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Kidder Mathews Releases Annual Report on Seattle and Puget Sound Microhousing Market

Posted In — Market Research | Trend Article

Kidder Mathews’ multifamily team led by Dylan Simon and Jerrid Anderson has released its annual study on the Seattle and Puget Sound microhousing market.

“Microhousing continues to exhibit relative resilience in an otherwise softening residential landscape. That said, investors should always keep a close eye on the supply and demand dynamics of each submarket,” said Anderson. “So far, there have been no microhousing sales in 2024. As the apartment investment market softened over the last few years, microhousing demand and values were deeply impacted. Since August, we’ve seen more competition and price escalation to buy apartments in Seattle, and as this continues into 2025, we expect the pricing pendulum for microhousing to swing back in the sellers’ favor.”

Key takeaways in the study include:

Microhousing Is Re-Legalized

In April 2024, the state passed HB 1998, requiring cities and counties within urban growth areas to permit “co-living” housing in any zone that allows at least six multifamily residential units. This marks a complete reversal of the anti-microhousing bill that Seattle enacted in 2014. Seattle’s mayor has already introduced the implementation of the legislation to the city council. By the end of 2024, this legislation is expected to take effect, once again enabling microhousing development in all areas where multifamily housing is permitted.

Small Efficiency Dwelling Unit (SEDU) Rents Continue to Hold Firm

Among microhousing types, SEDU fundamentals have stood out by demonstrating their resilience

amid a softer year for residential real estate. Rents for this product are up 2.5% year-over-year, as compared to a decline of 1.0% and 2.7% for studios and micros, respectively.

Fundamentals Vary Across Submarkets

However, the story is not necessarily the same from submarket to submarket with some microhousing markets showing substantial year-over-year increases in both occupancy and rental rates, while others fall behind. From what we can see, it always comes back to supply and demand.

Affordable Housing Groups Scale Back

Challenging market conditions and a lack of funding availability have caused affordable housing groups to scale back investment activity. In turn, this has reduced the number of sales and subsequent visibility of pricing trends this past year.

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 and purchase of apartment buildings and development land across the entire State of Washington. The team of 10 brokerage professionals specializes in the sale and purchasing 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 fully independent commercial real estate firm in the Western U.S., with over 900 professionals in 19 offices across Washington, Oregon, California, Idaho, Nevada, and Arizona. We offer a complete range of brokerage, appraisal, asset services, consulting, and debt & equity finance services for all property types. Kidder Mathews averages over $10 billion in transaction volume, manages more than 57 million square feet of space, and conducts 2,600 appraisal, consulting, and cost segregation assignments annually. For more information, visit kidder.com.

Read the full report at the link below.

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Contact

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

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