When Spokane resident Sonja Mongar received notice of a 20 percent rent increase and was informed her apartment building might be sold and converted into condominiums, she found herself stuck between a rock and a hard place.
“I’m terrified to move out of here,” she said. “There’s no place to go. Ninety-nine percent of rentals are (already) rented. There’s nothing affordable, nothing comparable. I’m forced with having to move out of my neighborhood.”
Mongar is one of many renters affected by the rental affordability crisis. It’s been happening in Los Angeles, San Francisco and Seattle. But now it’s also occurring in Spokane County, with half of renters spending over 30 percent of their income on rent, according to a recent report.
Rental search site Apartment List – which used U.S. Census figures for median incomes and rent to compile the report – found Spokane County renters are “moderately to severely cost burdened,” meaning they spend more than 30 percent of their income on rent, according to federal government standards.
The severity of Spokane’s rental market has increased notably over the past year and a half, said Terri Anderson, co-director of the Spokane Tenants Union.
“There are many people in Spokane that are paying over 50 percent of income in rent,” Anderson said. “I get those calls all the time.”
Nationally, more than 49 percent of renters were cost-burdened in 2016, and although that number dropped to its lowest point since the Great Recession, it may be driven by high-income renters moving to an area rather than wages increasing for existing renters, according to the report.
Seattle’s share of cost-burdened renters is more than 47 percent – lower than Spokane County – but it’s because rent and incomes both increased rapidly.
For smaller metro areas such as Spokane, rents are rising while wages are remaining stagnant, said Sydney Bennet, senior research associate at Apartment List.
“There’s a crisis in every metro in the country where you have renters that can’t pay rent,” she said.
Low vacancy, high demand
Besides stagnant incomes, Spokane is facing another factor that’s driving up rent: low apartment vacancy and high demand.
Spokane has a 2.9 percent apartment vacancy rate with an average rental rate of $886, according to a September 2017 report by University of Washington’s Runstad Center for Real Estate Studies.
Last year, the vacancy rate hovered around 1.4 percent.
“Spokane is growing, and there are not enough apartments,” said Pamela Tietz, executive director of the Spokane Housing Authority. “It makes competition much more difficult and that’s also the cause of the rents going up.”
Spokane County experienced an average rent increase of $102 since 2016, and low vacancy rates fueled the fastest 12-month increase in average rental rates in the past 10 years, according to a 2017 NAI Black report.
Anderson said property managers she has spoken with claim they receive several phone calls from perspective renters minutes after posting a Craigslist apartment advertisement, and renters are sending landlords cash in envelopes to secure places sight unseen.
“It’s a very, very tight rental market and it’s having a real impact on low-income tenants,” Anderson said. “It’s getting really bad out there.”
Anderson also receives calls from renters looking at apartments that haven’t been cleaned between tenants and renters living in apartments with maintenance issues.
Normally, she would advise them to break their lease or move, but in this market, they don’t have much recourse, she said.
“Landlords have told tenants ‘if you don’t take (the apartment), somebody will,’ ” she said. “I hear reports that a lot of tenants are living in spaces that aren’t meant to be lived in, but they are so grateful to have a roof over their head.”
Households that can’t afford rent may face eviction, or those renting month-to-month are living in fear of receiving a 20-day notice to vacate.
“When the vacancy rate is this low, they can’t find anywhere to move to,” she said. “To be able to find another home is impossible.”
Monger said most tenants living in her building – who are also grappling with the rent hike – are senior citizens that have lived there 10 to 20 years with families in the neighborhood, so displacement becomes a much bigger deal than having to search for an apartment. It means they may have to uproot their lives.
“My 80-year-old mother lives in this neighborhood,” she said. “Our doctors are here, our families live in this neighborhood. We’re not the only ones this is happening to. It’s going to happen in the whole city.”
For the past two years, the number of multifamily building permits exceeded single-family detached permits. As a result, there’s been a boom of apartment construction, mostly on the outskirts of Spokane, said Joel White, executive officer of the Spokane Homebuilders Association.
“Every developer that’s building brand-new units is already at 100 percent capacity,” White said.
White said he’s seeing more duplexes under construction in Spokane Valley, but luxury apartment communities – such as Bella Tess – are also building more units in the area.
Spokane Valley added more than 662 apartments in 2016, which increased their vacancy rate to 4 percent, according to the NAI Black report.
Multifamily is a hot market, and builders can’t keep up with demand for all levels of housing, White said.
“My members are as busy as they’ve ever been, but there’s lack of (construction) workforce,” White said. “So, they can’t build faster. There’s a slowdown in construction because of this.”
Also, with multifamily permits in Spokane County nearing a historical high, it could signify an end of a growth cycle, so investment in new development is slowing, White said.
Rental apartments are easier to build, but take more time, while low-vacancy rates in existing apartments remain constant, Young said.
“So, there is a situation where you have multifamily development in the pipeline, while demand has also been growing with not enough units of existing stock around either,” said Young in an e-mail. “The result is rents moving faster than house prices in the short term.”
As demand for housing grows, more pressure will come into the labor market as employers need to pay more so people are willing to pay higher living costs in Spokane, Young said.
Young said renters could possibly transition to home ownership if interest rates remain low and they can qualify for a mortgage, but if that’s an issue, increased demand will stay in the rental market making the problem of rent increases “all the more acute.”
Construction of more than 1,620 market-rate apartment units will be completed by the end of the year and an estimated 877 units built shortly thereafter may reduce vacancy and rental rates next year, according to the NAI Black report.
“I think until we get some more inventory, (affordable housing) is going to be an issue,” Tietz said. “Safe and affordable housing is every family’s foundation.”
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