In the past five months, 67,000 people moved into our state. Almost two-thirds of them moved to the Puget Sound region. That's 42,500 people setting up new households in King, Pierce, Snohomish, Kitsap, and Thurston counties. That's a lot of potential apartment demand. These are estimates, based on driver license data. And these numbers don't take into account the people without driver licenses or those who moved out of our region during the same period.

This week we take a look at the tremendous surge in sales activity in December. We just talked about sales volume last week. So we planned to talk about in-migration this week, and its impact on apartment demand. We even finished the video. But December was a big month for apartment sales, a really big month. So we need to visit sales volume again. We think you will be amazed. We were.

This week we will look at apartment sales volume in King, Pierce, and Snohomish counties. You might say 2012 was a Dickens of a year. To paraphrase the first sentence of A Tale of Two Cities: "It was an above average year. It was a below average year." The dollar volume of sales last year was well above average. Investors bought almost $2.7 billion of apartments last year. That's the third highest volume year ever.

Capitalization rates move higher or lower for a number of reasons. Supply and demand is one of them. More buyers chasing fewer deals will tend to bid up sale prices, lowering capitalization rates. That was clearly evident between 2005 and 2007. Another reason capitalization rates move higher or lower is as a response to changes in the cost of capital. Since most apartment sales involve substantial financing, changes in mortgage rates have a significant impact on capitalization rates.

This is our weekly discussion of apartment market trends, for Friday, December 21st, 2012. This week we take a look at the apartment development pipeline for the next few years in King, Pierce, and Snohomish counties.

At this point, it looks like developers will open just over 5,600 units this year. That makes 2012 the fourth highest volume year in the past 20 years. We expect even more units will open in 2013, 2014, and 2015.

Will all of this production really happen? No, it won’t. Some projects will get delayed due to weather, red tape, or capital needs. Some will probably get shelved because of feasibility concerns.

The average price per unit buyers paid over the past six months in the Tri-county market area is just over $144,000. That's up 14% from six months earlier when buyers paid almost 4127,000 a unit. The increase is exaggerated by the recent sale of Aspira, which closed for more than $480,000 a unit. However, even with that sale, you can still see a clear monthly upward trend in prices.