Seattle is a major seaport city located on the West Coast. The city has the largest population in the State of Washington as well as in the entire Pacific Northwest. The City of Seattle is home to nearly 745 thousand residents, while the Seattle metro area is estimated to hold 3.94 million people. In recent years Seattle has consistently ranked as one of the fastest-growing major cities in the United States with an annual population growth of 2-3%.
Seattle’s early economic and social development was based on the logging industry, but even before the end of the 19th century the city had emerged as an important commercial and shipbuilding center and a gateway to Alaska. In the past century a number of major companies became based in Seattle. One of the most significant economic drivers in the 20th century was the establishment of the Boeing company, which turned Seattle into a top aircraft manufacturing location. The founding of Microsoft in the 1980s determined the fate of Seattle as a technology hub as well. In the 1990s Amazon was also founded in the city.
In more recent years Seattle’s economy has benefited from an influx of software, Internet, and biotechnology companies which brought with themselves a lot of young people and have been one of the main reasons for the rapid population increase in the Seattle housing market. Due to the young, highly qualified population, Seattle offers one of the highest minimum wages in all of the US.
Speaking of the labor market, Seattle has a below-average unemployment rate at 3.1%, and the local job market is expected to grow by 44% in the next 10 years, exceeding the US average growth forecast. At the moment the median household income of a Seattle resident stands at $67,365. This is higher than the nation’s median level of $53,482. The strong economy and labor market are among the main reasons for the impressive performance of Seattle real estate investments and one of the drivers of the positive Seattle housing market forecast 2020.
Seattle attracts not only people looking for good job openings in the long term but also numerous short term visitors. In 2018 the city welcomed a record-breaking 40 million tourists. This outstanding number of visitors had positive repercussions on a series of economic and financial indicators such as revenue, employment, and taxes. Furthermore, the fact that Seattle stands out as one of the most visited cities in the US sets Airbnb Seattle as a profitable real estate investing opportunity.
Overall, the Seattle real estate market is supported by a strong growth in the economy, labor opportunities, population, and tourism. Such a housing market is destined for success and is one that is not expected to slow down any time soon. If you think want to have a share of the profit of Seattle investment properties, continue reading our Seattle housing market report to figure out everything you need to know about the investment opportunities there.
Seattle Housing Market Overview
- Median Property Price: $737,100
- Price per Square Foot: $504
- Real Estate Appreciation: 171% in the last ten years (significantly above the Washington and the national average)
- Days on Market: 69
- Listings for Sale: 106
- Price to Rent Ratio: 26 (high)
- Buyer’s Market or Seller’s Market: A buyer’s market
- Renters’ Percent of Population: 54%
The Seattle housing market 2020 is an ideal location for real estate investors looking for a high return on buying rental properties. Seattle exhibits a residential real estate market which is diverse in neighborhood and property prices, neighborhood amenities, and property types.
As a first step in our Seattle housing market analysis, we’ll look at what PwC’s annual Emerging Trends in Real Estate 2020: United States and Canada report has to say. According to the publication, Seattle is in the top 10 US Markets to Watch for Overall Real Estate Perspectives. Seattle is leading the Washington housing market as the city hosts more than half of the state population. The Seattle housing market forecast 2020 is that residential real estate will continue to attract more and more investors. In 2016-early 2019 the city already accounted for 3.4% of the national real estate transaction volume, and investors are definitely in an expanding mode in Seattle.
Keeping in mind the high demand from investors and the constantly growing population, it comes as no surprise that homes for sale in Seattle get listed for significantly more than the national median property home value. The median property price for Seattle housing amounts to $737,100 – according to Mashvisor real estate data analysis – which exceeds the national level of $231,000 by 219%. Such high home prices are something to be expected in a competitive market like the Seattle one. However, real estate investors planning to buy a rental property in the Seattle housing market in 2020 should take into considerations the average property prices and budget accordingly.
As affordability has become an issue in Seattle, the good news for investors – as well as homebuyers – is that the local housing market is cooling down. In 2020 Seattle is forecast to be a buyer’s market, and Zillow predicts that the prices of Seattle homes for sale will decline by 0.9% in the coming year. This means that 2020 is the best time to search for an investment property in the Seattle housing market as investors will have an abundant inventory to choose from and will not face pressure from other property buyers.
At the same time, rental demand will remain strong, as indicated by the high price to rent ratio of 26. Such a high price to rent ratio means that renting is more economical than buying a home. Accompanied by the large proportion of renters (56%) and the ever-increasing population, this positive trend translates into an even wider pool of tenants for residential real estate investors in Seattle in 2020.
