WHY TENANT RENT DELINQUENCIES IN SEATTLE WILL INCREASE IN 2023?

May 19, 2023 0 comment

Written by: Eric Davis

Like many cities worldwide, Seattle has been affected by the COVID-19 pandemic. As the city slowly recovers from the economic downturn caused by the pandemic, there are several reasons to believe that tenant rent delinquencies in Seattle will increase in 2023. This article will examine the underlying factors contributing to this trend and discuss the implications for both tenants and landlords in Seattle.

A photo displaying rent increase.

FACTORS CONTRIBUTING TO TENANT RENT DELINQUENCIES

High Cost of Living – Seattle is best known for its high cost of living^[1], partly due to the city’s strong job market and desirable location. However, this high cost of living can be a significant challenge for many tenants, particularly those who are low- or middle-income. Before the pandemic, many Seattle tenants struggled to pay their rent due to the high cost of living. The pandemic has only exacerbated this problem, with many tenants losing their jobs or experiencing reduced income. As the economy recovers, many of these tenants will likely continue to struggle to make ends meet, increasing rent delinquencies.

Housing Affordability – Housing affordability is a significant issue in Seattle^[2], with many tenants needing help finding affordable housing in the city. In recent years, rental prices in Seattle have been rising faster than wages, making it increasingly difficult for tenants to afford decent housing. The pandemic has further worsened this situation because of tenants facing these financial difficulties due to job loss or reduced income. With rental prices continuing to rise, it is likely that many tenants in Seattle will struggle to keep up with their rent payments, also leading to increased rent delinquencies.

Eviction Moratoriums Ending – The eviction moratoriums put in place during the pandemic have provided important protection for tenants who have been struggling to pay their rent. However, as these moratoriums are phased out, tenants who are still facing financial difficulties may be at risk of eviction.
In Seattle, the eviction moratorium expires in 2022^[3]. Landlords can evict tenants behind on their rent, which leads to increased rent delinquencies due to the expired suspension.

An image of notice of eviction.

Mental Health – The pandemic has significantly impacted mental health, with many people experiencing increased anxiety, depression, and stress. This can substantially affect a tenant’s ability to manage their finances effectively, including paying their rent on time.
In Seattle, where the cost of living is high and rental prices are increasing, tenants who are struggling with mental health issues may find it particularly challenging to keep up with their rent payments leading to an increase in rent delinquencies in the city.
Furthermore, mental health challenges can be even more significant for tenants who have experienced considerable loss, like the death of someone they love or the loss of a job. These individuals may be more likely to fall behind on their rent payments as well, increasing rent delinquencies.

Economic Instability – Economic instability is one of the primary reasons for the predicted increase in tenant rent delinquencies. Despite the efforts of governments around the world to reduce the impact on the economy by the pandemic, the global economy has been shaken to its core. Many people have lost their jobs or have seen their earnings reduced, making it difficult for them to pay their bills, including rent.
Although many countries have implemented measures such as rent freezes, eviction moratoriums, and financial assistance programs, these measures could be more sustainable in the long term. As governments gradually phase out these programs, tenants that are still struggling to make ends meet may fall behind on their rent payments and so leading to increased rent delinquencies.

Unemployment and Underemployment – The pandemic has also caused a significant increase in unemployment and underemployment worldwide. Even after the economy begins to recover, it is likely that many people will continue to struggle to find work or will be unable to secure full-time, permanent employment.
For tenants who are unemployed or underemployed, paying rent can be a significant challenge. Without a steady source of income, paying rent can be difficult to keep up with which then leads to increased rent delinquencies.

IMPLICATIONS FOR TENANTS AND LANDLORDS IN SEATTLE

The predicted increase in tenant rent delinquencies in Seattle has significant implications for both tenants and landlords.

For tenants, falling behind on rent payments can cause various negative outcomes, including eviction, damage to credit scores, and homelessness. Paying rent fully and on time will avoid penalties and other consequences.

Eviction- Paying rent late can cause you to default on your lease, which points your landlord to file and start eviction proceedings.
Damage to Credit Score- in some cases, landlords can communicate with credit bureaus, which can cause a long-term impact on your credit—similar to defaulting on a loan.
Homelessness– in King County, it is experienced that at least one out of 22,500 households has been homeless, which recorded the highest number back in 2018.

Rental Payment as one of the factors for credit score.

For landlords in Seattle, increased rent delinquencies can lead to a decrease in rental income, making it more difficult to maintain properties and pay bills. It can also lead to increased evictions, which can be costly and time-consuming. Being a landlord is not for everyone. You may feel timid about raising the rent or being protective of how your property is treated, which can cause conflicts. You may even become friends with your tenants, or they may already be family or friends. If you cannot be firm about rent increases or property care, you could collect rent well below market price or with an undervalued property.

To address these challenges, tenants and landlords must work together to find solutions. Financial assistance from the government and other organizations can be a good start to this. It may also require landlords to be flexible and understanding with tenants who are struggling to pay their rent.

CONCLUSION

Overall, the expected increase in tenant rent delinquencies in Seattle in 2023 reflects the ongoing challenges facing city residents in the wake of the COVID-19 pandemic. Addressing these challenges will require collaboration and support from both tenants and landlords, as well as from government and community organizations. By working together, it may be possible to mitigate the impacts of increased rent delinquencies and support the long-term stability of Seattle’s rental market. Davis Property Management representatives are responsive to change. Our passion for Real Estate permeates our daily work and empowers our team; it is at the heart of our company. Call us now at 425-658-7471 or send us an email at info@davispropertymanagement.com.

Links and References:

https://realestate.usnews.com/real-estate/articles/what-is-the-cost-of-living-in-seattle

https://www.seattle.gov/rsji/racial-equity-research/housing-affordability

https://www.zillow.com/research/rents-larger-homeless-population-16124/