Investor Resources, Multifamily, Quarterly Market Pulse, Uncategorized / Investing, multifamily, Real Estate Investment
Market Pulse Logo_MF Blue-02-02
Q2 • 2025

TMGMultifamily

MARKET PULSE

A Snapshot of the Pacific Northwest Multifamily Housing Market

Market Update

We are pleased to share positive news across the four markets TMG actively tracks. All regions are currently performing well, with the most encouraging indicators pointing toward continued decreases in vacancy rates and projected rent growth in the coming months.

While each market has unique factors influencing local performance, the broader trend remains consistent: declining housing supply paired with increasing demand. Notably, the Tri-Cities area continues to absorb new units as a result of residual construction projects nearing completion. In contrast, the other three markets are experiencing a significant slowdown in new development, further tightening supply.

Delinquency Update

TMG has historically maintained delinquency rates below market averages. Beginning in Q2 2025, we implemented a more proactive delinquency response strategy, shortening timelines for action and improving outcomes. As a result, delinquency rates across all TMG-managed portfolios—regardless of market or rent tier—have improved by 8.5% compared to Q1. We will continue monitoring this trend, particularly as labor market fluctuations and layoffs could impact tenants’ ability to meet rental obligations.

Legal Updates

Washington State:

On May 7, 2025, Washington State’s House Bill 1217 was signed into law as an emergency measure, taking immediate effect. The bill introduces significant changes to landlord-tenant regulations, rolled out in two phases: May 7 and July 27, 2025.

Key Provisions: Rent Increase Restrictions (Effective May 7, 2025)

  • Rent Cap: Increases are now limited to the lower of 7% + CPI or 10%. (Current CPI = 10%; effective Jan 1, 2026 = 9.683)
  • New Tenancy Rule: No rent increases may be issued within the first 12 months of a tenancy.
  • Notice Period: All rent increases must be delivered with a minimum of 90 days’ notice.
    Statutory Form Requirement: The state mandates the use of an official Statutory Rent Increase Form.
  • Lease Type Parity: Landlords must ensure rental parity between lease types for a specific unit, limiting rent variation to no more than 5% between month-to-month and fixed-term leases.
  • Service of Notices: As of May 7, rent increase and renewal notices must be personally served. Beginning July 27, notices must also be sent via certified mail.

Exemptions to Rent Caps:

Certain tenancy types are exempt from rent increase limitations. Landlords must include specific supporting documentation and rationale within the notice to claim an exemption. Exemptions include:

  • New Construction: Residential units are exempt for 12 years following the issuance of the first certificate of occupancy. This does not apply to renovated or rehabilitated buildings.
  • Owner-Occupied Triplexes and Fourplexes: Properties where the owner occupies one of the units may qualify, provided the property is not owned by a corporation or similar entity.

For the full list of exemptions, refer to Section 102 of Chapter 59.18 RCW.

City of Vancouver Rental Registration Program:

Starting January 2026, all long-term rental property owners will be required to register their units each year and pay a $30 per-unit fee. This fee will be waived for the first year for units registered within the first 90 days of the program launch. Rental registration will require submission of unit-level data, such as address, number of bedrooms and bathrooms, year built, and whether the unit is income-restricted. Inspections will begin in mid to late 2027 after the registration system is established and shaped with community input.

The ordinance also establishes a tenant relocation fund to help lower-income households move from uninhabitable units. Certain types of housing, such as short-term rentals, shelters, hospitals and owner-occupied units, are exempt from the requirements, and fee waivers are available for qualifying income-restricted properties.

 

Download & Print the Full Report
Market Pulse Logo_MF Blue-01

VANCOUVERMultifamily

12 Mo. Delivered Units
1,605		 12 Mo. Absorption Units
1,926		 Vacancy Rate
7.6%		 12 Mo. Asking Rent Growth
1.0%
  • To date, asking rents of $1,720/month have moved past the larger metro average rate of $1,680/month, with cumulative rent gains in Vancouver amounting to approximately 38.5% over the past decade.
  • Vancouver has 630 units in the construction pipeline across various stages of development. These projects will expand existing inventory by around 1.6%, but the pace of construction has slowed substantially over the past year and the current pipeline is 85% smaller than its recent peak.
  • Multifamily leasing in Vancouver has driven trailing 12 month absorption to 1,900 units, versus the five-year average annual rate of 1,500 units. Given continued upward pressure on population growth, absorption is now set up to significantly outpace supply over the remainder of 2025.
Market Pulse Logo_MF Blue-01