Best Property Types for Investing in the Seattle Housing Market
- Single Family Homes for Sale in Seattle, WA: 61 listings
- Median Property Price: $795,700
- Price per Square Foot: $484
- Average Monthly Traditional Rental Income: $2,570
- Average Traditional Cash on Cash Return: 1.1%
- Average Monthly Airbnb Rental Income: $2,340
- Average Airbnb Cash on Cash Return: 0.2%
- Condos for Sale in Seattle, WA: 28 listings
- Median Property Price: $564,100
- Price per Square Foot: $544
- Average Monthly Traditional Rental Income: $1,970
- Average Traditional Cash on Cash Return: 1.7%
- Average Monthly Airbnb Rental Income: $2,560
- Average Airbnb Cash on Cash Return: 2.1%
- Townhouses for Sale in Seattle, WA: 13 listings
- Median Property Price: $746,200
- Price per Square Foot: $524
- Average Monthly Traditional Rental Income: $2,410
- Average Traditional Cash on Cash Return: 0.8%
- Average Monthly Airbnb Rental Income: $3,390
- Average Airbnb Cash on Cash Return: 1.6%
- Multi Family Homes for Sale in Seattle, WA: 2 listings
- Median Property Price: $1,664,500
- Price per Square Foot: $473
- Average Monthly Traditional Rental Income: N/A
- Average Traditional Cash on Cash Return: N/A
- Average Monthly Airbnb Rental Income: N/A
- Average Airbnb Cash on Cash Return: N/A
- Foreclosed Homes for Sale in Seattle, WA: 23 listings
- Median Property Price: $617,200
- Price per Square Foot: $494
- Average Monthly Traditional Rental Income: $2,120
- Average Traditional Cash on Cash Return: 1.7%
- Average Monthly Airbnb Rental Income: $2,170
- Average Airbnb Cash on Cash Return: 1.2%
As the Seattle housing market data above reveals, single family homes are the most numerous type of real estate listings there. They comprise 58% of the housing inventory, followed by condos with 26% of the market share, townhouses which make up 12% of listings, and multi family homes for sale which constitute less than 2%.
Why Invest in Single Family Homes in Seattle
One of the main reasons why investors in the Seattle housing market 2020 should consider single family homes for sale is the fact that they are the most numerous property type for sale. This gives investors the chance to conduct careful real estate market analysis and diligent property search to find an investment property which meets all their criteria and expectations. While the median price of single family homes for sale in Seattle is a bit higher than the city level, this doesn’t mean that all listings of this type sell for that much. Indeed, savvy investors will be able to find good deals with the help of a Property Finder and an investment property calculator. Moreover, beginner Seattle housing market investors should keep in mind that single family homes make for optimal rental properties as they constitute a stable source of rental income and offer a stable return on investment.
Why Invest in Condos in Seattle
An important attraction of condos for sale in the Seattle housing market is the low listing price. Nevertheless, this property type costs the most per square foot as it comes with more amenities and with a homeowner’s association (HOA). importantly, Seattle condos emerge as the most profitable property type as they have the highest rate of return on a rental property for both rental strategies: traditional and Airbnb. Before deciding to buy a condo, however, first-time real estate investors should not forget to check out the rules and regulations of the HOA as many of them prohibit or at least limit renting out.
Why Invest in Townhouses in Seattle
According to Seattle real estate market analysis for 2020, townhouses get listed for a price comparable to the citywide home value. While townhouses offer more or less the same traditional rental income as an average Seattle home for sale, the Airbnb rental income generated by this property type is significantly higher than the city average. Although investors have relatively few townhouses to choose from in the Seattle housing market, they can turn into a profitable real estate investing strategy, especially when listed as an Airbnb Seattle rental.
Why Invest in Multi Family Homes in Seattle
Multi family homes for sale in the Seattle housing market cost close to $1.7 million on average. This is understandable considering the fact that they host a few housing rental units and provide investors with an opportunity to buy multiple rental properties within the same building and in the same location. However, they are an unaffordable option for investors who face limited savings and who will have to choose between a single family home, a condo, or a townhouse.
