For most of the last decade, the Sun Belt was the default answer in apartment investing. Population was moving south, rents were climbing, and many syndication sponsors built their entire business around Texas, Florida, Arizona, Georgia, and the Carolinas. If you have looked at private real estate offerings, you have probably seen a lot of them.
We made a different choice. We buy older workforce apartment communities in Pierce and Snohomish Counties, Washington, and we have stayed there through the Sun Belt boom. This post explains why, using current public data, and it is honest about what we give up by investing here. The Sun Belt is not a bad place to own apartments. It is a different bet than the one we want to make.
The short version
Our thesis is simple. We want to own housing that is hard to replace, rented by people who are likely to keep renting, in a region where new supply is constrained and where the buildings we own do not compete head to head with new construction. The Puget Sound fits that thesis well. The Sun Belt, especially its fastest-growing metros, has spent the past few years working through the opposite problem: a very large wave of new apartments.
What happened in the Sun Belt
A record supply wave
U.S. apartment completions hit a level not seen in decades. RealPage reported that annual completions peaked at nearly 588,000 units in late 2024, and that the South led the nation throughout the cycle. Even after the wave started to recede, the South still delivered about 41,100 units in the third quarter of 2026, roughly half of all U.S. completions, with Dallas, Houston, Phoenix, Austin, and Atlanta delivering the most (RealPage, October 22, 2026).
Rents followed supply
When that many new units open at once, landlords compete for tenants, and rents soften. As of the third quarter of 2026, RealPage reported that the South was the only U.S. region with annual rent cuts and the only region with occupancy below 95 percent. San Antonio rents were down 3.7 percent over the year, and Denver, Charlotte, Tampa, and Houston saw annual declines of about 2 to 3 percent. Nationally, rents rose just 0.9 percent (RealPage, October 6, 2026).
To be fair to the Sun Belt
The demand was real. Austin, for example, absorbed a record of nearly 31,000 apartments in the year ending in the first quarter of 2025, roughly matching its record deliveries (RealPage, 2025). By the third quarter of 2026, RealPage reported that Phoenix and Austin had narrowed their annual rent cuts to less than 2 percent, and both saw rents rise from July to September. As new construction keeps slowing, many Sun Belt markets will likely recover. Our point is not that the Sun Belt is broken. It is that a market where developers can add supply quickly is a market where rents can be undercut quickly, and that is a risk we would rather not carry.
Why it is harder to build in the Puget Sound
Land is limited by law and by geography
Washington's Growth Management Act, first enacted in 1990, requires the state's faster-growing counties to designate urban growth areas, and growth outside those areas generally cannot be urban in nature (Washington State Department of Commerce; WAC 365-196-310). Add Puget Sound itself, the Cascades, lakes, and protected land, and the region simply cannot sprawl the way a metro surrounded by flat open land can.
New projects are hard to pencil
In its September 2026 study of the four-county region (King, Pierce, Snohomish, and Kitsap), Kidder Mathews found about 19,163 units under construction and reported that a meaningful number of developers had formally shelved projects, mainly because construction and capital costs make new buildings difficult to justify. The firm expects fewer deliveries in 2028 and beyond (Kidder Mathews, September 24, 2026).
In the Seattle-area apartment market as tracked by Kidder Mathews using CoStar data, deliveries through the third quarter of 2026 were down 38.4 percent from the same period in 2025, vacancy fell to 6.6 percent from 7.0 percent a year earlier, and average asking rent rose 1.1 percent (Kidder Mathews, Q3 2026). Those are modest numbers, and we do not want to oversell them. But the direction is the opposite of what Sun Belt owners have been facing.
One honest caveat: the same Kidder Mathews study notes that construction activity increased in Snohomish, Pierce, and Kitsap counties even as Seattle projects were cancelled. New buildings are coming to our counties too. That is part of why what we buy matters as much as where.
Who rents here, and why they stay
A broad employer base
The Puget Sound economy is often described as a tech story, and tech matters. CBRE ranked Seattle the No. 2 tech talent market in North America in 2026, with 213,010 tech workers in 2025, up 13.1 percent since 2022 (CBRE, August 12, 2026).
