Seattle is going to be the hottest real estate market in 2018, according to Emerging Trends in Real Estate. This annual study is produced by PwC and the Urban Land Institute, and it gets its results by conducting 1,600 interviews with homebuilders, property owners, developers, lenders, real estate advisory firms, and investors. This is considered the gold standard of real estate surveys, so if you’re interested in picking up some investment property, you want to take notice. Seattle is heating up, and it’s expected to get hotter and hotter. Now is a great time to consider Seattle for some investment property.
Seattle has been in the report’s top ten for years, and last year, it made it all the way to number four in the rankings.
What made it jump all the way to number one this year?
The answer is quite simple. Seattle is strong in various areas, including:
- Local property/market outlook
- Demographics and livability
- Technology readiness
With strength in each of these areas, it’s clear that Seattle’s real estate market will continue to grow. That makes the city a sound investment for real estate investors.
Let’s take a closer look at each of these areas.
Local Property/Market Outlook
Industry insiders expect strong growth in the industrial and single-family housing sectors. This growth will be good for both investors and developers. It will mean the demand for investors will grow, and they will flock to the city to snatch up investments. That will be easy to do since there will be ample investment capital available. Lenders will have money to give, so it will be up to investors to take it. If you want to jump into a hot market, this is your chance.
Demographics and Livability
In order for a market to be hot, the population has to keep growing, and that isn’t a problem in Seattle. With a population growth that is twice the national rate, people keep coming to the city. Seattle is expected to bring in around 29,000 people a year for the next five years.
The population growth is even more impressive when you look at people aged 15–34. The population for that age group is expected to grow more than 17 percent over the course of five years. That’s great news for landlords who want to reach the young crowd. Many people in the age group are looking to rent, and you can help them find the perfect property.
This young crowd will also have the means to pay for their rental properties. Seventeen percent have graduate or professional degrees, and 37 percent have at least an associate’s degree. That means they can get good jobs and pay their rent on time.
Seattle also has a good outlook as far as cost goes. The affordability index sits at 106.2, with rent making up 20.8 percent of the household income. The city is expected to experience a solid disposable income growth over the next five years, so people will have even more money to put into the economy. That is good news for real estate investors. A healthy economy usually means a healthy rental outlook. Also, investments tend to grow when the economy is healthy.
Technology readiness is another reason Seattle’s market is so hot. Twelve percent of the population is employed in STEM occupations, which is double the national average. On top of that, there are 6.63 patents for every 1,000 residents.
That means Seattle is attracting the best and the brightest, and they aren’t likely to go anywhere soon. It’s easy to see why the market is so attractive.
More of the Same in Seattle
Everyone is looking toward 2018, but you can’t ignore 2017. Seattle has performed really well this year, and that’s one of the reasons the outlook for next year is so bright.
You just need to look at housing prices for proof that Seattle is hot. Home prices have gone up 5.9 percent in the last year on a national level, but they’ve gone up 13.5 percent in Seattle.
The reason for the price increase has to do with basic economics. The supply outweighs the demand, and that causes the prices to go up. This price increase is expected to continue, especially since there aren’t many undeveloped spots left in the city. Developers are running out of options, so the prices continue to shoot up. That means it’s not a good idea to wait if you plan to invest in Seattle real estate. It isn’t likely to get cheaper for years to come, but your investment can go up if you buy it soon.
Renting in Seattle
The hot real estate market isn’t just for buyers. Renting is also hot in Seattle. In fact, most of 2017 saw some big rent hikes in Seattle, even as hikes around the rest of the country slowed down.
In June of 2017, rents in Seattle were reported as some of the highest in the country. At the same time, rents were going down in other big cities.
Rents went up even though more apartments are available in Seattle than ever before. In fact, more apartments have opened in the last five years than in the previous quarter of a century combined. An increased supply typically causes rent prices to go down, but that hasn’t been the case here.
That’s partially because Seattle is growing at a rapid rate, so more people need to rent apartments. Also, the people who are moving into Seattle generally have high-paying jobs. They want higher-end rental property, and they are willing to pay for it.
Since they’re willing to pay so much on rentals, you might want to know why they don’t just buy a house. That way, they could get something back from their investment. It has to do with supply and demand. There aren’t many houses available, and the ones that are up for sale are priced high. People are renting right now so they don’t have to buy something for hundreds of thousands of dollars.
