investors won’t want to miss it. Wondering whether you should do an exchange? Worried about home sale exclusion rules? Then this one’s for you. Check it out here.

August 20th | WMFHA’s Budget & Financial Management Seminar

This seminar runs from 9:00 a.m. to 1:00 p.m. at the WMFHA Training Center in Tukwila; registration costs $59 ($79 for non-members). Presented by WMFHA board member and Senior Regional Supervisor of Fairfield Residential, Brett Stevens, this crash-course in budgeting and financial management will cover the essentials of property management budgeting. Among other things, you’ll cover the major acronyms (ROI, IRR, NOI) and learn the best ways to analyze cash flow–sign us up! Check it out here.

August 29th | The RHA’s Landlord 101

This seminar will run from 5:00 to 8:00 p.m. at the RHA office in Seattle; registration costs $45 ($65 to earn CRE clock hours). If you’re new to the landlording gig, or looking for a refresher to cover basics you might have missed, this seminar will give you the tools to become an effective landlord, including the basics of Landlord-Tenant Law, ways to attract and keep the right tenants, and tips for improving your bottom line. Check it out here.

September 4th | King-South Meeting of the Washington Landlord Association

Dinner will begin at 6:15, with the program beginning at 7:00 p.m., at Mitzel’s American Kitchen in Kent. Have you checked out the Washington Landlord Association? It’s a great resource for networking, education, and other services. Not sure if you’d like to join? Stop by a meeting and see what you’re missing. The next King-South meeting will feature Tim Seth and John Wells of the WLA, presenting a “Field Brief on Human Rights.” Check it out here.

September 19th | The RHA Presents: How to Read a Credit Report

This seminar will run from 12:00 to 1:00 p.m. at the RHA’s office in Seattle. Registration is free. There’s no question that it’s vital to perform credit checks on potential tenants; but are you sure you’re reading the credit reports you receive in a valuable way? In this seminar, the RHA Director of Tenant Screening, Megan McCormick, will break down RHA credit reports step-by-step, answering questions as they come up. Check it out here.

September 26th | WMFHA’s Apartment Outlook: Perspectives and Projections for 2014

This event will run from 11:30 a.m. to 3:00 p.m. at the Seattle Sheraton. Registration is $89 ($109 for non-members). Mark your calendars for September’s annual big event from WMFHA, the Washington Apartment Outlook (WAO)! This seventh-annual event will cover all of the latest information on economic trends concerning the multifamily industry; whether you’re a landlord, a supplier or even a lender, you’re going to want to be there. Matthew Gardner and Mike Scott will be among those presenting on the economic forecast and industry trends. Check it out here.

Rental Tech: The iButler, Smart Home Security, and Elegant Urban design

Seattlerentals.com Rental Tech

Some buildings have a concierge; these apartment residents in Sydney get an “iButler”

ButlerPlenty of apartment buildings in Seattle have a concierge desk for tenant convenience. But can your concierge do your grocery shopping, organize a baby-sitter, or wash your car? Residents of  the Avantra building in Sydney will have access to a technology called iButler. Accessible via iPhone or the mounted iPad in the apartment, the app can be used to organize just about any service a tenant could need–and even gives housekeepers and other staff temporary access to the apartment, and charging residents on one convenient monthly bill. Sounds fun–and pricey. Read more.

With the rise of smart homes and apartments, new security risks rise as well

smart home securityWe’ve been hearing a lot of the past few years about how smart homes and apartments will make our lives easier, greener and more efficient. But as with any new technology, the emergence of wifi-accessible, computer-controlled gadgets in the home leads to new possibilities for hacking and other threats from outside. These gadgets were one focus of the annual Black Hat and Def Con computer security conference held last week. Hackers at the conference successfully gained control over smart door locks, power outlets, and even luxury toilets. As these technologies become more widely used, there’s no doubt manufacturers will begin to build in stronger safeguards–look like it’s time to start! Read more.