Why Invest in Foreclosed Homes in Seattle
Speaking of investors with restricted financing options, buying properties below market value is an excellent opportunity to join the millions of successful property investors in the US housing market in 2020. Foreclosures are one easily accessible source of below market value properties available to investors in Seattle. Foreclosed homes for sale in Seattle are not only an inexpensive but also a profitable possibility for investing in Seattle rental properties. They boast higher returns than other property listings. Nevertheless, if you are a beginner investor, remember that home inspections are crucially important when buying a foreclosure in order to get an accurate estimate of the required fixes and repairs before you can start renting out your investment property and making money from it.
Important Stats for Seattle Real Estate Investors
- Crime Rate Index: 3 (100 is safest)
The Seattle housing market is safer than only 3% of US cities and faces a high crime rate of 61 crimes per 1,000 citizens.
- Walk Score: 73
- Transit Score: 60
- Bike Score: 70
Seattle, WA is ranked as the 8th most walkable city in the US housing market which boasts good public transportation and is also very bikeable. The most walkable Seattle neighborhoods comprise of Downtown, Pioneer Square, and First Hill.
- Cost of Living Index (Excluding Rent): 84
- Rent Index: 64
- Cost of Living Plus Rent Index: 74
The average cost of living in Seattle excluding rent is 16% cheaper than in New York City. rent in the Seattle housing market costs 36% less than in NYC. Overall, consumer prices including rent exceed the New York level by 26%.
Property Tax Rates
- Seattle Property Tax Rate: 0.829%
- King County Property Tax Rate: 0.953%
- Washington Property Tax Rate: 1.08%
Seattle real estate taxes are relatively low with an effective property tax rate for residential properties of 0.829%. This is below the national average property tax rate of 1.03%.
Property tax can constitute a significant share of the recurring rental expenses which an investor should factor in a rental property analysis. If you’d like to consider investing in states with no property tax, have a look at Alabama, Hawaii, Louisiana, Texas, West Virginia, and Wyoming.
Seattle Housing Market: Traditional Rentals
- Average Monthly Rental Income: $2,390
- Average Cash on Cash Return: 1.2%
- Price to Rent Ratio: 26
- Renters’ Percent of Population: 54%
- Optimal Property Type: Condo or single family home
- Optimal Number of Bedrooms: 0 or 4
- Traditional Rental Listings: 2,800
- 3 Best Neighborhoods for Traditional Seattle Rental Properties: Maple Leaf, Alki, and Loyal Heights
- 3 Worst Neighborhoods for Traditional Seattle Rental Properties: Columbia City, Sunset Hill, and Atlantic
Investing in traditional long term rental properties in the Seattle housing market 2020 offers endless chances for making money with investment properties. Traditional rentals are those which are rented out on a monthly or annual basis. As you can guess, demand for long term rentals is strong in Seattle due to the high percentage of renters, the growing population, and the high price to rent ratio. According to the Seattle housing market forecast 2020, investors in traditional rental properties will enjoy a wide pool of tenants while benefiting from an above-average return on investment in terms of both CoC return and cap rate.
Real estate data analysis conducted by Mashvisor estimates the average cash on cash return in Seattle at 1.2% for traditional rental properties. This CoC return is not bad when compared to the rate of return in other best places to invest in real estate in 2020. Moreover, this is only the citywide average, while savvy investors can definitely find Seattle neighborhoods and homes for sale which offer a much higher return.
To narrow down their property search, investors should focus on condos and single family homes when buying rental properties to rent out traditionally in the Seattle housing market. They should also look for properties with 0 or 3 bedrooms. Seattle market analysis shows that these investment properties are set to perform the best in 2020.
Landlord-Tenant Law and Regulations in the Seattle Rental Market
It is important to familiarize yourself with the landlord-tenant laws in any real estate market before investing in it, and Seattle is no exception. Landlords in the Seattle housing market have to check out and comply with city, state, and federal rules and regulations to avoid breaking the law. However, the existence of multiple landlord-tenant laws doesn’t mean that becoming a landlord in Seattle is impossible or unprofitable. To the contrary, buying a traditional rental property can be an amazing investment opportunity as long as you study the rules for renting out to tenants carefully. What matters the most is to treat investing in rental properties as a business and make all your decisions based on the rules and requirements.
Let’s have a look at the most prominent features of the Seattle landlord-tenant law. Tenants in the Seattle housing market are allowed to collect a security deposit as long as the amount is stated in a written rental agreement and – together with the move-in fees – does not go above the first month’s rent.
It is good news for Seattle property investors in long term rentals that there is no rent control in the city. Nonetheless, a landlord is obliged to notify his/her tenants of a housing cost increase of 10% or more in a 12-month period in a written form at least 60 days in advance. In case of a rent increase of less than 10%, the required notification period is 30 days.
