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Apartment Demand is high!

When taking a look at the regional housing market and trying to project where it might go based on where it is today and what’s happening around it, it’s important to always keep an eye on the rental markets.  One of the reasons theorized for why 2018 became a bit of a breather for the Puget Sound Housing Market is because of the boom in apartment construction.  Thus leading to falling rents.  When rents rise, there’s a motivation-ping for renters to stop renting.  However, when they don’t rise, like in 2018, that motivation-ping goes away, and renters keep renting.

Current Rental Standings

So where we at on the rental side of things?  Seattle has built more apartments this decade (and primarily in the last three/four years) than in the entire previous half-century COMBINED (see HERE and HERE).  So it’s no wonder that despite all the local hiring, rents and the housing market stalled out in 2018.  There was just a TON of supply!  All this supply (~5,800 new units in 2016, ~9,900 new units in 2017, ~12,500 new units in 2018, and projected ~13,700 new units in 2019) has tempered appreciation in both the rental market, but also the housing market.

The good news is that even though supply is burgeoning, the demand is there.  Supply is keeping prices from appreciating quickly.  However, the demand is keeping prices from tanking.  In fact, for the second time this decade, Seattle leads the nation in filling all those new apartments. Greater Seattle filled about 3,400 new apartment units in Q1 of 2019.  In the past 12 months, Seattle has filled about 10,000 net-new apartments, up 15% from the previous 12 months.  Last data point here:  The downtown Seattle core which had a 26% vacancy rate last year, is down to 12% this year.

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Summary

It would be surprising if the Puget Sound Housing Market saw appreciation rates as it did between 2012 and 2018.  A big reason for that is because the supply of apartments is tempering prices across the board.  Buyers aren’t going to escalate housing prices as they did in the past if their apartment rents aren’t also escalating.  According to RentJungle, between January 2011 and March 2019, apartment rents appreciated 78.79%.  Compared to housing and condo prices which have risen from about $245,030 in the Tri-County area in January 2011, to $487,240 in March of 2019 – 98.85% (derived from data from the NWMLS and Zillow).

Obviously renting and owning is different, but the fact remains:  When rents rise, oftentimes housing prices do as well; and vice versa.

Interest Rates

Per Bankrate.com, the 30 Year Mortgage interest rate rose to 4.34%, with .33 in discount and origination points.

 Rates are near 14-month lows

Mortgage rates this week

Mortgage rates are creeping higher but still remain near 14-month lows. And that’s good news if you’re in the market for a home this spring.

The benchmark 30-year fixed-rate mortgage rose this week to 4.34% from 4.28%, according to Bankrate’s weekly survey of large lenders. A year ago, it was 4.58%. Four weeks ago, the rate was 4.44%. The 30-year fixed-rate average for this week is 0.76 percentage points below the 52-week high of 5.10%, and is 0.17 percentage points greater than the 52-week low of 4.17%.

The 30-year fixed mortgages in this week’s survey had an average total of 0.33 discount and origination points.

  • The 15-year fixed-rate mortgage rose to 3.71 % from 3.65%.
  • The 5/1 adjustable-rate mortgage was flat at 4.05%.
  • The 30-year fixed-rate jumbo mortgage rose to 4.36% from 4.27%.
  • At the current 30-year fixed rate, you’ll pay $497.22 each month for every $100,000 you borrow, up from $493.70 last week.
  • At the current 15-year fixed rate, you’ll pay $725.24 each month for every $100,000 you borrow, up from $722.27 last week.
  • At the current 5/1 ARM rate, you’ll pay $480.30 each month for every $100,000 you borrow, unchanged from last week.

Results of Bankrate.com’s weekly national survey of large lenders conducted April 17, 2019, and the effect on monthly payments for a $165,000 loan:

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The “Bankrate.com National Average,” or “national survey of large lenders,” is conducted weekly. The results of this survey are quoted in our weekly articles and national media outlets. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans, and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison.  https://www.bankrate.com/mortgages/analysis/

City of Seattle Stats for Single Family Residences – Updated 4.17.19v

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These charts are Seattle Specific, but the Puget Sound Real Estate Market mirrors the Seattle market.


scott sheridan, scotty sheridan, scott sheridan jr, prmi, scott sheridan prmi,

Scott Sheridan is a Loan Officer with Primary Residential Mortgage, Inc.  Being in the mortgage industry for three years, Scott brings a fresh millennial flair to the industry. He is well-versed in the most modern, efficient, and convenient ways to get things done. Scott combines these skills with a genuine love of his work and recent experience in what is it like to be a first and second-time home buyer.  You can follow Scott’s weekly market updates on his PRMI Facebook Page.

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