PORTLANDMultifamily

12 Mo. Delivered Units
6,324		 12 Mo. Absorption Units
5,175		 Vacancy Rate
7.5%		 12 Mo. Asking Rent Growth
0.1%
  • Steady apartment leasing has driven absorption over the past 12 months to 5,200 units. This figure is below the 5 year high of 11,000 units, but well above the historical average annual figure of 3,200 units. The vacancy rate is hovering around 7.5%, with downward momentum anticipated over the remainder of 2025.
  • There are 3,000 units underway as of the third quarter of 2025, which will expand existing inventory by 1.2%. Net deliveries over the past 12 months total 6,300 units Based on absorption of 5,200 units over the same period, a slight supply overhang lingers, but Portland’s vacancy rate is already on a downward trajectory.
  • Market asking rents in Portland have been relatively stagnant over the past two years, currently trending to $1,680/month. Year-over-year growth measures 0.1%, while the national index gained 0.9% over the same period. Over the past decade, Portland has averaged rent growth of 3.1% annually.
Market Pulse Logo_MF Blue-01

SALEMMultifamily

12 Mo. Delivered Units
751		 12 Mo. Absorption Units
856		 Vacancy Rate
6.2%		 12 Mo. Asking Rent Growth
1.3%
  • Apartment asking rents in Salem have changed by 1.3% over the past 12 months. The annual performance has downshifted significantly from the recent peak of 7.7% reached in 2022. For reference, average annual rent growth over the prior five years equates to 3.8%.
  • Salem’s vacancy rate comes in at 6.2%, and a slightly higher ceiling has formed near-term, but as leasing stabilizes and construction starts slow, occupancies will slowly strengthen again.
  • Trailing 12-month absorption equates to 850 units, which compares to Salem’s 10-year average rate of 590 units. The region’s multifamily construction expansion—which began in earnest over the past five years—will add to supply in the coming quarters, but has witnessed a pullback from peak activity that took place in 2023.
Market Pulse Logo_MF Blue-01

TRI-CITIESMultifamily

12 Mo. Delivered Units
844		 12 Mo. Absorption Units
834		 Vacancy Rate
8.6%		 12 Mo. Asking Rent Growth
2.6%
  • The Kennewick-Richland metropolitan area, better known as the Tri-Cities, is one of the best-performing small markets in the nation. The market has a vacancy rate of 8.6%, down from a recent all-time high of 10.5%. The rate for established properties not still in their leaseup period is around 5%.
  • The average asking rent runs about $1,490/month, having risen 2.6% over the past year. That growth rate is one of the best in the Pacific Northwest and compares to a national average annual rent growth rate of 0.9%. Unlike many markets, the Tri-Cities has not seen a single quarter with falling year-over-year rent growth over the past 15 years.
  • The market is in relative balance. Over the past 12 months, developers added about 840 new market-rate units to the inventory while renter households absorbed 830 units.

The TMG Multifamily Quarterly Market Pulse is brought to you by TMG Multifamily, an AMO accredited property management company providing a full suite of management services for existing apartments, new developments, lease-ups, and mixed-use properties. TMG partners with investors to proactively identify strategic opportunities and maximize their return on investment. Locally owned and regionally focused, TMG has been helping clients reach their financial goals since 1985.

Carmen Villarma

CARMEN VILLARMA, CPM
President
The Management Group, Inc.
carmen.villarma@tmgnorthwest.com
(360) 606-8201

Vancouver/Clark County
7710 NE Vancouver Mall Dr Ste B
Vancouver WA 98662

Portland Metro
16520 SW Upper Boones Ferry Rd Ste 250
Portland OR 97224

Salem
698 12th St SE Ste 240
Salem OR 97301

Tri-Cities
30 S Louisiana St Ste 1
Kennewick WA 99336

 All data in this report is pulled from CoStar.

Related Posts

Scroll to Top