2023 Q4 Seattle & Puget Sound Apartment Market Dynamics

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apartment market dynamics

The apartment market in Puget Sound – and across Washington state – continues to experience the adjustment in market conditions felt across the nation and the world in 2023. Specifically, uncertainty and pricing volatility define the market.

  • Rental rates remain relatively steady but are trending moderately downward across all market segments. The only exceptions are the markets that experienced sharper declines earlier in 2023, which now show signs of stabilization.
  • Vacancy continues as the metric to watch. While every market in the region must contend with threats of rental rate decline and oversupply, the early indication of this phenomenon is vacancy rates approaching 7% — a tipping point for landlords to adjust rental rates downward.
  • Sales of apartment buildings continue a sluggish trend with sustained moderation (or a complete stall) in sight. In this case, the massive rise in interest rates throughout the last 18 months simply overwhelmed the investment sales market, resulting in a 50%+ plunge in sales volume and pricing declines more than 20%.


Cap rates reach the 5% range, while sales volume continues to lag – leaving us to wonder when and how Seattle’s apartment market will evolve.

Sales Insight
Cap rates in the 5% range? That’s the prevailing trend that’s on the rise in Seattle — and it’s progressing toward 6%. Sales are slow to come with sellers and buyers inching closer together to facilitate successful transactions. However, sales volume is still significantly below peak pre-COVID levels, indicating that there’s still a ways to go in the market’s recovery.

Rent & Vacancy Insight
Vacancy rates have seen a marginal decline of 20 bps in apartment complexes with more than 50 units, coinciding with a one-point decrease in rents. In contrast, the 5-50-unit apartment segment has remained relatively stable with little to no fluctuation in both rents and vacancies. As for the future of rent growth in Seattle, the key questions lingering are when and by how much it will transpire.

North King

Vacancy rates have seen a marginal decline of 20 bps in apartment complexes with more than 50 units, coinciding with a one-point decrease in rents. In contrast, the 5-50-unit apartment segment has remained relatively stable with little to no fluctuation in both rents and vacancies. As for the future of rent growth in Seattle, the key questions lingering are when and by how much it will transpire.

Sales Insight
While we have seen a continued decrease in total transactions and sales volume in North King (similar to all markets due to rising interest rates), we are still seeing a lot of buyer demand for the few properties available in this region. In fact, this was demonstrated during our recent sale of a 121-unit apartment complex located in Northgate that generated 45 tours and 19 offers during our marketing campaign.

Rent & Vacancy Insight
While rent and vacancy trends continued a steady pace from Q2 to Q3, due to slowed demand and delivery of new apartments, during this same time period vacancy spiked for large (50+ unit) apartment buildings. Additionally, as new units continue to be delivered near the light rail station, prepare for the possibility of sustained increases in vacancy rates, even as we approach next year’s prime rental months.

East King

East King’s real estate market maintains a slow, but steady rhythm. As such, it will prove to be a coveted choice for investors due to its resilient pricing in a sea of uncertainty.

Sales Insight
In keeping with the prevailing 2023 market dynamics, East King’s sales activity continued its slow pace in Q3. Yet, despite the sluggish sales performance, East King remains a highly coveted option for investors with its pricing exhibiting a relative high compared to other markets. Thanks to this resilience and coupled with increasing interest rates, it’s foreseeable that sales volumes are likely to persist at a slow pace as we approach the year’s end.

Rent & Vacancy Insight
Rental rates and vacancy trends held steady in the 5-50-unit apartment segment. That’s in contrast to the properties with 50+ units. The latter constitutes a substantial 92% of the total inventory, which encountered a 20 bps surge in vacancy accompanied by a 2% reduction in rental rates. These fluctuations are primarily attributed to the poor performance of the summer rental market.

South King

Renters continue to show a preference for South King, supporting relatively stable rental and vacancy rates. However, buyers and sellers can’t seem to find a way to put deals together!

Sales Insight
Although transaction volume picked up in Q3, overall, 2023 sales volume is far from its historic pace. Thus, we expect the year to close with sales volume less than 50% of usual and cap rates at least 150 bps wide of pre-pandemic trends. Of course, given declining values, most South Sound owners are content to ride out the interest rate storm, instead betting on continued health of South Sound renter demand.

