It’s a hot topic – the expansion of tech giants like Amazon in the Seattle area pushing employment to in this information sector to an all time high. We’ve all heard that these new jobs have attracted new, affluent residents. And that those affluent residents are driving up Seattle area rental prices.
However a recent study from the Real Estate listing and research site Zillow says that growth in the tech sector is not the sole explanation for the upward trend in Seattle area rental prices. Rents across the city have gone up 8.5 percent over the last year with no sign of slackening off.
The study confirmed that in areas with a high concentration of tech workers, median rent prices climbed more than in other neighborhoods. However neighborhoods like the University District that lack those populations of tech workers have seen spikes in rent prices as well. The study included rent increases in tech-heavy neighborhoods like Belltown and Queen Anne as well as surrounding neighborhoods.
This study points to other factors influencing the upward trend in rent prices across Seattle. Overall this is great news for investors as Seattle area rental prices do not appear to be a ‘bubble’ but rather expected market activity.
If not tech, then what?
To start with there has been an overall economic prosperity leading to a population boom in the wider Seattle area. Seattle is one of the fastest growing cities – according to Census data there has been an influx of 14,000 people per year since 2010.
These migrants aren’t all due to tech and the reality is the higher the population growth, the more supporting industries will grow. Think the education, healthcare, entertainment, retail and government sectors that will all expand to service the growing number of residents.
On top of the quickly expanding population, Seattle is a notoriously tough area to build in. 60 percent of the city is zoned for single family housing, making development of higher density housing a challenge. Where apartments are being built, they tend to be high-end to attract the valuable high-end rent price.
Basically what we are seeing is a typical situation of limited supply and high demand.
Despite some building activity, Seattle currently has a very tight inventory for housing. The growing population paired with a lack of available housing means the cycle of climbing rents continues. We know it’s a great time to be a landlord and this trend suggests rental income will continue to be a valuable asset.