2024 Rental Market Recap
As we look back on the year that was in Seattle-area residential rental housing, there are some key storylines that stand out. Whether it be the regulatory environment, market conditions, supply & demand trends, or lifestyle adjustments, there’s a little something here for everyone. Readers, please keep in mind that the majority of the content in this article covers single-family rental housing (not apartments) and data has been gathered via the Northwest Multiple Listing Service (NWMLS) unless otherwise noted.
We’ll set the table with some statistics. Year-over-year, rental prices were up in 2024 compared to 2023, correlating with fewer homes available for lease and faster market times. Across the King/Pierce/Snohomish market, a total of 3,305 rentals leased via the NWMLS. This is down 9.37% from the previous year. Not surprisingly, less inventory led to an across-the-board average price increase of 5.39% on monthly rents, and homes leased 13.89% faster than the previous year. So what’s behind this? Simply put, 2024 was the year of the lease renewal (or extension). The “staying put” trend extended to homeowners as well, and the rental market definitely reflected this trend when it came to the data. As reported by the Seattle Times on 12/2/2024, a growing share of renters are staying in their homes five years or longer. Most recently tracked at 26%, that is up from 22% the previous decade. And for those who stay ten years or longer, it’s about 11% of renters (up from 9% the decade before).
The cost of homeownership has skyrocketed since the onset of COVID-19 due to a combination of rapidly escalating home prices and interest rates that currently sit at about double what they were at their lowest point during the pandemic. During this time, while still on the rise, rents climbed slowly by comparison. The average 4-bedroom house in Seattle sold for $1.056M in 2019 when interest rates hovered around 3.9%. Fast forward to 2024, that same type of house in Seattle sold for $1.404M on average, and interest rates were closer to about 6.5%. Factoring a 20% down payment on a 30-year fixed mortgage, the “cost” in terms of monthly payment went up by a staggering 78.2% (not including insurance or property taxes). Meanwhile, monthly rent on a 4-bedroom house in Seattle climbed from $3,955/mo to $5,144, an increase of 30.1%. No wonder so many people are choosing to renew their leases.
Another trend that has been years in the making is the exodus of “family suitable” rental housing throughout the area, particularly within the Seattle city limits where local housing ordinances have been rolled out like clockwork. In the wake of policies such as First In Time, winter eviction ban, and Economic Displacement Relocation Assistance, housing providers in the single-family market have been saying “so long!” to the Emerald City. Thousands of these homes have been sold off, or otherwise removed from the city’s rental inventory, leaving renters with fewer choices while the focus on new construction has consisted heavily on apartments; not a great situation for families and larger households. This puts extra pressure on Section 8 Housing Choice Voucher holders who are limited to where they can live. A Seattle voucher, for example, doesn’t cover a home in Renton… just the same way a Renton voucher doesn’t cover a home in Seattle, and a King County voucher doesn’t cover a home in either city. So the reduction of suitable rental homes hits these folks particularly hard, and we see it when applicants start to line up around the corner when we put new listings on the market because there’s so little else to choose from. Remember back in 2019 when rentals were about 30.1% less per month? (See previous paragraph). Not only that, but now if you want a 3+ bedroom rental in Seattle, there were 8.6% fewer to choose from in 2024. The Seattle Times published an article keying in on record-breaking new housing construction in Seattle during 2024, however, if you look closely at the numbers, a clear trend emerges. Of the 12,730 new housing unit starts throughout the year, only 463 were single-family homes (that’s a paltry 3.63%). Throw in 750 ADUs, and that shows us that over 90% of new home construction in 2024 was dedicated to multi-family/mixed-use apartment units.
Is the data about supply, demand, and pricing finally starting to resonate with lawmakers? In some cases yes, in some cases no. We did not see any new major legislation come to pass in Washington state this past year, but as of press time on this article, we are again heavily entrenched in the rent control conversation with the state legislature in Olympia. In a somewhat surprising plot twist, the Seattle City Council is actually starting to consider rolling back some of the aforementioned ordinances that don’t appear to have accomplished the stated goal of fostering affordable housing in the city. In fact, it’s the affordable housing operators themselves calling upon the city council to ditch some of these failed policies that have made it so difficult to effectively provide housing in the city. Seattle is in the process of learning by experience, and hopefully, other cities & counties are paying attention.
In late December 2024, the Seattle Times published a story about the rise in backyard cottage construction. Otherwise known as ADUs (accessory dwelling units), these housing units help fill a void for new construction housing within a neighborhood setting, and can be a great option for multi-generational living, aging in place, and… relatively affordable rental housing. This author has been a big fan of the ADU as a way to gently create housing density at relatively affordable levels for renters without completely changing neighborhood aesthetics, and it’s a good collaborative “supply first” approach, compared to the process of passing more and more laws that would seek to make the housing provider/tenant relationship more adversarial. However, per the above-referenced construction numbers, they only accounted for about 5.89% of newly built housing units in 2024.
We’ll close with a preview of 2025 rental housing priorities. I have personally had my eye on policy that would allow housing providers and tenants to communicate with one another, officially, in a more friendly and efficient way by eliminating the need for certain documents to be formally served on tenants. You can sell a house completely online without printing a single piece of paper, but you can’t renew a lease this way? That’s got to change. I am also pursuing just cause reform that would allow condo unit owners the ability to use intent to sell the same way that a single-family owner can. And finally, as an industry, we are pursuing more causes that we can show up and support, such as housing gap vouchers to assist tenants with rent payments and keep them out of the eviction process, rather than waiting for them to miss a payment and fund the attorneys who then represent them in eviction court. Let’s curb the problems before they start.
Cory Brewer is the General Manager at Windermere Property Management / Lori Gill & Associates. His firm oversees management of approximately 1,500 residential rental homes throughout the Greater Seattle Area, as well as commercial & multi-family properties. He may be contacted via wpme@windermere.com. Visit their website wpmnorthwest.com.