While both parties to a lease agreement hope to never have to reach an eviction, it is a must for Seattle tenants to know the city and state law in this regard. To begin with, a property owner can evict a tenant only if the rental property is registered with the City of Seattle and only for good reasons. Some good causes for filing an eviction include the tenant’s failure to pay rent within 3 days after receiving a notice to pay rent or move out; the tenant has received at least 4 written notifications of overdue rent over the last 12 months; the tenant causes serious damage to the rental property; and others.
Best Neighborhoods in Seattle for Investing in Traditional Rentals
1. Maple Leaf
- Median Property Price: $534,800
- Price per Square Foot: $453
- Average Monthly Rental Income: $2,640
- Average Cash on Cash Return: 4.3%
- Walk Score: 70
Maple Leaf is forecast to be a great neighborhood for making real estate investments in the Seattle housing market in 2020. With both property prices and prices per square foot significantly below the citywide average, this is definitely one of the most moderately priced neighborhoods in Seattle. Furthermore, Maple Leaf is ranked as one of the best places to live in Washington which makes it perfect for attracting tenants. The average return on investment in this area exceeds the Seattle level significantly, and with diligent neighborhood analysis investors can find top-performing traditional rental properties within their budget.
- Median Property Price: $710,000
- Price per Square Foot: $490
- Average Monthly Rental Income: $3,590
- Average Cash on Cash Return: 2.4%
- Walk Score: 51
Seattle housing market analysis reveals that Alki is another profitable neighborhood for investing in long term rentals in the city. While the prices of homes for sale in Seattle in this area are close to the median citywide level, the expected rate of return on a rental property in 2020 is a few times higher than on average. The reason for this is the very high forecast traditional rental income of $3,590. Alki is yet another great place to live in Washington which explains the excellent return on investment for traditional rental properties.
3. Loyal Heights
- Median Property Price: $546,100
- Price per Square Foot: $553
- Average Monthly Rental Income: $2,780
- Average Cash on Cash Return: 2.0%
- Walk Score: 77
Loyal Heights is the preferred home to many young professionals working and residing in the Seattle housing market. The fact that this segment population prefers to rent rather than own a home is one of the main reasons for the high profitability which investors can enjoy in Loyal Heights. The moderate property prices, the strong rental demand, and the good rental income are all necessary components for the success of residential real estate investments in this neighborhood.
- Median Property Price: $562,800
- Price per Square Foot: $370
- Average Monthly Rental Income: $2,530
- Average Cash on Cash Return: 1.9%
- Walk Score: 50
Seattle real estate market analysis ranks Fauntleroy as #4 among the best neighborhoods in Seattle for owning a rental property as a landlord. The area boasts particularly low price per square foot which makes it a fairly priced option even for beginner investors. Finding good real estate deals in the Fauntleroy housing market is easy with the help of the right property search and investment property analysis tools.
- Median Property Price: $699,000
- Price per Square Foot: $440
- Average Monthly Rental Income: $3,220
- Average Cash on Cash Return: 1.7%
- Walk Score: 82
In our Seattle housing market report 2020 Garfield emerges as yet another excellent neighborhood for buying a long term rental. An important feature of this area is the high traditional rental income, which is the main driver of the good return on investment. Moreover, Garfield is one of the most walkable Seattle neighborhoods, which makes it an attractive option for tenants.
6. North College Park
- Median Property Price: $299,000
- Price per Square Foot: $312
- Average Monthly Rental Income: $1,570
- Average Cash on Cash Return: 1.7%
- Walk Score: 74
If you are still thinking where to invest in long term rentals in Seattle, give the North College Park neighborhood some consideration. Many young professionals live there, and the majority of residents rent. Importantly, property values there are only a fraction of the median value of homes for sale in Seattle. Indeed, North College Park will be the most affordable neighborhood for rental property investing in the Seattle housing market in 2020.
Seattle Housing Market: Airbnb Rentals
- Average Monthly Rental Income: $2,550
- Average Cash on Cash Return: 0.9%
- Average Airbnb Occupancy Rate: 61.1%
- Optimal Property Type: Condo or townhouse
- Optimal Number of Bedrooms: 1 or 3
- Airbnb Rental Listings: 7,137
- 3 Best Neighborhoods for Traditional Seattle Rental Properties: Uptown, First Hill, and Dunlap
- 3 Worst Neighborhoods for Traditional Seattle Rental Properties: Portage Bay, Jackson Place, and Fremont
- Airbnb Seattle Legal Status: Legal for up to two dwelling units, one of which must be the host’s primary residence. Certain registrations and licenses are required to operate a short term rental legally.
