Seattle 2023 apartment market outlook

Seattle 2023 apartment market outlook

Seattle’s apartment market has escaped the slowdown that hit other cities in 2022 — so far. But rent growth is expected to slow next year, especially if a recession hits. Victor Calanog, Head of Commercial Real Estate Economics at Moody’s Analytics, shares his analysis.

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Seattle escaped 2022’s multifamily slowdown 

Performance metrics for Seattle apartments held steady throughout the first three quarters of 2022. Year-over-year rent growth came in at over 20%, with effective rents rising throughout every single quarter, according to Moody’s Analytics CRE. 

Vacancies rose 30 basis points, to 6.5%, but that’s in part because construction activity has been ramping up again. Moody’s expected close to 10,000 units to open doors for all of 2022. That’s almost twice the 5,500 or so that came online in 2021.

Rent growth may be tough to sustain 

Moody’s forecasted Seattle would post effective rent growth of close to 15% for all of 2022. That would mean some pullback in the fourth quarter, and a bit more is anticipated in 2023. Expectations of a recession occurring sometime in the next 12 months have risen significantly, and moderation in demand may manifest even in well-performing apartment markets like Seattle.

Signs of weakness in Auburn/Enumclaw submarket

Some submarkets may exhibit weakness earlier than others. The Auburn/Enumclaw neighborhood posted the weakest year-over-year effective rent growth in the market, growing “only” 10.5 percent. 

Still, Seattle has bucked the general trend of “slowing down” that other markets like Portland and even Sacramento have exhibited in the third quarter, at least so far. It’s preaching to the choir, but monitoring performance indicators becomes even more important as the market begins to turn — the way it’s been turning all year.

By the editorial team at Story by J.P. Morgan

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