The effects of local and state housing regulations continue to take their toll on the single family home rental market. Windemere reports that 2019-2020 saw a 38 percent increase within 10 counties in the number of housing providers who sold their rental homes – virtually all of which were bought by individuals planning to occupy those properties themselves.
“I think you’re going to inevitably see rental pricing continue to rise,” Windermere Vice President of Residential Operations Cory Brewer said. “You’re going to lose supply.”
Windemere manages 1,600 rental homes, almost all of which are owned by small landlords with just one or two rental units. Brewer said that within its portfolio there was a 33 percent increase in landlords exiting the market within the same timeframe; inside Seattle, it was a 48 percent increase. The 38 percent increase reported is based on data Brewer recently obtained from 12 property managers operating in those 10 counties.
While some have questioned the importance of small landlords in the rental market, the Rental Housing Association of Washington (RHAWA) has reported that more than half of rental homes in the state are owned and managed by small housing providers. Brewer said when these housing providers exit the market, the home is almost always sold to an occupant.
The result, he added, is that the supply of single family housing rentals is “disappearing. When we’re talking about single family houses (sold) it’s almost always going to be the case of ‘I’m taking my ball and I’m going home.’”
It’s a trend that isn’t likely to turn around, Brewer warns. For over a year, landlords have been subject to an eviction moratorium that prohibits them from collecting rent from tenants to the tune of tens of thousands of dollars, even as the landlords remain financially liable for repairs, maintenance, utilities, property taxes – and the mortgages. The state legislature passed a bill stipulating the moratorium would end on June 30, but Governor Jay Inslee has extended it through the fall.
“There’s definitely a sense that ‘this is my property, and I don’t want someone else telling me what I can and can’t do with it,’” Brewer said. “A percentage of homeowners have made the decision based on that. But just as importantly there are people who are bleeding financially and were kind of forced into this decision. There’s no economy of scale for this individual mom and pop housing provider.”
One of the potential causes for the higher rate within Seattle is the local regulations such as the “roommate law” in which a tenant can invite anyone to live in a property without screening by the landlord.
Brewer said that for many local housing providers this was the “last straw. If we can’t screen, we can’t know if we’re putting a sex offender into a building with children. There’s no real means test. The unintended consequence is the loss of housing availability.”
He added that new state and regional policies have either undermined efforts to address the housing situation or exacerbated the crisis. During the legislative session lawmakers enacted SB 5160, which allowed landlords to file for reimbursement of up to $15,000 under the Landlord Mitigation Program. However, legislators also enacted a statewide “just cause” eviction policy, while King County recently enacted a “tenant protection package” for rental units applicable in the unincorporated areas.
“I’ve become very disappointed in what I’ve seen in the legal process,” Brewer said. “I think there’s a mentality from lawmakers that ‘I don’t care if this is a good bill. I just need to pass a bill. I want to grab headlines. I want to get reelected.’ I think that this is a priority that they come from. I really believe that if lawmakers would invite housing providers to collaborate…we could come up with solutions that are balanced and provide (for) people who need help.”
He added: “The approach is ideology setting aside numbers, basically. The numbers and the reality of the market in the situation have to be considered.”