Yikes! Rental rates are rising the way housing prices were a few years back:
Apartment rents averaged $1,026 in King County and $1,071 in Seattle in March—up 2.5 percent and 1.9 percent, respectively, from September and about 8.5 percent in both cases from March 2007.
In my view, rental costs are a far better bellwether of housing affordability than the more commonly cited indexes based on the cost of purchasing a home. Rent matters much more to low-to-middle income families; the lower down on the income ladder you are the more likely you are to rent rather than own. And for years, housing markets have been wacky—“irrationally exuberant,” as they say—so rental rates have more closely reflected the true value of housing as shelter, rather than the speculative value of housing as get-rich-quick scheme.
Obviously the increase in rental costs is a real problem for lots of working families. Coupled with the rampant inflation in food and fuel costs, it’s adding injury to insult. But the question is, what can be done about it?
Seattle’s rent increases seems to represent genuine supply scarcity; vacancy rates are plummeting as prices rise. And high demand for the available rental homes may be driven by another force: people are looking to move closer to work (ie., to Seattle proper rather than distant suburbs) to save on transportation costs. In fact, NPR is reporting that, nationwide, homes with long commutes are plummeting in value faster than homes closer to the city center.
Economists say home prices are nowhere near hitting bottom. But even in regions that have taken a beating, some neighborhoods remain practically unscathed. And a pattern is emerging as to which neighborhoods those are.
The ones with short commutes are faring better than places with long drives into the city. Some analysts see a pause in what has long been inexorable—urban sprawl.
All of this points towards an action item that the city can take to ease rental woes: make it easier to build more housing—rental and otherwise—in close proximity to downtown, or with easy access to concentrated job centers. Increasing the rental supply can help take the edge off rising demand. That may not be a complete solution to rising rents, but it’s a start.
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Photo courtesy of Flickr user sninky-chan under a creative-commons license.