But most of our residents do not work in tech. In Pierce County, Joint Base Lewis-McChord generated $3.9 billion in economic impact and 57,640 jobs in 2023, the Port of Tacoma supported over 41,000 jobs, and health care and social assistance accounted for 56,600 jobs in 2024, according to the county (Pierce County). In Snohomish County, Boeing builds airplanes in Everett. These are nurses, logistics staff, tradespeople, and military families, and they need to live near work regardless of what the stock market does.
Renters who stay renters
High regional wages, especially in tech, push home prices out of reach for many middle-income households. We call this "renters who stay renters." That is not a judgment about anyone. It is the math in a high-cost region, and it supports steady, long-term demand for well-run apartments priced around area median income.
Older buildings are not competing with new ones
This is the part of our thesis that matters most, and it applies anywhere. A new building has to charge new-building rents to cover today's land, labor, materials, and financing costs. The 1960s to 1990s apartments we buy were built at a fraction of those costs, and we buy them well below what it would cost to build new. That means a new luxury building down the street is usually chasing a different renter than we are.
In a Sun Belt market flooded with new units, new buildings offering free rent can pull residents from older Class B properties, and the pressure rolls downhill. In a supply-constrained market, that pressure is much weaker.
Insurance and climate costs
Insurance has become one of the fastest-rising costs in apartment ownership, and it is a real difference between markets, though not as simple as "Washington is cheap."
A Federal Reserve analysis of loan-level data found that in 2024, average property insurance cost about $62 per unit per month in the Seattle-Tacoma-Bellevue metro, compared with about $181 in Miami, $122 in Jacksonville, $115 in Tampa, and $109 in Houston (figures in 2023 dollars) (Federal Reserve Board, FEDS Notes, September 19, 2025; accessible data). Phoenix ($38), Austin ($56), and Atlanta ($61) were similar to or lower than Seattle. The National Apartment Association also reported that in one same-store sample, insurance costs in Seattle-Everett rose 93 percent from 2021 to 2024 (NAA, March 18, 2026).
So the fair conclusion is this: compared with Florida and the Gulf Coast, the Puget Sound has a meaningful insurance advantage. Compared with inland Sun Belt metros, it does not, and our insurance costs have risen too.
The honest trade-offs
Investing here comes with real costs. Any sponsor who tells you a market has no downside is not telling you the whole story.
Statewide rent stabilization
In May 2025, Washington's rent stabilization law (HB 1217) took effect. It limits rent increases to 7 percent plus inflation or 10 percent, whichever is less, in any 12-month period, bars increases during the first 12 months of a tenancy, and requires 90 days' written notice (Washington Attorney General). The state set the cap at 9.683 percent for 2026 and 10 percent for 2027 (Washington State Department of Commerce). Buildings whose first certificate of occupancy was issued 12 or fewer years ago are exempt (RCW 59.18.710). That means older buildings like ours are covered and new construction is not.
The cap can slow how quickly a deeply under-rented building can catch up.
Local rules vary
Tacoma voters approved their own Landlord Fairness Code, in effect since December 2023, which requires relocation assistance for some rent increases above 5 percent and restricts evictions during the colder months (Northwest Public Broadcasting, December 11, 2023). Local rules can make day-to-day management more involved, and they vary by city. We do not buy in Seattle or King County proper. The basis is higher, there are more bidders, and the local rules are tighter.
Higher prices and slower growth
Buying here costs more per unit than in many Sun Belt metros, so the margin for error on price is thinner. Population growth is also steadier rather than explosive. Washington grew 0.9 percent from July 2024 to July 2025, compared with 1.2 percent in Texas and 1.5 percent in South Carolina, though Washington still ranked sixth among states in numeric growth (U.S. Census Bureau, January 27, 2026). The state's own estimate shows growth of 0.8 percent in the year to April 1, 2026, slower than the average of the last decade (Washington Office of Financial Management, June 29, 2026).
Concentration in a few large employers
Large employers can also cut. Boeing's Washington workforce shrank 3.7 percent in 2025 after companywide layoffs (The Seattle Times, January 31, 2026). We prefer submarkets where demand rests on several employers, including the military, health care, and logistics, not just one.
How this fits the way we invest
None of this works without discipline at the property level. We buy mismanaged 30 to 100 unit workforce housing built in the 1960s to 1990s, in Pierce and Snohomish Counties, and we grow income by fixing operations rather than betting on the market. We finance with long-term fixed-rate agency or bank debt and do not use bridge or floating-rate loans, so a building does not need rates to fall or rents to spike to work. You can read the full thesis on our strategy page.