- Annual Events in Seattle with the Highest Airbnb Occupancy Rate:
- Seattle Boat Show: late January-early February
The fact that this is the most sizeable boat show on the northwestern coast of the United States comes as no surprise taking into consideration the location and status of Seattle. This exhibit takes place both indoors and outdoors hosting over 1,100 recreational watercraft and accessories besides seminars on related subjects.
- Emerald City Comic Con: March
Together with Halloween, this is the largest dressing up event in Seattle held on an annual basis. It is usually attended by close to 100,000 visitors.
- Seattle St. Patrick’s Day Celebration: St. Patrick’s Day
This is the oldest and most appealing observance of this holiday in Northwest USA, named one of the “Five places to get your green on” by CNN. the culmination of the week-long activities is the parade bringing together more than 30,000 spectators.
- Lilac Bloomsday Run: early May
Around 50,000 participants from near and far join the biggest timed road race in the world which has been running for as many as 40 years. The race features a post-run party and selection of delicious foods at the Bloomsday Food Court.
- Northwest Folklife: Memorial Day Weekend
For more than 40 years, Seattle has been celebrating the traditions of all groups in the Northwest region. Each year this festival brings hundreds of thousands of participants and attendees.
- Hoopfest: late June
A total of 7,000 teams, 3,000 volunteers, and 250,000 players and sports fans get involved in the greatest 3-on-3 street basketball tournament around the globe. The games happen on 450 courts covering 42 downtown city blocks bursting with live music, sports equipment shopping opportunities, barbeque food, and other interactive entertainments.
- Seafair: June-August
Hundreds of thousands of people decide to spend the summer in Seattle, attracted by the fresh and salty water around. Furthermore, they get to participate in and enjoy over 75 different events over the course of eight weeks.
- Seattle International Film Festival: November-December
SIFF constitutes the largest film festival in the US and has been running for 45 years. More than 400 documentaries, short films, and audience features from over 85 countries participate in the festival which brings over 175,000 guests each year.
- New Year’s Eve Space Needle Fireworks: 31 December
Few other cities in the US have such a spectacular New Year celebration to offer as the fireworks shooting off the Space Needle in Seattle.
As stated earlier in this Seattle real estate market report 2020, the tourist sector is one of the leading industries in Seattle. The multiple attractions, the year-round events, and the water attract 40 million visitors throughout the year. The local, domestic, and foreign tourists coming to Seattle all year-round have made Airbnb Seattle such a profitable real estate investing strategy.
Analysis of the available real estate data by Mashvisor shows that Seattle features both a high Airbnb occupancy rate and a good Airbnb rental income. The average cash on cash return for Seattle short term rentals amounts to 0.9%. This is a good Airbnb cash on cash return considering that this is just a citywide average. Meanwhile, the best Seattle neighborhoods for vacation rentals offer a much higher return on investment for this rental strategy. The key to successful Airbnb investments in the Seattle housing market – as well as any other location – is conducting diligent rental property analysis.
Airbnb Seattle Laws and Regulations
Before deciding to buy an Airbnb property in any market, an aspiring Airbnb host should study the local Airbnb laws and rules. Luckily for those who are thinking of investing in an Airbnb rental property in the Seattle housing market, this will be a legal and viable option in 2020.
In 2017 the Seattle City Council passed new short term rental regulations which are supposed to come into effect fully on 15 December 2019. However, they have already experienced a few delays and postponings.
The main reason for introducing these new Airbnb Seattle regulations was the impending affordable housing crisis. Due to the higher return on investment, many investors in the Seattle housing market decided to go for Airbnb rentals instead of traditional rentals, thus limiting the housing opportunities for those who don’t own a home.
The most important things which Seattle Airbnb hosts should keep in mind to comply with the new regulations include:
- To operate short term rentals in Seattle, you need to obtain a business license tax certificate from the City of Seattle. Applications can be submitted online, and the processing time takes up to 48 hours.
- If an Airbnb Seattle property is subject to Seattle’s Rental Registration and Inspection Ordinance, the rental property should be registered with the Seattle Department of Construction and Inspections.
- An Airbnb Seattle host also needs to apply for an STR regulatory license at the Seattle Services Portal. This license is to be renewed annually and costs $75.
