July 17, 2020
New research shows over the last decade, new residents who elected to live in brand new, luxury apartments in downtown Seattle instead of owning a condominium have paid more than $50 million in unrecoverable rent, collectively. Meanwhile, the average renter missed an estimated $325,000 in capital appreciation over the same period and roughly $9,228 of income tax deductions for 2019 on Tax Day, according to research by Realogics Sotheby’s International Realty (RSIR), Caliber Home Loans and O’Connor Consulting Group.
“No other city has witnessed such population growth and increases in both household prices and rent growth,” said Dean Jones, President and CEO of RSIR. “An unfortunate result of so many residents opting to lease a downtown apartment instead of owning a downtown condominium is that they missed out on both capital appreciation and annual mortgage interest deductions on Tax Day.”
There have been 27,000 new multifamily housing units delivered in Seattle’s urban core over the past decade, however 93% of this new supply was purpose-built for rent and not for sale the collaboration notes. In one of America’s fastest growing cities, 82% of the housing stock is now comprised of rental apartments.
Typical rents in Seattle averaged $1,241 in 2010 but soared 84% higher to average $2,230 in 2019. Meanwhile, the average price for a condominium in 2010 was $524,842, but swelled to $849,481 in 2019. Seattle has seen only 10 new condominium buildings delivered over the last decade (1,727 units) and 91% of this inventory is already sold out.
O’Connor Consulting Group’s Brian O’Connor says, “The reality is condominiums are a greater risk for developers, so they’ve overwhelmingly preferred to build apartments and that’s been a very profitable venture given the robust job and population growth. Owning the apartment building in Seattle has become a globally recognized, blue-chip investment. That’s good news for landlords but sobering for consumers experiencing price inclines both for rent and for homeownership.”
For comments, questions or concerns, please contact Dennis Kaiser