Both Mike Scott, one of the region’s best experts on rental housing prices, and I often share a frustration about how rent increases and decreases get reported. Usually, when rents go up over a short period of time, the headlines blare about “skyrocketing” rents on the front page. When they go down, or flatten, that news usually ends up buried in the real estate pages or unreported. After all, when rents go down, housing isn’t an issue anymore, what everyone including politicians care about are jobs, jobs, jobs. But Dupree + Scott’s latest report on rental housing prices, The Apartment Vacancy Report, shows we we’ve discussed many, many times: rents go up and down. And, as I pointed out to blunt denials by Councilmember Licata, operating costs are going up. That makes rent control a disasterous policy even if the City could enact it. The bottom line is that we’re not is a housing crises as characterized by many at City Hall.

Here are three key paragraphs in the Dupree + Scott report. First, new construction skews prices higher. When accounting for the “skew toward the new,” prices aren’t going up that fast.

If you look at the in-city Seattle market where a lot of the new units are happening, between the stadiums, Ship Canal, Lake Washington, and Puget Sound, the impact of new construction on rents is even more obvious. Adjusting for new construction, rents went up just 3.9% in the past twelve months. That’s down from 8.4% a year earlier. We expect the rate of rent increases to slow further as more new units open over the next few years.

And what’s coming up with prices? Will they be “skyrocketing” in the near future? Probably not.

And survey respondents agree. Last fall 72% of the survey respondents told us they planned to increase rents in the next six months by an average of 2.9%. They were close. Rents rose 2.6% between last fall and this spring. Now only 32% say they expect to raise rents by next March. As a result, we expect rents to increase about 1.5% by spring.

And the stubborn fingers-in-my-ears-nyah-nyah-nyah resistance to the idea that operating costs are going up faster than rents?

As you can see from the chart on page 1, rents are cyclical. Sometimes investors forget that. They shouldn’t. Since 2000, rents have gone up, down, and flattened out, resulting in an increase of just 2.8% compounded annually, excluding the distortion caused by new construction. By comparison, real estate taxes and utilities increased 5.4% compounded annually over the same period

The truth is that rental housing prices in Seattle have never been, quantitatively all that bad. Over time they’ve gone up — but they’ve also gone down. Overall, Seattle has been doing a relatively and comparatively good job dealing with growth, producing housing that’s almost keeping up with supply. What is worrisome are the inflationary measures the Council is always proposing in outright denial of Dupree + Scotts numbers; things like rent control, impact fees, linkage taxes, and inclusionary zoning.

And in an email Mike Scott made this great set of additional points:

I was also trying to point out that (1) the rate of rent increase in Seattle is already slowing – so where’s the crisis, and (2) rents went up more in the rest of the Puget Sound region than they did in Seattle – so what makes Seattle so special it needs the state to change the law [for rent comtrol?]

What can we do to prevent a trend of “skyrocketing” rents? We can build more new housing that will become the affordable housing of tomorrow, and we can stop considering destructive interventions that will make things worse like rent control, when they aren’t really that bad right now.

You can read the executive summary for yourself here at this link: Fall2015RentalMarketTrends