State and local lawmakers are creating a problem that they do not — or perhaps refuse to — understand, and that is the erosion of the single-family rental-house supply. In my more than 10 years of experience, never have I seen so many people searching for a new rental house because the one they live in now is being sold.
The reality is not that the owners of these rental houses necessarily want to sell or take advantage of a hot seller’s market (and it is a very hot seller’s market). No, unfortunately a sweeping trend among housing providers is that they are selling their rental houses due to policies handed down from state lawmakers and Seattle City Hall.
So why is this a problem? Isn’t it good that more houses are available to purchase? Perhaps, but let’s focus on how these policies inflict the most harm on the very people that they would seek to protect: low-income families who cannot afford to buy a home. The common term for rental housing assistance funds is a “Section 8” voucher. This program places strict guidelines on location and bedroom count. In my experience, many voucher-holding families are of large enough size that a single-family house with 3-plus bedrooms is their only viable option. Where are these families to turn when such houses are no longer offered as rentals? The typical 2-bedroom apartment does not work for them.
The single-family rental house plays a crucial role in the overall housing mix. Lawmakers who support policies such as an extended restriction on lease terms enforcement and rent increases, limits on screening criteria, mandatory term renewals and other “tenant protections” may do so with the very best intentions, however, the unintended consequences cannot be ignored. Such policies are difficult for “mom and pop” housing providers, who typically offer single-family houses as rentals, to absorb. When it all becomes too much, they sell (at alarming rates recently), and local renters scramble to find a suitable replacement house with fewer options available as they compete with new renters moving to the Seattle area from all over the world. The sad reality is that once a house like this sells, it will likely never again be offered as a rental.
The firm I represent may account for only a small sample size, but it is not insignificant that we saw a 48% increase in the number of our clients selling off their Seattle rental homes in 2020 as compared to 2019. With every extension of the statewide eviction moratorium came a new wave of calls from clients to inform us that they would be selling. To be very clear, my motivation in shining a light on this issue is not out of concern for my brokerage. We have consistently added to our client roster and property count year after year, and I can argue that increased rental-housing regulation influences providers to seek out professional management services such as ours. My concern is for the health of our region’s single-family rental-house supply, which is disappearing right out from under us. In a January 2021 poll of our clients, 35% of them intending to sell at the end of the current lease pointed to “new legal regulation” as the reason why.
My appeal to lawmakers: Understand that a “blanket application” approach does more harm than good. I join you in supporting targeted assistance to renters who truly need help (The Seattle Times reported in both February and March of this year that less than 10% of Seattle renters are behind). Preserve the already short supply of rental houses that we do have. There is nearly $500 million in COVID-19 federal relief money headed our way in Washington state. Let’s use it to help renters who have lost their businesses and their jobs to keep from falling behind in the first place and avoid the idea of an eviction entirely.