In this online article of the Snohomish County Business Journal you’ll read about the market forces that are setting up the Puget Sound region to be an area of rising rents. It’s one of the many reasons why investors both in and out of the area have been busy picking up multi-family properties in King, Snohomish and Pierce counties.
For a while now there has been a lot of speculation in the local industry that rents would rise partly due to the need of new owners of quickly appreciating properties (over the past 5 years) to raise rents to justify their purchases, especially as we’ve seen cap rates falling and gross rent multipliers increasing. Costs of maintaining and updating buildings has also risen sharply over this period because of the raw materials used in many construction materials, such as roofing and drywall, have increased over this same period of time.
Since real estate follows the same laws of supply and demand that most consumer items are impacted by, we do have a scenario where the stage is set for rents to rise. It’s also been noted that while conversions of apartment buildings to condominiums have taken away from the rental supply we are seeing some condo converting investors starting to turn the other direction and putting their properties back on the rental market. Whether or not that is because the return on investment needed is available in the rental market with rising rents or whether they want to ride out a bit of the market to see if condo sales upswing a little more to make conversion the better choice, we’ll see. Or maybe they want their cake and to eat it too.
We’ll be keeping an eye on this as the coming year unfolds to see if the predictions come true.
