Real Estate News

Tacoma apartment rents see steep rise in 2016, data show

One building in the works is at South 17th and Market streets by Koz Development. The company plans a 104-unit building with units ranging from 250 to 400 square feet, furnishings included, averaging around $850 to $900 per month.
One building in the works is at South 17th and Market streets by Koz Development. The company plans a 104-unit building with units ranging from 250 to 400 square feet, furnishings included, averaging around $850 to $900 per month. Courtesy

If you’re looking for a single-bedroom apartment in Tacoma, get ready to pay up.

Rents for single-bedroom apartments have risen faster than the market as a whole, according to Seattle-based real estate data firm Zillow. From December 2015 to December 2016, rents increased at one-bedroom flats in Tacoma by more than 16 percent to a median of $1,085, with an increase in rent on the median single-bedroom apartment of $153 per month.

Two years ago, Tacoma renters paid $780 for that median-priced single-bedroom unit — nearly a 40 percent jump, according to Zillow.

Two-bedroom units in Tacoma last month were comparable in price to a single-bedroom at $1,100 per month for a median apartment — where half cost more and half cost less.

And while Zillow doesn’t track single-bedroom rents in Olympia, rental website Rent Jungle does. The average cost of a single-bedroom unit in Olympia last month was $943 per month. A year ago, an Olympia renter paid $850 per month — a nearly 11 percent increase according to Rent Jungle.

Two-bedroom units in Olympia averaged $1,109 in December 2016, around 8 percent more than the previous year, according to Rent Jungle.

Rents rise with population growth

As population continues to outpace construction in Tacoma, the price of rent is climbing, too.

Last December, rents for apartments of all sizes in Tacoma were up 10.5 percent compared with the previous year, according to numbers from Zillow. Those who rented a median-priced apartment in a building with five or more units paid $1,100 — $105 more per month than the previous December. The rent increase would be even higher if rents hadn’t dropped from October’s spike of $1,175 per month.

Tacoma’s overall rent increase was the fourth-highest of any city in the state, behind Oak Harbor’s 22 percent jump to $1,095 per month, Portland-area Vancouver’s nearly 12 percent increase to $1,225 and Kirkland’s nearly 11 percent hike to a whopping $1,883 per month.

On the heels of Tacoma was Olympia’s rent increase of 10.1 percent, per Zillow. A renter in Olympia is paying $1,210 for a median-priced apartment, which includes units with any number of bedrooms, in a building with five or more apartments, $111 more than in December 2015.

Seattle’s rents have flatlined, according to the same Zillow data. Rents for rose there December to December a miniscule 0.28 percent to $1,800 per month.

Love them or hate them, Tacoma is increasingly becoming home to more and more so-called “micro-units” — studio or single-bedroom apartments about the size of a couple of parking spaces. Many are in various stages of planning and construction and could open within the next three years.

One building in the works is at South 17th and Market streets by Koz Development. The company plans a 104-unit building with units ranging from 250 to 400 square feet, furnishings included, averaging around $850 to $900 per month. Many other developers are planning micro-unit housing in Tacoma.

Pierce County is seeing an apartment boom, and many of those new buildings command premium prices for a smaller space. Through 2019, More than 3,500 apartment units could open, according to apartment rental research firm Dupre+Scott Apartment Advisors.

Meanwhile, around 19 new residents per day moved to Pierce County in 2015 and 2016. If that trend continues, nearly 21,000 new residents will move to Pierce County by the end of 2019.

Statistics provided last week by DIY moving company U-Haul shows Tacoma as 13th among large cities in the nation for more people moving here than leaving in 2016. U-Haul locations in Tacoma saw 51.4 percent of one-way truck rentals entering Tacoma rather than leaving. Just two years ago, arrivals and departures were even, the company said.

In Olympia, arrivals made up 50.7 percent of U-Haul business in that city in 2015, the data show. But more people left than arrived in 2014.

Will millennials move to suburbs?

Many developers have said they are trying to attract the millenial demographic. According to College Investor, a financial literacy website focusing on student debt, the average 29-year-old has a net-worth of negative $1,989, College Investor reported. Those millenials graduated in 2009 and entered one of the worst job markets in recent history.

negative $1,989 The average net worth of a 29-year-old millennial, according to College Investor

Many millenials can’t afford a down payment on a home, said Peter Orser, chairman of the board of advisers for the Runstad Center for Real Estate Studies at University of Washington.

A millenial who is “unmarried or recently married,” living in downtown Seattle working for Amazon, he said last year, “is living in one of those new apartments. They want to remain mobile. We just came through a major real estate crash and they aren’t sure if they want to invest.”

But once they start raising a family, everything will change, Orser said earlier this month.

“They are thinking about ownership and schools and commute distances. That will change the dynamics” of who rents and who buys,” Orser said.

Rent increases squeeze out poor

The combination of rising rents and an influx of new people is bad news for families surviving on lower incomes, said Michael Mirra, director of the Tacoma Housing Authority.

“More supply of any sort should make the product less expensive,” Mirra said. That doesn’t seem to be the case with apartments in Tacoma, he said. The new developments are a lost opportunity for the city of Tacoma to require private developers to include affordable units, Mirra said.

Many in need rely on the Tacoma Housing Authority for vouchers to pay part of their rent. For a two-bedroom unit, a client would receive a voucher for $571 per month, said Julie LaRocque, associate director of client services for the Tacoma Housing Authority.

And while the client is expected to make up the difference, many still cannot afford to live in Tacoma if they are unemployed or only receiving child support, she said. Thousands apply for the voucher but only a comparative few are selected.

Apartment vacancy rates in Tacoma in the final quarter of 2016 was 3.64 percent, down from 4 percent the year before, according to Apartment Insights, a Seattle research firm. Olympia’s vacancy rate last quarter was 2.92 percent, down from 3.55 percent the previous year. This also puts a crimp on those seeking affordable housing.

negative $1,989 The average net worth of a 29-year-old millennial, according to College Investor

“With vacancy rates so low, landlords can be a lot more restrictive on who they rent to,” Mirra said. “Low-income families generally don’t have as good a credit history that allows them to compete in such a tight rental market.”

“Rent relates to almost every other civic interest, including the ability of employers to find workers who live within a reasonable commute of their jobs,” Mirra said. Expensive rent means residents have less money to spend on other items.

Homes nationwide are more expensive

Homes also are becoming less affordable across the country, according to ATTOM data solutions, another real estate data firm. ATTOM said home affordability nationwide dropped to an eight-year low in the fourth quarter of last year when comparing median home prices and the average wage needed to make a house payment.

Home price growth has outpaced wages in 81 percent of counties nationwide, the company said.

Another report by the company says buying is more affordable than renting in two out of three housing markets nationwide — but not in Pierce or King counties. The report compared rent data from the U.S. Department of Housing and Urban Development, wages from the U.S. Bureau of Labor Statistics and home sales data.

Nationwide, it costs a bit more than a third of take-home pay to buy a home. In Pierce County, ATTOM reported, it costs 42.8 percent of the average take-home pay of $44,650 per year. It would cost a King County resident nearly 48 percent of average household pay of $73,357 to buy a home there.

Meanwhile, home mortgage rates have inched up to a two-year high. A year ago, a 30-year fixed-rate mortgage averaged 3.96 percent. Last week, Freddie Mac reported the same mortgage averaged 4.19 percent. The difference can mean thousands more dollars in interest payments over the 30-year loan’s term.

Kate Martin: 253-597-8542, @KateReports