- Short term rental operators can operate up to two units in the Seattle housing market. One of these has to be the primary residence of the Airbnb host, while the other can be an investment property. Moreover, rented rooms without separate kitchens and bathrooms do not count as a unit and do not require licenses.
Owners of short term rentals in the Seattle real estate market which are not properly registered and licensed by 15 December 2019 will face serious fines and other penalties.
The stance which the Seattle City Council has taken with regards to vacation rentals has facilitated the growth of the Airbnb Seattle rental business. Unlike many other previously most profitable locations for Airbnb rentals, Seattle has decided to keep the option of buying an investment property for the sole purpose of renting it out on Airbnb or another home sharing platform open. This is one of the reasons for the strong investor demand in the Seattle housing market, where even out of state investors can go for short term rental properties.
Real estate investors should remember that they need to pay taxes on the short term rentals which they operate. It is important to study these taxes in advance and include them in the investment property analysis before buying a rental property to ensure a positive cash flow property with a high rate of return.
Best Neighborhoods in Seattle for Investing in Airbnb Rentals
- Median Property Price: $350,100
- Price per Square Foot: $596
- Average Monthly Rental Income: $3,320
- Average Cash on Cash Return: 4.8%
- Average Occupancy Rate: 68.2%
- Walk Score: 94
Analysis of the Seattle housing market shows that Uptown will be the best Airbnb location in 2020. The most attractive features for Seattle real estate investors is the low property prices, compared not only to other Seattle homes for sale but also the nationwide home values. Moreover, Uptown is one of the most walkable neighborhoods in Seattle, a characteristic which out of state Seattle Airbnb guests find important. Buying a short term rental in Uptown will be a top choice in 2020.
2. First Hill
- Median Property Price: $637,300
- Price per Square Foot: $571
- Average Monthly Rental Income: $3,730
- Average Cash on Cash Return: 4.6%
- Average Occupancy Rate: 60.9%
- Walk Score: 97
First Hill is another top-performing neighborhood for Airbnb Seattle rental properties. Importantly, this area is also one of the most profitable ones for long term rentals in the Seattle housing market 2020. The fact that First Hill is a strong location for both rental strategies supplies investors with the option to change their focus in case short term rentals face further restrictions in Seattle in the coming years.
- Median Property Price: $380,000
- Price per Square Foot: $307
- Average Monthly Rental Income: $3,520
- Average Cash on Cash Return: 3.8%
- Average Occupancy Rate: 74.0%
- Walk Score: 83
Another great location for investing in Seattle short term rentals is Dunlap. What distinguishes this area from all the other Seattle neighborhoods is the impressively high Airbnb occupancy rate. Combined with the low property prices, this trend provides above-average Airbnb rental income and amazing return on investment for Airbnb Seattle.
- Median Property Price: $515,700
- Price per Square Foot: $736
- Average Monthly Rental Income: $3,650
- Average Cash on Cash Return: 3.5%
- Average Occupancy Rate: 69.1%
- Walk Score: 98
Yet another top performing neighborhood for Seattle vacation rentals, Belltown is also one of the most walkable areas in the Seattle housing market. Airbnb rental properties in this location benefit from a high rate of return. Real estate investors should keep in mind that Belltown is ranked as one of the best neighborhoods to live in Seattle, which means that it is also a good choice for house hacking. If you decide to buy a home as well as an investment property to rent out on a short term basis in Seattle in 2020, Belltown is your optimal location for the former.
5. Phinney Ridge
- Median Property Price: $975,000
- Price per Square Foot: $508
- Average Monthly Rental Income: $5,820
- Average Cash on Cash Return: 3.1%
- Average Occupancy Rate: 57.0%
- Walk Score: 82
Investment property buyers looking for the best places for profitable Airbnb rental properties in 2020 should consider Phinney Ridge. This is one more of the top Seattle neighborhoods for buying an Airbnb property. While homes for sale in Seattle get listed for significantly more in the Phinney Ridge housing market, the forecast Airbnb rental income for 2020 is also well above the citywide average. The ultimate result is a high return on investment, which is what investors care most about.
6. Central Seattle
- Median Property Price: $600,000
- Price per Square Foot: $594
- Average Monthly Rental Income: $3,530
- Average Cash on Cash Return: 2.5%
- Average Occupancy Rate: 68.6%
- Walk Score: 93
The last position on our list of the best neighborhoods in the Seattle housing market 2020 for investing in a short term rental property is occupied by Central Seattle. This residential area emerged as yet another location with above-average Airbnb occupancy rate and Airbnb income in the Seattle real estate market analysis. The median property price in Central Seattle is below the city average, while this area boasts a walkability score.
