Last October I posted about my upcoming eviction. I live in the highly desirable neighborhood of Ballard in Seattle. In the past few years rents have increased and developers have been responding to this demand by building more and putting capital investment into existing structures. The apartment complex I live in was sold last year to a developer that plans on turning them into luxury apartments. Not only will the rents go up, but the construction is such that the tenants need to leave.
I get this and I’m not complaining. It is business. The fact is me and my neighbors have been paying below market rent for a few years now. When we move, we will be entering a market with higher rents.
My neighborhood of Ballard.
I recently ran into a neighbor who was distraught about having to move. Even though we likely won’t have to leave until June or July, the neighbor has begun looking for new places. He asked if I had. I haven’t and I don’t plan to until the end date gets closer. He seemed puzzled, so I shared my 3 reasons why I’m holding on to the end.
- We are paying below market rent. My guess is we are underpaying by $200-$300 a month should we stay in Ballard. Every month we stay is a month we don’t have to fork over that money.
- There could be delays with the developer. It could take an extra month or several. I also reminded him that when the recession started in 2008 developers shelved construction plans for more than a year. Although the Seattle economy is super bullish now, it could always reverse. There are a number of things that could delay the construction. Again, every month we don’t leave is money in our pocket.
- As anyone can see that lives in Seattle, there is massive amounts of rental construction underway. This is especially true in Ballard. Lots of these buildings will completed this summer. If you combine the high demand from people moving into Seattle with very low interest rates, you get a commercial building boom. Although I don’t expect rents to drop immediately, I do think that increasing the supply of units available will relieve the upward pressure of rents. Basic supply and demand. Supply has been lagging demand for a few years. I not only expect it to catch up, but during booms builders have this history of building too much. This is good for renters.
My neighbor understood my first two points, but went ballistic on the third. He started yelling at me a bunch of economic nonsense about how increased supply always leads to increased costs. He also ranted other economic conspiracy nonsense. Too much for a single post.
Like so many people in Seattle, he lacks basic economic understanding. Increasing the supply of apartments with higher rents does not increase the rents everywhere. Those new apartment buildings are being constructed to deal with the current pent up demand. Those people are still moving to Seattle whether or not those apartments get built. And if they got a job offer from a tech company they can likely pay higher rent than most. That is exactly what has been going on in the past few years. Incoming high paid tech workers are bidding up the rental market.
As a renter, I see additional construction of rental units as a good thing. If the builders build too much, which is a possibility, we will start see rents come into line. If they don’t, then I’ll likely leave Ballard and pay less in rent.
I attempted to cheer up my neighbor and he was rude and angry towards me. I excused myself from the conversation telling him I couldn’t continue as I understood economics. There are reasons for my neighbor to be pessimistic. They are known. All I was attempting to do was provide some much needed balance to this discussion, but he wasn’t receptive. Lesson learned.