Rent prices skyrocketed earlier this year, but the increases are finally starting to slow down. New apartments have accommodated the influx of new renters, and now, there aren’t nearly as many people looking for rentals. At the same time, there are more new developments on the horizon. In fact, 2018 is expected to see lots of new developments. Seattle might be running out of land, but savvy developers have managed to scrape some together, and they’re going to fill it with complexes. That is good news for renters.
This has put the power back in the tenants’ hands. Now, they don’t have to take whatever they can get and pay an exorbitant amount of rent. They have a little more control over the process, so landlords have to be smart when operating inside of this market.
Renting in a Popular Market
The Seattle rental market is incredibly popular. As a landlord, you need to approach it a little bit differently because of that. Take the right approach so you can find quality tenants for your rental properties.
At one time, apartments were filled as quickly as they went up for rent. Now, though, the vacancy rate is growing, giving tenants a little more control over the process.
Now, landlords have to find a way to reach people in an overly crowded market. They are competing with more apartments than they have in years past. Simply having a vacancy isn’t enough. That vacancy has to stand out to potential renters.
First, take a multi-pronged approach to vacancy advertising. Create listings on various social networks and use QR codes to advertise listings on your business cards and flyers. You also need to have a website that advertises your vacancies. Connect your advertisements together so people can see you on social media, online, and in print.
You also need to make sure your advertisements build trust with your target market. Add a trusted landlord seal to your listing to show people that you are a landlord they can trust. This shows people that you are a legitimate landlord.
Focus on Walkability
People in Seattle love that the city is so walkable. They enjoy being able to take a stroll and reach different shops and restaurants. If your rental is close to various locations, highlight it in the listing. You want to let people know where they can walk to so they can picture themselves living there. You can also highlight how close the property is to public transportation. That way, they’ll know if they can just take a short walk and hop on the bus.
If your property isn’t within walking distance of any good areas, don’t worry. Find other unique features and highlight those instead. Every property has something special to offer. Let potential renters know how your property stands out. The more it stands out, the more phone calls and emails you’ll receive.
Landlords are offering more concessions than ever before in Seattle. Fall of 2017 saw an average of $921 in concessions. That is twice as much as it was four years ago.
Come up with some concessions you can offer renters. A free month’s rent is one of the most popular concessions. Yes, it limits your earnings upfront, but you will make it up in dividends.
If you don’t want to offer free rent, you can come up with other concessions, such as free cable or internet. You have lots of options, so decide what works best for you. Then, add it to your marketing campaign. You need potential renters to know that you have some great concessions to offer. You will get a lot more calls that way.
Consider Going Outside of the City
The hot rental market has caused some people to move to Tacoma or Marysville. It is much cheaper there, so you can attract some good renters who are looking for a deal. If you want to pick up several rental properties, going outside of the city just might be the ticket. At any rate, give it a look and see what you can find. You might find an amazing investment just a little way outside of Seattle.
Amenities will make your listing stand out in an overpopulated maker. Luxury rentals should be loaded with amenities, but you can also add amenities to standard rentals as well. Study the market where your rental is located to get an idea of popular amenities. Then, offer those amenities as well.
Encourage Renter’s Insurance
The ball is going back into the tenant’s court in Seattle, meaning you need to go the extra mile to ensure your tenants are happy. One way to do that is to encourage your tenants to get renter’s insurance. Renter’s insurance protects your tenants if anything goes wrong. It allows them to recover damages and it makes them whole again if there is a problem. That means they will still have rent money to spend if a disaster strikes or if they get robbed. They will be less likely to leave if disaster strikes, and they will also be more likely to trust you. When you build trust with a tenant, that relationship can last years and years into the future.
Take Advantage of the Hot Market
It’s a great time to have property in Seattle. If you already have property, it’s time to list it and take advantage of the market. If you don’t have property yet, consider adding some to your portfolio. The market is going to keep getting hotter in Seattle, so now’s a great time to buy.
Once you buy your property, go through the steps to find high-quality tenants. Build a relationship with your tenants so you can keep them in your property for years and years to come. The longer they stay in your property, the longer you can count on those regular rent payments coming in.