Investing in Seattle Real Estate: Optimal Rental Strategy
Analysis of the Seattle housing market reveals that both rental strategies – traditional and Airbnb – can be very profitable and let investors make money from real estate in 2020. Nevertheless, Airbnb Seattle is the winning real estate investing strategy for 2020.
With regards to the return on investment, Seattle short term rentals yield a higher rate of return than traditional Seattle rental properties. The Airbnb cash on cash return is more than 4 times higher than the traditional cash on cash return in the Seattle real estate market. This is the main factor which gives advantage to this rental strategy.
It is important to note that vacation rentals are expected to remain fully legal in 2020 albeit some registration and licensing requirements. This distinguishes the Seattle housing market from the vast majority of major US cities where Airbnb has become illegal for non-owner occupied rentals and investment properties. The decision of the Seattle City Council to regulate but not prohibit vacation rentals sets the Airbnb Seattle rental business industry for further expansion, success, and profitability in 2020 and beyond.
Why You Should Invest in Real Estate in Seattle in 2020: The Pros
There are many reasons which make buying a Seattle investment property a smart investment move in 2020. First of all, Mashvisor real estate data and analysis shows that Seattle rental properties – both traditional and Airbnb – will offer stable and reliable return on investment. The rental income generated in the Seattle housing market is sufficient to compensate for the relatively high property prices and provide investors with a good rate of return on rental properties.
Another top reason to buy an investment property in Seattle in 2020 is the fact that the local market is expected to remain a buyer’s market. Seattle real estate listings are spending longer days on market, resulting in a rich inventory of homes for sale in Seattle. Moreover, although prices are significantly above the median home value in the US housing market as a whole, they are forecast to drop mildly in 2020. This means that even beginner real estate investors will be able to find a profitable income property, facing less competition from experienced investors and homebuyers.
If your budget is tight and you don’t have many rental property financing options, you should look into investing in a foreclosure. Just like in any other housing market, foreclosed homes for sale in Seattle offer a great deal as they come at discounted prices. After some fixes and repairs, foreclosures are ready to bring the same rental income and return on investment as any other property type. Moreover, forcing appreciation on them is easier and cheaper, resulting in the best return in the long run.
With regards to traditional long term rentals, landlords in the Seattle housing market do not have to worry about the legal issues. While the Seattle and Washington landlord-tenant laws make sure to protect the rights of tenants, they also provide enough protection for investors in traditional rental properties.
Similarly, Airbnb Seattle remains one of the very few fully legal real estate investment opportunities nationwide. While the local authorities in the majority of major US cities have been busy limiting and even prohibiting short term rental in non-primary residences and non-owner occupied properties, the Seattle City Council took a slightly different approach. Seattle short term rentals have been regulated by a relatively new ordinance, but they remain legal for both primary residences and second homes. Seattle Airbnb hosts can register and license up to two short term rentals, which means that buying an investment property for the sole purpose of renting it out on Airbnb or another home sharing platform remains a feasible option for housing investors in Seattle in 2020.
Last but not least, the Seattle economy promises to remain strong in the coming year, with a growth rate exceeding the national average. Population growth is also forecast to be above the average as young professionals move to Seattle in search of high-paying jobs. These factors will continue to drive demand in the Seattle rental market. Combined with the nationwide low mortgage rates, 2020 will be the best time for real estate investors to purchase a rental property in the Seattle housing market.
Why You May Not Want to Invest in Real Estate in Seattle in 2020: The Cons
Of course no housing market is perfect and comes without any drawbacks. Even though the prices of Seattle houses for sale are expected to stop increasing, they remain quite expensive for both local Washington real estate investors and those out of state. The high Seattle home prices pose a few challenges to investors. First of all, buying a rental property in the Seattle housing market is harder to finance than in other profitable locations. Second, investing in expensive real estate comes at a higher risk of default on the mortgage. Nevertheless, if you can afford the home values, owning a Seattle rental property will be one of the best real estate investing strategies in 2020.
Another factor which investors, especially new ones, should keep in mind before entering the Seattle housing market, is the strong competition from other investors. While the housing market is cooling down as a whole, investor demand is expected to remain strong, as highlighted in the PwC report. So even if regular people are not buying homes on a large scale and prefer to rent (as a result of the high price to rent ratio), investors in income properties will put some upward pressure on property prices. All this means is that you have to prepare yourself before moving forward with investing in rental properties in Seattle.
