Downtown Seattle is Booming!

Guess what? It looks like downtown Seattle is back.

Things were a bit uncertain for awhile; between 2000 and 2012, we had a 12% drop in employment (or 20,000 jobs) in the downtown Seattle corridor. But the great news is that Seattle has been blessed with strong corporate institutions which have helped insulate our region, ensuring that our losses have not been as dire as those in many other cities.

These days, things are looking good. With sections of downtown like South Lake Union and the Stadium District committed to growth, we should see a dramatic economic upswing in the heart of the city. and the Bill and Melinda Gates Foundation have set the tone for South Lake Union. Their commitment will bring jobs and residents and maybe something more important; enthusiasm. While SLU is striving to become a cauldron of biotech, real estate, and technology power players, the Stadium District is also building for the future. There is a new 25 story apartment building planned and a proposed NHL/NBA stadium to be constructed South of the current stadiums. New restaurants and shops will soon follow, promising a fun and interactive experience.

With the drop in real estate prices over the past few years, there are a ton of good buys available in these areas. And with new jobs popping up each day, there are plenty of renters to fill these investment properties. So it may be time to rent again downtown…are you up for it?

Signs of a Housing Market Recovery?

It has always been my assumption that as the home sales market weakens for various reasons–interest rates, inflation or an economic recession–the rental market quickly strengthens. It just seemed like common sense; people may not be buying, but they will always need somewhere to live! But it was all just an assumption on my part, until the hard data that came out this week confirmed the theory.

Home prices have been continuing to fall, but new data shows the rental market is finally strengthening. Analysts are saying this could be an early indicator that housing on the whole may be headed into recovery.

Fueled mainly by the foreclosure crisis, we have seen the number of renters increase, many with less than perfect credit records; this slows their becoming homeowners again. Additionally, the current difficulties in getting a mortgage are adding to the number of renters.

Even with this added demand, inventory has stayed relatively constant, as many investors are buying up foreclosures and converting them to rentals. According to Zillow, median rents rose 3% from January 2011 to January 2012 nationally, while home prices declined 4.6% during the year.

So while it may take a bit more time for the housing market to recover, we know we can count on the rental market in the meantime–it’s become the dependable housing model for the 21st century.

How Long Should I Sign a Lease For?

If you are looking at a home or condo that is individually owned, most often the term required is a 12 month lease. Apartment complexes can vary a little more, since these look to avoid a glut of openings in any particular month. They may offer a small break on rent due to this, or a varying grid of choices over a certain time span, and signing a 9 month or 14 month lease, for example, may have a slight benefit.

When considering how long a lease is right for you and whether you should consider signing a lease longer than 12 months, there are two factors to be mindful of: 1) Will rent prices rise in the future, and 2) Can you get a break on rent by signing a longer term lease?

First, we continue to see vacancy rates trend lower, increasing rent prices. As housing programs continue to fail, many are forced to rent their homes instead of sell them. Also, homeownership is near all-time lows, which means more and more people are renting and will continue to do so. These factors will continue to push rent prices higher in the future. If you sign a 12 month lease, there is a solid chance in a year that market prices will be higher, and you may be required to pay more rent just to stay in the same place. Signing a longer term lease can help avoid having your rent increase in a year.

Second, it’s important to consider whether it is possible to get a break on the rent price by signing a longer term lease. That can vary from place to place, but generally speaking, it is in to the benefit of the owner, whether individual or corporate, for you to sign a longer term lease. Even if rent prices rise, turning over a rental is costly for the owner. There are commissions to a realtor or property manager, there are cleaning services and there may be small damages or simple wear and tear to repair. Signing a longer term lease is a benefit to the owner, and most often you can negotiate a lower rent price by offering longer than 12 months.

Not everyone can sign a longer lease. Many may stay longer than a year, but the uncertainty of life may not be worth the risk of being locked into lease, no matter how likely it is that you will stay. However, if you can sign an 18 month, 24 month, or even longer lease, you may be able reap the benefits of not having your rent hiked in a year, as well as negotiate up front a lower rent price. The cumulative benefit could very well save you thousands in rent!