Over sixteen years, we have acquired 468 units across 21 deals since 2010 and grown to about $85 million in assets under management, with no realized losses on any deal. You can see what we own on our portfolio page, learn how partnering works on our invest page, and find answers to common questions in our FAQ.
Talk it through with us
If you have been weighing Sun Belt offerings against something closer to home, we are happy to walk through how we think about markets, supply, and risk. Book a Discovery Call and we will go through it together.
This website is for informational purposes only. It is not an offer to sell, or a solicitation of an offer to buy, securities. Any offering is made only through official offering documents, and only to investors who meet the requirements of that offering. Past performance does not guarantee future results. Investing in real estate involves risk, including the possible loss of capital.
Sources cited
RealPage Analytics, "U.S. Apartment Supply Update 3rd Quarter 2026" (October 22, 2026): https://www.realpage.com/analytics/us-apartment-supply-3rd-quarter-2026/
RealPage Analytics, "3Q 2026 U.S. Apartment Demand Update" (October 6, 2026): https://www.realpage.com/analytics/3q-2026-us-data-update/
RealPage Analytics, "Austin's Apartment Supply Didn't Break Demand" (2025): https://www.realpage.com/analytics/austin-record-supply-didnt-crash-market/
Washington State Department of Commerce, GMA Laws and Rules: https://www.commerce.wa.gov/growth-management/gma-topics/gma-laws-and-rules/
WAC 365-196-310, Urban growth areas: https://apps.leg.wa.gov/wac/default.aspx?cite=365-196-310
Kidder Mathews, 2026 Seattle and Puget Sound Apartment Development Pipeline release (September 24, 2026): https://kidder.com/news/2026/09/kidder-mathews-releases-annual-report-on-seattle-and-puget-sound-apartment-development-pipeline-2/
Kidder Mathews, Seattle Multifamily Market Report, Q3 2026 (CoStar data): https://kidder.com/market-reports/seattle-multifamily-market-report/
CBRE, "Seattle Retains No. 2 Ranking in CBRE's 2026 Scoring Tech Talent Report" (August 12, 2026): https://www.cbre.com/press-releases/seattle-retains-no-2-ranking-cbres-2026-scoring-tech-talent-report
Pierce County, "Pivot to Pierce County" (JBLM, Port of Tacoma, sector employment): https://www.piercecountywa.gov/8244/Pivot-to-Pierce-County
Federal Reserve Board, FEDS Notes, "Rising Property Insurance Costs and Pass-Through to Rents for Apartment Buildings" (September 19, 2025), with accessible data tables: https://www.federalreserve.gov/econres/notes/feds-notes/rising-property-insurance-costs-and-pass-through-to-rents-for-apartment-buildings-20250919.html
National Apartment Association, "Metropolitan Fragmentation Trends: Insurance Inflation is Outpacing the National Trend in Many Markets" (March 18, 2026): https://naahq.org/news/metropolitan-fragmentation-trends-insurance-inflation-outpacing-national-trend-many-markets
Washington State Office of the Attorney General, Landlord-Tenant (HB 1217): https://www.atg.wa.gov/landlord-tenant
Washington State Department of Commerce, HB 1217 Landlord Resource Center (2026 and 2027 caps): https://www.commerce.wa.gov/housing-policy/hb1217-landlord-resource-center/
RCW 59.18.710, exemptions (12-year new construction exemption): https://app.leg.wa.gov/RCW/default.aspx?cite=59.18.710
Northwest Public Broadcasting, "Tacoma's new tenant protections now in effect" (December 11, 2023): https://www.nwpb.org/nw-news/2023-12-11/tacomas-new-tenant-protections-now-in-effect
U.S. Census Bureau, "U.S. Population Growth Slows Due to Historic Decline in Net International Migration" (January 27, 2026): https://www.census.gov/newsroom/press-releases/2026/population-growth-slows.html
Washington Office of Financial Management, April 1 official population estimates (press release June 29, 2026): https://ofm.wa.gov/wp-content/uploads/sites/default/files/public/dataresearch/pop/april1/ofm_april1_press_release.pdf
The Seattle Times, "Boeing's WA employment fell nearly 4% in 2025, while total head count grew" (January 31, 2026): https://www.seattletimes.com/business/boeing-aerospace/boeings-wa-employment-fell-nearly-4-in-2025-while-total-head-count-grew/