Seattle Multifamily Report – February 2023
While still healthy, fundamentals are dampening.
Seattle’s multifamily fundamentals began moderating in response to the deteriorating economic landscape. Rent growth turned negative in September, and by December, it had posted a 0.6 percent decline on a trailing three-month basis, outperformed by the 0.2 percent U.S. rate contraction. Robust stock expansion has played a role, but demand is fairly robust, as the average occupancy rate in stabilized properties declined just 50 basis points year-over-year as of November, to 95.4 percent.
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Seattle’s unemployment rate reached pre-pandemic values, at 3.4 percent in November, outperforming both the state (4.0 percent) and the U.S. (3.6 percent), according to preliminary data from the Bureau of Labor Statistics. The job market expanded 5.5 percent, having added 82,600 jobs in the 12 months ending in October, above the 4.1 percent U.S. rate. Although leisure and hospitality led gains, up by 14,100 positions, professional and business services and information were not far behind, with 12,800 and 11,800 jobs, respectively.
Developers delivered a record 12,400 units in 2022 and had another 26,400 units underway. Still, the number of construction starts declined from the prior year. Meanwhile, investors traded $4.4 billion in multifamily assets, which was fairly evenly distributed throughout the year. In addition, the average per-unit price rose 6.1 percent year-over-year, to $392,968, well above the $215,719 U.S. figure.