Rental rates have increased in West Seattle by 7 percent to 10 percent in the last year, but the demand for rentals is stronger than ever.

"For landlords, this is the best rental market I've seen," said Mike Gain, of Cayce and Gain Real Estate Management. "We don't have any vacancies that just sit."

The market has improved for landlords who can now charge higher rents due to a smaller inventory, but demand has outweighed supply and renters may have a tougher time finding a place here.

Based on research by Dupre and Scott Apartment Advisors, Gain said West Seattle's vacancy rate is around 4 percent; 5 percent is considered very good.

It's a big difference from just a few years ago. From about 2000 to 2005 inventory soared and prices were low. Renters became purchasers as homes could be bought for the same price as renting due to shrinking interest rates.

Landlords offered incentives to get tenants like a free first months rent or a trip to Hawaii.

Now rental rates have climbed "back to reasonable rates," said Gain.

"Immigration, a strong job market, condo conversions and increased interest rates and rising home prices are all contributing factors to the strong rental market we are experiencing," he said. "Renting has become a good decision again."

Randall Berg, a property manager in West Seattle, said in the most popular areas like Alki, Genesee and North Admiral vacancy rates are "near non-existent." It's fueling rising rents, which in areas some have increased by 25 percent, he said.

Gain disagreed with that observation and said if vacancy rates were really that low, there would be nothing on the market.

"Things are not in crisis at all," he said.

West Seattle boasts cheaper rents than other popular neighborhoods in Seattle.

"For tenants it is probably the best deal in town," Gain said. "Rents are fair and affordable."

Of the few hundred rentals Berg manages, many are still what he considers to be reasonably priced.

On average, a two-bedroom single-family home rents for about $1,300 a month, and three bedrooms can go for between $1,500 and $1,800. One-bedroom apartments are being leased at around $725 and two bedrooms for $750 and up to $1,000 a month.

But many units can easily go for much more, he said. According to the Seattle Office of Housing, rents have increased by 14 percent citywide in the last two years, and it's expected to increase next year.

"I'm still shocked at some of the prices we are getting and what people will readily pay for," Berg said. "We are just pricing out what made Seattle great - that's the middle class."

Despite a real estate slow down across the rest of the state, West Seattle's steady home sales market "defies logic." Gain said. Homes have been appreciating by as much as 10 percent in some areas, he estimated.

"West Seattle has always been a solid market," said Gain. "It never has the peaks, but it doesn't have the valleys either."

The rest of the city may be experiencing a condo boom, but houses make up the majority of the active market in West Seattle.

There are 541 homes and 106 condos on the market, according to Northwest Multiple Listing Service. About 207 condos and 955 homes have been sold in West Seattle in the last six months.

Houses are being sold on average for a little more than $458,000, while condos are getting about $344,000, said Karen Lavallee, managing broker of Windermere West Seattle. Waterfront homes tend to go for the most, with the most expensive house on the market at $4.5 million and $2.4 million for a condo near Puget Sound.

Up until this year, West Seattle still had affordable homes for sale, said Shari Kruse a real estate agent for Prudential Northwest Realty in West Seattle. Prices have increased by a little less than 10 percent a year for the past five years, she said.

Last year, a medium sized home could be purchased for less than $300,000 in Westwood Village.

"That's changed," she said. "You can't do that anymore."

Median prices for pending sales in July were about $410,000 for a single-family residence. The same time last year it sold for $375,000.

But West Seattle is still affordable compared to other Seattle neighborhoods. For instance, buyers in general pay about 10 percent more for a home in Ballard, Kruse said.

Agents said Seattle's booming economy and an increase in condo conversions are the major contributors to the rising rents low vacancy rates. Dupre and Scott report there have been 412 apartment-to-condo conversions in West Seattle over the last two years. Conversions are up 33 percent from last year, said Don Bereiter, branch manager of Prudential,

Kruse said there's no doubt conversions contribute to a decrease in affordable rentals, but they aren't all bad either. Though they are typically poorer quality, converted condos can provide affordable home ownership opportunities for first time homebuyers because they tend to be cheaper that new construction.

Conversions in Roxbury, for instance, are selling at $189,000 to $225,000. However, the price also depends on location. A unit of similar size would go for $500,000 or more on Alki, said Tracy Harris, a Prudential agent.

But real estate agents and developers believe the rate of conversions is slowing and will eventually balance out.

"The pendulum is going back," Berg said.

In the meantime, Harris said there ought to be laws that limit how many conversions can be done in each community.

"We still need to provide an affordable rental market," he said.

Rebekah Schilperoort may be reached at 783.1244 or rebekahs@robinsonnews.com