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One of the nation’s best-performing multifamily markets, Seattle took a hit during the pandemic. However, the market has fully recovered and the outlook looks bright, according to Carl Whitaker, director of research and analysis at RealPage. “It’s emblematic of the gateway markets that were slow out of the gate, but it has certainly had a nice run of performance lately,” he says.

As of September, RealPage estimates 8% year-over-year rent growth for Seattle. Whitaker says at the market’s lowest point in 2021, rent cuts were about 8%, with the market reverting well above last year’s low.

“Seattle has been one of our markets that we have flagged for some time now as a top gateway market,” says Whitaker, citing strong economic and demographic drivers. “The market is well positioned for the long haul. It doesn’t mean that there won’t be some short-term hiccups, like a demand blip and maybe some localized supply headwinds. By and large, we really like the Seattle market outlook moving forward.”

According to RealPage, there are about 27,000 units under construction in the metro area, which is about at the peak for the market. A lot of the development is happening in Seattle’s urban core as well as the eastern inner-ring suburbs with big-scale corporate campuses.

“In every submarket in Seattle, outside of some of the far-reaching ones, development is pretty ubiquitous,” Whitaker adds.

However, Whitaker says the market is undersupplied. “Looking back at what should have been developed in Seattle in the 1990s and 2000s, that never really was developed. Now the market is looking to catch back up on the supply gap.”

On the investment side, RealPage has seen about $8 billion worth of properties traded in the market—above the pre-pandemic peak of about $7 billion in 2019.

“The investment activity in Seattle hasn’t expanded to the degree of a lot of the Sun Belt markets, but we have seen investment come back up to pre-pandemic peaks,” says Whitaker. “I think that is a good proxy indicator of how investors are feeling about the market today versus two years ago when there was more uncertainty.”

Whitaker says he is watching the demand side heading into 2023. The nation overall in the third quarter recorded negative net absorption, the first time it has been seen in a third quarter since RealPage began tracking the information. He adds that looking ahead to 2023, he thinks some of today’s external economic factors like rising interest rates, inflationary pressures, and global uncertainty will influence near-term household formation.

“We have seen that household formation has been put on pause. Where demand looks a little better though is if you look at resident retention. We see resident retention in a market like Seattle has started to recover closer to its pre-pandemic norms. Late in 2020 and early in 2021, we saw retention rates plummet, and that probably was a good signal of some of those move-outs happening from Seattle,” he says. “I think if you look at demand from a new household formation, that will be a little weaker in the coming 12 months; retention rates appear to be more stable so I think the demand outlook is good, but maybe not great, for the near term.”