Seattle Housing Market Forecast 2020
Real estate experts agree that the outlook for Seattle housing market trends in 2020 and beyond is very positive. From investors’ point of view, the expected minor decline in property values in the next 12 months is good news as it will somewhat alleviate the affordability issue. At the same time, according to the Seattle real estate market forecast, new construction will be down which means that home prices will not drop enough to compromise long term return on investment properties in Seattle. A Seattle housing bubble is not expected any time soon.
Another one of the important Seattle housing market trends for 2020 will be the high demand from investors. Investors will be attracted to Seattle by the growing economy, the increasing population, the young highly paid labor force, the high rental demand, and the investor-friendly legislation. If you want to get a share of the profits available for rental property investors in Seattle, you should hurry up and buy an investment property sooner rather than later.
A major part of the Seattle housing market forecast 2020 is also the fact that Airbnb Seattle will remain legal. While Seattle vacation rentals will face more regulations such as required registration and licensing than in previous years, they will still continue to be a feasible independent real estate investment strategy.
Additional Resources for Investors in the Seattle Real Estate Market
Best Seattle Investment Properties
Buying rental properties with a high return on investment in the Seattle housing market is easier with the help of smart real estate investment tools. To begin with, a heatmap tool can show you a color-coded Seattle neighborhood map highlighting the top Seattle neighborhoods for investing in both long term and short term rental properties. In addition, you can use a Property Finder to search through the 106 Seattle homes for sale to filter those which meet your criteria such as budget, property type, optimal rental strategy, and number of bedrooms and bathrooms. With the help of an investment property calculator, you can conduct a detailed analysis of the rental properties which meet your search criteria to find the best Seattle investment property in line with your budget, preferred rental strategy, expected return on invested capital, and other criteria.
Top Real Estate Agents in Seattle, WA
Hiring one of the best Seattle real estate agents comes with many benefits, especially for first-time investors, those out of states, and those preferring passive real estate investments. Top-performing real estate agents in the Seattle housing market can help you find and close a profitable deal. Here are some of Mashvisor’s most popular Seattle real estate agents:
Real Estate Auctions in the Seattle Housing Market
Investing in a foreclosure is one of the best ways to buy cheap real estate in Seattle as well as in any other market. If you’re interested in buying one of the foreclosed homes for sale in Seattle in 2020, you should check out house auctions and other related events happening in the Washington real estate market.
Property Management of Long-Term Rentals
Buying a Seattle rental property doesn’t have to amount to becoming a landlord, dealing with tenants, managing your income property, and tackling all the other daily tasks related to investing in traditional rentals. Instead, you can hire a professional property management company to turn your rental revenue into a stream of passive income.
Property Management of Short-Term Rentals
Investing in an Airbnb Seattle property can be a passive real estate investing strategy too. After all, not everyone is excited about becoming an Airbnb host and dealing with Airbnb guests firsthand. Hiring one of the best rental property managers in the Seattle housing market is the solution.
Our Top Blogs for Investors in the Seattle Housing Market
If you’d like to expand your research on the Seattle real estate market before deciding whether to buy an investment property there, you can have a look at some of our top-performing real estate blogs on the local housing market:
- 2019 Seattle Housing Market: Still a Good Choice for Investment?
- Seattle Housing Market 2019: 5 Best Places to Invest
- Should I Invest in Airbnb Seattle in 2018?
- What’s Up with Seattle Real Estate Investing
- Seattle Remains to Be One of the Top Airbnb Cities
Other Top Real Estate Markets for Investing in Rental Properties
If you’re not sure that buying a rental property in the Seattle housing market 2020 is the right real estate investment strategy for you, you should have a look at other top-performing markets:
- Atlanta Housing Market
- Austin Housing Market
- Baltimore Housing Market
- Boston Housing Market
- Charlotte Housing Market
- Chicago Housing Market
- Columbus Housing Market
- Dallas Housing Market
- Denver Housing Market
- Houston Housing Market
- Jacksonville Housing Market
- Las Vegas Housing Market
- Los Angeles Housing Market
- Miami Housing Market
- Nashville Housing Market
- New York Housing Market
- Orlando Housing Market
- Palm Springs Housing Market
- Philadelphia Housing Market
- Phoenix Housing Market
- Portland Housing Market
- Raleigh Housing Market
- Sacramento Housing Market
- San Antonio Housing Market
- San Diego Housing Market
- San Francisco Housing Market
- Tampa Housing Market
- Washington Housing Market