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Tuesday, July 12, 2011

Seattle: The Downtown Apartment Boom

by Calculated Risk on 7/12/2011 01:29:00 PM

From Eric Pryne at the Seattle Times: Apartment developers bypass suburbs, target Seattle (ht David)

More new apartments will come on the market in King and Snohomish counties in 2013 than in any year since 1991, one researcher projects.

This apartment boom, however, is different from those that preceded it.

This time it's focused almost entirely on Seattle. Developers, for the most part, are bypassing the suburbs.
Observers attributed the turnaround to a host of influences: foreclosed homeowners re-entering the rental market; an economic recovery that was sufficiently strong to allow some young adults to finally move into their own places; and growing disillusionment with homeownership.

Thanks to the recession, however, there was little new supply on the horizon to meet this surge in demand: In King and Snohomish counties, 2011 is shaping up as the worst year for new-project completions since at least 2004.

Now apartment developers are rushing to fill that gap, inspired in part by projections that growing demand will continue to push rents up — perhaps another 25 percent by 2015 ...
This article touches on several themes we've been discussing:
• Multi-family completions in 2011 will be at record lows (also total completions).
• Starts for multi-family will pick up sharply this year, but the new supply will not be on the market until 2012 or 2013.
• this lack of supply will put upward pressure on rents (and lower the price-to-rent ratio for homes).
• And there is more "disillusionment with homeownership"