High demand for apartment rentals continues in Yakima, with not enough supply, survey shows

The Yakima Housing Authority's new apartment project on Fruitvale Boulevard was supposed to be ready to house people at the end of 2023. But increasing costs and difficulties getting supplies have pushed its opening to next year, said YHA Executive Director Lowel Krueger.

Those challenges fold into the larger trends in Yakima's apartment market: high demand, particularly for affordable housing, and not enough supply. 

Rents have remained relatively steady through the first nine months of 2023 in Yakima County, according to the latest quarterly report from University of Washington's Center for Real Estate Research, hovering between $920 and $950 on average for all units. The state's monthly average in the survey was $1,766.

Yakima County’s rents are some of the lowest in Washington, but Krueger said a low vacancy rate has an impact.

“Rents may be the lowest in the state, but if there isn’t anywhere to rent, it doesn’t help,” Krueger said.

Supply

The vacancy rates for all types of apartment units was around 2.2% in the third quarter – between July and September – in Yakima County, the UW report found.

That rate is even lower for two-bedroom units, which tend to be more expensive and had a vacancy rate of just 1.8%. Demand is also high for three- or four-bedroom apartments, said Bryan Ketcham, director of housing services at Catholic Charities.

“Demand for housing of any type, but particularly affordable housing for very low- and low-income families is high, particularly for larger unit sizes,” Ketcham said.

Ketcham added that high demand, low supply and inflation push rents upward in Central Washington.

The survey samples 5,720 apartments in Yakima, which is just a portion of the more than 30,000 renter-occupied housing units in the county, according to the U.S. Census Bureau.

Krueger has characterized a healthy vacancy rate for a market as closer to 5%. Yakima’s vacancy rates were between 6.7% and 6.9% in the last six months of 2022, but Krueger said that the housing market last year and this year do not feel that different.  

YHA has felt the low vacancy rate, Krueger said, and many of its housing units are full. One way YHA helps people find low-income housing is by distributing vouchers for rental assistance. Krueger said housing has been so hard to find that YHA has extended the deadlines on many housing vouchers.

Rick Glenn, a Yakima landlord who will join the Yakima City Council in January, said he’s seen even tighter vacancy rates for low-income housing.

“There’s a little bit more supply on the higher end stuff,” Glenn said.

Glenn owns more affordable housing targeted at lower income tenants. He said units are so in demand that he rarely has to advertise them; prospective tenants often reach out and apply.

Costs increasing for housing providers

Increasing costs for insurance, construction and maintenance have made housing more expensive.

Materials and cleaning costs for refurbishing or turning over units have skyrocketed, Glenn said. He added that many of the supplies he buys have decreased in quality recently, so they require replacement more often.

Krueger said those increased costs extend to larger projects like electrification of residences, which also can require buying or replacing appliances. It also means construction of housing takes longer -- YHA has felt delays in its efforts to build more housing.

Landlords, housing providers and renters aren’t the only ones who see those cost increases, though. Krueger and Ketcham said that a combination of factors affected insurance rates for their organizations.

“The continued increase in climatic events have had a significant impact on the insurance industry,” Ketcham said. “The cost of construction materials has driven up building costs and therefore, replacement costs from an insurance perspective.”

“There’s almost this view that the West Coast is going to burn down,” Krueger said. “The pricing has increased dramatically.”

Krueger and Glenn have noticed insurers pulling out of the market or reducing their portfolios. That includes reinsurers – YHA is self-insured through as risk pool with other housing providers. The companies that insure that pool are splitting it up into smaller pieces.

Higher insurance premiums stem from the same cost increases housing providers already face. If construction, refurbishment or renovation is more expensive, it's more expensive to rebuild housing and therefore costs more to insure it.

“There’s a number of different cost drivers that are going up,” Krueger said. “That will trickle back into the market, it has to.”

Rents have remained stable for most of the year, but Krueger thinks they could start to increase as costs for housing providers climb, though he is not sure when or how much those increases might be.

Painfully exiting the pandemic

Rental assistance from Yakima County for those affected by the pandemic ended over the summer and Glenn said some tenants who were relying on that aid may struggle to pay for housing as costs for other essentials like gasoline and groceries increase.

Evictions are on the rise again after rental assistance and the pandemic eviction moratorium kept people in apartments. With three months left in the year, 2023 already has seen the highest number of evictions filed in court since 2019 in Yakima County, and monthly eviction rates have increased toward the end of this year, according to county data.

Glenn said that evictions are becoming a last resort, though. The legal process is often expensive and lengthy for landlords, he added, and he said he’ll work with tenants to find other solutions.

The risks and costs associated with eviction also make him less likely to take chances on renters.

“It’s not a fun situation. I hate to see anyone not have a place to live. But at the same time, you have to pay the bills,” Glenn said. “It strengthens the resolve of landlords because they can’t take the risk, which is sad because everyone deserves a second chance.”

Ketcham has noticed that inflation has outpaced wage increases. That can leave low-income renters out in the cold – literally – if they need to choose between housing and other essentials like food, fuel and medication.

“Many families have seen their incomes increase due to increases in minimum wage in the last few years, but wage increases have not kept up with inflation, especially if you look at the long terms trends over the past few decades,” Ketcham said.

Krueger said the low vacancy rate is proof that people still need housing and that there’s room for growth in that critical industry.

“We still have an ability to build and provide additional units in the community and we still won’t saturate the market,” he said. “It’s all desperately needed.”