Inland Northwest Market Update: August 2021

Apartment Values Skyrocket

Owning apartments has become more complex through the years and this trend has accelerated in the last 3 months.  Rents are rising faster than owners can increase, plus the national eviction moratorium expired for 2 days, was reinstated, then was struck down in Supreme Court last week.  There are also major changes in state legislation and labor shortages that have put significant pressure on landlords.

One consolation for landlords:  Apartment values have increased at record levels in the last 3 months.  I have personally seen owners sign contracts for multifamily property sales at prices far beyond what they could have imagined when they first acquired the property.  If you are looking at historical sales as a benchmark of value, you are likely underestimating the value of your assets in today’s market.

Overall Market

  • The Supreme Court struck down the CDC’s eviction moratorium last week, noting the “irreparable harm by depriving them of rent payments”.  What does this mean for landlords?  If you’re in Washington state, not much.  Other states in the Inland Northwest vary, but you are now likely bound by permanent legislation, not the federal moratorium.  Either way, the future is unclear as managers and landlords interpret what this ruling means in practical terms.
  • Investor demand for multifamily is through the roof and the national market has seen an increase in property sales, with sights on a record sales volume year in 2021.
  • Home prices continue to rise and housing affordability is plummeting, turning first-time home buyers and retirees into renters, especially in the Inland Northwest.  For example, the Average home price grew +53% in Boise and +38% in Spokane since 2019, the two fastest-growing markets in the Mountain West.
  • Close behind home prices is rent growth. Boise rents grew +45% and Spokane +38% since July 2017.
  • In speaking with a regional property manager this week, they told me, “If you don’t have plans to raise your rents +15% in the next 2 months you will find yourself too far behind the market to catch up over the next 2 years.”  Do you have plans for rent increases?  If not, email or call me, and together we can make sure you’re not left behind the market by $300/unit.
  • If this feels overwhelming or you’re simply tired of the new headaches that come with owning apartments, know that you can realize close to 75% of the increase in rents by selling your property and letting the next investor navigate these changes.


  • If you have not received a value estimate of your assets in the last 2 months, reach out so we can walk through what your property is worth in today’s market.  Values and investor interest are changing monthly, and you should be working with someone who is in tune with local dynamics and investor interest, not just historical sales.
  • For a few months, I’ve been talking about rent growth, rent growth, rent growth.  But why?  Why are rents rising so rapidly?  This article from GlobeSt outlines the following drivers:
    1) Demand for rentals exploded in 2021, especially for new renters with higher incomes
    2) Renewals increased as many people decided to stay put during the pandemic, decreasing apartment availability for new renters
    3) Legislation (eviction bans, just cause termination) added costs that get passed on to renters
  • In addition to these national factors, migration to the Inland Northwest has surged because:
    1) People left major cities and suburbs
    2) Employers allowed more work-from-home
    3) Millennials have started families and desire more space to roam
  • These national and regional factors combined is a tidal wave for rent increases in the Inland Northwest.

Local News

  • Rural population growth in the Inland Northwest significantly exceeded the national average over the last 10 years.  Washington, Idaho, and Montana exceeded national growth by +9.3%.  This interactive map shows clear migration to the Inland Northwest.
  • This migration trend will continue to change our markets in the next 10 years.  Some investors are already shifting their focus from Boise and Eastern Washington to Montana, hoping to be early to this trend.
  • In the labor market, there are 1.4 million more jobs available than there are people looking for work.  This is hurting builders the most, but also presents challenges to property managers, value-add investors, and multifamily service businesses (HVAC, landscaping, etc.)
  • At the same time, Washington State increased the weekly unemployment benefit by 50%.  The state’s new weekly benefits range from $595 to $1,229.  That translates to a $31,000 to $64,000 annual salary.  What’s this mean for property owners?  Expect an increase in operating expenses, particularly payroll and service contracts.
  • Last month Pasco, WA made waves announcing new food processing and distribution facilities, bringing 5,000+ new jobs in the next 2 years.  This month Moscow, ID received attention when Schweitzer Engineering Laboratories (SEL) announced a 162,000 SF manufacturing facility opening in 2023.


  • Even among labor shortages, supply costs, and uncertain legislation, developers are moving forward with new projects and exciting opportunities to create value, especially in multifamily development in the Inland Northwest.
  • For example, I’ve helped two developers source 17+ acres for multifamily development, one of which is an affordable housing project. Combined these will bring 300+ new apartments to the Tri-Cities over the next 2 years.
  • In addition, I have 65+ acres of multifamily sites on my radar coming to the Tri-Cities in the next year. Want to make sure you’re one of the first to see these opportunities? Reach out and let’s connect on your buying criteria.

With all the headwinds facing long-term owners and the influx of new capital into multifamily, here is my summary:

1) If you are going to hold onto assets another 7+ years: make sure you have a great management team, keep rents at market rates, and mitigate increases in expenses where possible
2) If you think you might sell in the next 7 years: there is a good chance now is a perfect time and you won’t see this high of relative value in the next 7 years.

You should know exactly what your property is worth in today’s market before deciding which path forward.
If you would like to receive a valuation analysis, send me your current rent roll and a recent operating statement and I’ll get to work to make sure you’re equipped to make the best decision regarding your holdings over the coming years.

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