There's finally a major American city where rent increases are slowing

By Fusion Staff  |  November 25, 2015 | 3:51pm
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Take any major American city, and the odds are rent prices are accelerating there.

In San Francisco, according to real estate site Zumper, the median rent for a 1-bedroom was up 8.9% year-over-year in November. In New York, the median rent for a 1-bedroom was up 9.3%. And in Chicago it was up 14.5%.

But not in downtown Seattle, where rents increased just 3.9% year-over-year in September, compared with 8.4% a year earlier, according to Dupre + Scott Apartment Advisors.

The reason is simple economics: According to Marc Stiles of the Puget Sound Business Journal, more than 11,000 new units are expected to open this year there, with an equal number coming online next year.

“Supply, I think, is definitely having more of an impact and a drag on the market right now more than anything else,” Billy Pettit, a local developer, said at a recent real estate conference, Stiles reports.

The question of how to increase supply in a way that creates reasonably priced rentals has dogged cities across the country. It’s been a particular concern in San Francisco, which has the highest median 1-bedroom price in the country, at $3,670, according to Zumper.

Morgan Stanley analysts recently noted that only 15,000 units are expected to come on the market in 2016 in San Francisco—while 145,000 new jobs are expected to open up.

“We think supply/demand would remain favorable even if current Bay Area job growth forecasts were cut in half,” the firm said according to Business Insider. By “favorable,” the analysts mean for landlords, not renters.

However, 11,000 units are more than enough for Seattle, even though employment growth there is accelerating, Stiles reports.

“While demand remains high, (Pettit) said the large number of new units coming to the market is reason to pause, especially since the increase in supply is slowing down rent growth,” he writes.

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.

 
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