Rent & Vacancy Insight
Rental rates and vacancy rates alike confirm the strength of the South Sound rental market. In particular, owners of smaller, non-institutionally sized buildings are holding the line best with a slight (2%) uptick in rental rates year-over-year, all while maintaining sub-5% vacancy rates. Meanwhile, owners of larger buildings lost a bit of ground during the summer of 2023 with rates slipping 1%. However, the strongest sign of slowing demand was vacancy rates in these buildings expanding to 6%.

Snohomish County

Sales continued to slow in Snohomish in the last 90 days with a 50% decrease in total transactions and an 84% decrease in overall sales volume.

Sales Insight
We witnessed a very slow quarter in terms of total transactions in Snohomish with only two sales totaling $30M in volume. Furthermore, when comparing the quarterly sale metrics to annualized metrics from previous years, Snohomish also record the lowest price per unit average and lowest price per square foot average pricing in recent memory, coming in lower than any annual average recorded between 2017 and 2022.

Rent & Vacancy Insight
While Snohomish sales volume is down, we are continuing to witness a steady rise in rental rates for smaller, not institutionally owned buildings. This is likely due to renters deciding to leave the hustle of the city. That said, we expect to see a slight rental demand decrease in the difficult winter leasing months before the annual spring run-up.

Pierce County

Once a darling investment market, transaction volume in Pierce County is a ghost of its former self. As such, we expect sales volume declines of nearly 75% compared to historic averages.

Sales Insight
With only 21 sales year-to-date, it’s difficult to get a true sense of pricing in Pierce County. Pricing of suburban sales are not too far off historic averages but, due to significant oversupply of new apartments in downtown Tacoma, pricing is softening – especially for newer vintage buildings where fewer investors are in the market and stepping to the plate.

Rent & Vacancy Insight
Rental rates for both smaller and larger apartment buildings are holding fast with rates increasing from 0.5% to 2% year-over-year. More precisely, for the segment of smaller buildings, vacancy rates rose just above 5% in 2023. At the same time, vacancy for larger buildings – which have been massively affected by new construction in downtown Tacoma – experienced slight moderation, but still remains above 7% for the third quarter in a row.

Kitsap County

In Kitsap County, the real estate market is a rollercoaster of suspense with sales volume teetering around a decade-low performance.

Sales Insight
Kitsap County marked its third sale of the year with the potential to experience its first calendar year in a decade in which sales volume could dip below the $50 million mark. Therefore, the prospect of price discovery promises to be the catalyst for the Kitsap market’s resurgence.

Rent & Vacancy Insight
Kitsap County received a favorable shift in market dynamics during the third quarter as vacancy rates witnessed a significant and much-needed reduction of 120 bps. However, the challenges posed by the military supply of housing in the area still cast a shadow as an oversupply continues to persist, resulting in vacancies remaining 2% higher than the levels recorded during the same period in the preceding year. While progress has been made, the specter of oversupply remains a point of concern in the Kitsap County real estate landscape.


About the Dylan Simon and Jerrid Anderson apartment brokerage team
The apartment brokerage team led by Dylan Simon and Jerrid Anderson of Kidder Mathews represents apartment investors, developers, and landowners in the sale, purchase, and financing of apartment buildings and development land across the entire State of Washington. The team of nine brokerage professionals specializes in the sale and financing of apartment buildings and development land from $1 million to more than $100 million. For more information, visit simonandersonteam.com.

About Kidder Mathews
Kidder Mathews is the largest independent commercial real estate firm on the West Coast, with 900 real estate professionals and staff in 20 offices in Washington, Oregon, California, Nevada, and Arizona. Kidder Mathews offers a complete range of brokerage, appraisal, asset services, consulting, project and construction management, and debt & equity finance services for all property types. The firm performs $10.9 billion in transactions, manages 62 million square feet of space, and conducts over 2,600 appraisals annually. For more information, visit kidder.com.

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Simon | Anderson Multifamily Investments Team
Dylan Simon, Executive Vice President
Jerrid Anderson, Executive Vice President
Matt Laird, First Vice President
Winslow Lee, Vice President
Max Frame, Vice President
JD Fuller, Associate

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