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Pacific Northwest Real Estate Investment Market Report: Dec. 2019

Three words that can make or break an investor – capital gains taxes. The taxes from selling your investment property range from 15 to 30 percent, when state and federal taxes are combined. Ouch, there goes your profit margins or money for future investments. So how can you, as an investor, avoid them? The 1031 Exchange.

The 1031 Exchange is a powerful tool, making it a favorite among savvy and successful investment professionals. Let’s dive into the basics of the 1031 Exchange.

What is a 1031 Exchange?

A 1031 exchange gets its name from the Internal Revenue Code, Section 1031, which allows you to avoid paying capital gains taxes on an investment property upon its sale – as long as the profits are reinvested in like-kind properties. Like-kind refers to the nature or character of the investment rather than the form; therefore, any investment property can be exchanged for another type of investment property. In theory, an investor could defer capital gains on investment properties until death, potentially avoiding them altogether.

read more about using 1031 exchanges

Market Activity

Seattle, WA
Market Overview
According to Institutional Property Advisors, competition for tech talent powers Seattle’s apartment market into the next decade with major expansions by Facebook, Google, Amazon, Microsoft and a recent announcement by Apple bringing thousands of jobs to the Puget Sound region. Bellevue and Kirkland will most likely be prime areas among highly paid employees looking for housing. Those not in the tech industry are increasing the rental demand outside the urban core. In areas such as Everett, Kent and Federal Way, trading longer commutes for lower monthly rent.
829
Homes Sold
$665,000
Avg. Home Price
$2,138
Median Rent
Data Source: U.S Census Bureau - Quarterly
4.4%
Rental Vacancy Rate
0.9%
Homeowner Vacancy Rate
4.5%
State Unemployment Rate
Metro Area Unemployment
Bellingham, WA
4.9%
Bremerton-Silverdale, WA
4.5%
Kennewick-Richland, WA
4.8%
Lewiston, ID-WA
2.9%
Longview, WA
5.9%
Mount Vernon-Anacortes, WA
5.3%
Olympia-Tumwater, WA
4.8%
Vancouver-Hillsboro,WA
3.5%
Seattle-Tacoma-Bellevue, WA
3.3%
Spokane-Spokane Valley, WA
4.9%
Walla Walla, WA
4.5%
Wenatchee, WA
4.2%
Yakima, WA
5.3%

Market Activity

Portland, OR
Market Overview

Rent growth in Portland metro remains strong at 3.4 percent, with the strongest growth in Washington County at 4.5 percent over the year. The annual rent change for the city of Portland was 3 percent, the strongest being 1 bedroom units at 3.5 percent. Occupancy rates did not see much change over the year, according to a report by Colliers International.

880
Homes Sold
$446,000
Avg. Home Price
$1,548
Median Rent
U.S Census Bureau: third quarter 2019
5.4%
Rental Vacancy Rate
1.1%
Homeowner Vacancy Rate
4.1%
State Unemployment Rate
Metro Area Unemployment
Albany, OR
4.0%
Bend-Redmond, OR
3.4%
Corvallis, OR
2.8%
Eugene, OR
3.9%
Grants Pass, OR
4.5%
Medford, OR
3.6%
Portland-Vancouver, OR-WA
3.5%
Salem, OR
3.7%

Market Activity

Boise, ID
Market Overview

Colliers International states in a report that the Canyon County apartment segment should continue to expand as both Nampa and Treasure Valley continue to grow. Its strong and diverse economy paired with the high quality of life, Treasure Valley is pushing growth over 2% annually. Demand is expected to continue to rise due to the construction of the new Amazon distribution center.

442
Homes Sold
$330,000
Avg. Home Price
$1,180
Median Rent
6.9%
Rental Vacancy Rate
1.5%
Homeowner Vacancy Rate
2.9%
State Unemployment Rate
Metro Area Unemployment
Boise City, ID
2.3%
Coeur d'Alene, ID
2.8%
Idaho Falls, ID
1.9%
Lewiston, ID-WA
2.9%
Logan, UT-ID
1.5%
Pocatello, ID
2.3%
Twin Falls, ID
2.2%
*Rental vacancy, homeowner vacancy and state unemployment rates are from the U.S Census Bureau. Homes sold and average home price data is from Redfin.com. Median Rent data is from rentcafe.com.

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