My, what a beautiful wall socket: Japan re-invents the power outlet

Node Power Outlet, from MetaPhys of JapanIn case you’ve been wondering about the history of the electrical outlet lately, don’t bother–except to become safer, its design really hasn’t changed much over the years, and the design of the two-or three-prong plugs has never been particularly inspiring. But a design firm from Japan hopes to change all that with the introduction of a gorgeous, 360-degree electrical outlet they call the Node. The versatile design means plugs can fit into it at almost any angle, maximizing the socket’s usability. Sadly, there isn’t any third-prong support on the wall plate, which means this design won’t fly in the US–at least for now. But it makes us wonder how long it’ll be before power gets prettier on our apartment walls here in the US! Read more.

High-tech leasing tools making life easier for tenants and leasing agents alike

ID-10067547Remember just a few years ago, when iPads were a leasing-office innovation only a select few apartment communities had gotten ahold of? Fast forward to the present, and tablets are an essential tool in many leasing offices; and it turns out, that’s not the only technology taking hold. A new article from MHN highlights several such innovations, including touch tables and kiosks, which allow potential tenants to shop for apartments in the ways they’re used to even when they’re in the leasing office. The more tenants are able to feel in control, the better–and the ease of pulling up a floorplan or viewing available units even while a leasing agent is assisting other tenants can’t be beat. Read more.

Designers on the new urban lifestyle: Apartments should feature “elegant solutions”

ID-1009923There’s no question that tech gadgets have filled our apartments over the past ten years. As we look to the future of technology in the home, design firms such as Billings Jackson Design have visions of a simplified, more rewarding environment in which to live our urban lifestyles. As designer Duncan Jackson points out, “we are demanding more of the spaces we live in. We live there, work there, feed our friends and passions there.” As such, the firm envisions greater adaptability in our living spaces–elegant and useful rooms that are easily reconfigurable for multiple uses, and “lighting, surfaces and scent that can be adapted to reflect our mood and purpose.” Sounds perfect for apartments in downtown Seattle! Read more.

Dupre + Scott Video Highlights: Apartment Demand & Investor Leverage

Dupre + Scott Weekly Video Update from www.duprescott.com

We love Dupre + Scott’s weekly video updates–they’re a quick, easy way to stay informed on all aspects of the apartment market. Today, we’ve got a quick recap of the latest videos for you, along with the videos themselves for your viewing pleasure. Enjoy!

August 2: A Guide to Apartment Demand

Today’s video focuses on vacancy rates and apartment demand–and how we can predict their ups and downs over the next few years. Here are Dupre + Scott’s main tips:

  • Look at employment, not unemployment. Remember, unemployment can go down for plenty of reasons that don’t signal a recovery–for instance, if people stop searching for jobs or leave town. For a more accurate indicator of apartment demand, look at employment rates.
  • Eight jobs translate into demand for one apartment. While this can vary slightly, it’s a safe and easily-calculated principle that can be used from county to county. If you read in the paper that Amazon is adding 1,000 jobs in King County, for example, you’ll know that there will be demand for an additional 125 apartments.
  • This ratio changes over time, for many reasons; in the early 90s, it was under eight, as “the tail end of the boomers entered the housing market,” while it hit almost 9.5 in the late 90s, because there were fewer people in their twenties.

Bottom line? When you hear news about the unemployment rate, look for the actual employment numbers–they’ll tell you what you need to know.

July 26: The double-edged sword of Leverage

Last Friday’s video was all about leverage–borrowing money in order to buy real estate. While most investors do need to borrow in order to purchase rental housing, borrowers must keep things in perspective:

  • Smart investors know a bit about lending history. In the early 80s, buyers put about 25% down. Mortgage rates were near 20%, but attractive terms in seller-financing made up for it–until seller-financing “all but disappeared” by the early 90s. While things were fairly tough for borrowers during the 90s, they eased up after 1999, when mortgage rates fell; but over the past ten years, investors have used less and less leverage.
  • When it comes to leverage, we have the two investment extremes: “Eat well,” and “sleep well.” The Eat Well strategy maximizes leverage, which means a great deal of potential for gains, but less security; meanwhile, the Sleep Well strategy keep leverage to the absolute minimum, which protects against future changes in the market.
  • Borrowers today are falling somewhere in between these two extremes–a smart move, according to Dupre+Scott. Down payments on apartment sales over the past few years have oscillated between about 28% and 36%, which means investors have worked to balance risks, reward, and safety.

The bottom line: Leverage is an important tool–as long as you keep your history in mind, and balance the risk and the reward.