After a record decline in average rents in 2023, rents began climbing again this year despite increased vacancy rates.
Average rents for buildings with at least 20 units in the county decreased by about $100 between fall 2022 and winter 2023 — the longest and largest dip in rents since at least 2014, when the Washington Center for Real Estate Research first began recording rental data.
The decline was driven by an overproduction of multifamily housing, which followed a surge in rents from early 2020 to mid-2022. This surge was fueled by a domino effect of pandemic-related disruptions, inflation and high demand, experts say.
Increased investment in the multifamily industry spurred development, said Terry Wollam, a broker at Wollam and Associates. Construction outpaced the demand for rental housing, he said.
“COVID created a fever for building rental projects,” Wollam said.
The number of building permit applications for apartments in Vancouver doubled between 2016 and 2022, according to the city’s development dashboard.
Once developers realized too many units were being built and interest rates were climbing, it was too late. Many had already closed on the property and started the construction process.
“You’re stuck,” Wollam said. “You have to see it through and finish it.”
Clark County’s rental vacancy rate increased from a five-year low of 1.8 percent in 2021 to 4.4 percent in fall 2023. With more options for housing, rents went down.
The relief for renters was short-lived.
Clark County rents are creeping up toward 2022 levels, according to the most recent data from the Washington Center for Real Estate Research, which pegs average rent at $1,612 in mid-2024.
Developers are making less money on projects than they thought they would due to overproduction, Wollam said, so higher rents are required to make investments in multifamily development profitable.
“It’s going to force rent to come up so that it incentivizes people to invest in and build new rental properties to meet demand,” Wollam said.
Experts predict the trend, which is reflected nationally, will continue into 2025. Rents are expected to increase by 1.5 percent across the country in 2025, according to a Yardi Matrix report, which would be $24 on $1,600 rent.
Despite increasing rents, vacancy rates reached 5.1 percent in 2024 — the highest level since at least 2018, according to Washington Center for Real Estate Research. Construction projects finally opening up units after years of development contribute to that high, Wollam said.
It’s unusual for the market to go through such a strong downturn in new apartment project construction. An overproduction of apartment units to provide for higher demand, increased interest rates and decreased apartment values for investors has created a perfect storm.
“This is more dramatic by far than what is common,” Wollam said. “One thing, you can overcome. But three things — that’s going to take a while to allow for a correction.”
