By Erica C. Barnett
A new report from the City Auditor’s office on the decline in registered rental properties in Seattle concludes that while the city’s rental market is shifting away from smaller properties, like single-family houses, toward bigger apartment buildings, the change is part of a nationwide trend, and does not relate directly to the tenant protections landlords frequently cite as a reason they have sold or are planning to sell their smaller rental properties.
Overall, the audit found, the number of individual properties registered under the city’s Rental Registration and Inspection Ordinance declined from its 2019 peak of 33,619 to 26,519 in 2022 (a 21 percent drop), but the number of registered housing units has increased over that same period, from 151,181 to 161,384 (a 3 percent growth rate.) Between 2016 and 2022, the number of properties has declined by 6 percent while the number of units has increased by 13 percent.
In short, there are more (though not enough) units available for renters, but fewer of those (about 34 percent, according to the audit) are in smaller buildings, as large apartment buildings replace older buildings that landlords are tearing down, selling, or moving into themselves. Units in newer, larger buildings tend to cost more than those in older buildings, which could conflict with the city’s affordable housing goals, according to the audit.
Between 2016 and 2022, the city issued 768 demolition permits for RRIO-registered properties, the vast majority (92 percent) of them smaller buildings, primarily single-family houses, making way for denser development. Seattle is currently operating at a significant housing deficit, so increasing the overall supply of housing may do more to lower housing costs than preserving older buildings, like single-family houses.
The audit makes it clear that landlord-friendly policies would not reverse the trend away from smaller, older rental buildings, particularly single-family rental homes, which is happening across the country, regardless of local tenant protections.
Outgoing city councilmembers Kshama Sawant and Alex Pedersen requested the audit to help understand why fewer landlords were registering their properties under RRIO, a 2014 law aimed at ensuring landlords were complying with Seattle housing laws. Pedersen, along with Councilmember Sara Nelson, frequently lamented that tenant protections—including notification requirements for rent increases and a newer law requiring landlords to rent to the first qualified applicant—were forcing “mom and pop” landlords to take their properties off the market.
The audit makes it clear that landlord-friendly policies would not reverse the trend away from smaller, older rental buildings, particularly single-family rental homes, which is happening across the country, regardless of local tenant protections or housing costs. According to the audit, the changes in Seattle are “in line with a national shift towards larger multi-family rental buildings and the conversion of single-family rentals to owner occupancy.”
Additionally, a recent study, which we covered earlier this month, found that “both the areas surrounding Seattle, which were not subject to the new tenant protection ordinances, and Seattle experienced similar trends in the percentage of ‘small’ rental properties sold both before and after the introductions of these ordinances,” the audit says.
That same report also noted that nationwide studies on tenant protections show that “landlords’ reactions to tenant protections were not consistent or predictable. Instead, they were influenced by ‘broader’ factors within the market and policy environment.” Landlords frequently claim they are going to sell their properties and get out of the Seattle market because of excessive tenant protections, in other words, but generally don’t follow through on these threats.
This isn’t to say that some small landlords aren’t selling their properties; they are (often to new landlords who continue to operate the buildings as rental housing.) But the primary reason small landlords sell appears to be profit, not oppressive tenant protections. In Seattle, landlords sold off around 6,000 one-to-five-unit properties between 2016 and 2022; of those, the vast majority (69 percent) were single-family houses, whose prices spiked 20 percent between 2019 and 2021, the year with the largest number of rental housing sales.
This is squarely in line with national trends. Citing data from the American Housing Survey, the report notes that 16 percent of single-family rental houses, equivalent to two million units, “became owner-occupied properties” between 2017 and 2019, meaning their owners either moved into these units or sold them to people who used them as primary residences. “Nationally, a surge in homeownership demand, coupled with the limited availability of homes for sale, has resulted in a significant increase in the conversion of existing single-family rentals into owner-occupied properties,” the audit notes.
In a survey crafted in collaboration with two landlord groups, the Rental Housing Association of Washington and Seattle Grassroots Landlords, the auditor’s office found that a majority of landlords who sold their units or failed to register them with the city for some other reason claimed the city’s tenant protections and other regulations were too confusing or onerous
That doesn’t mean landlords have stopped citing tenant protections as a reason they’re getting out of the market; it just means that it’s important to look at landlords’ actions rather than simply taking them at their word.
In a survey crafted in collaboration with two advocacy groups representing small and midsize landlords, the Rental Housing Association of Washington and Seattle Grassroots Landlords, the auditor’s office found that a majority of landlords who sold their units or failed to register them with the city for some other reason claimed the city’s tenant protections and other regulations were too confusing or onerous, with 74 percent claiming the city’s rental regulations are “hard to implement or follow.” (Of those surveyed, a plurality—44 percent—were still renting out their units, while 41 percent no longer were.) Just 22 percent said it “made financial sense” for them to sell–a claim that flies in the face of national trends and local real estate sales patterns.
The survey skewed heavily toward landlords who own smaller buildings, with just 16 percent saying they owned buildings with 21 units or more, and three in ten saying they rented a single unit. These smaller buildings accounted for a hugely disproportionate number of tenant complaints about issues like illegal eviction notices, excessive rent hikes, and unsafe housing conditions; 59 percent of all tenant complaints came from people living in single-unit buildings (houses), while just 0.4 percent came from people living in buildings with 100 units or more.
Among the regulations these landlords said they “found most difficult to understand or follow” were the six-year-old “first-in-time” law, which requires landlords to rent to the first qualified person who applies for a unit, and the 43-year-old “just cause eviction” law, which lays out the legal justifications for a landlord to evict a renter. (The survey required all landlords to select three of nine possible options, including seven tenant protections, regardless of whether they said they found rental rules, in general, hard to follow, which could produce results more in line with the political goals of landlord groups than, for example, an open-ended question.)
Landlords also said the city doesn’t provide enough resources to help them comply with various laws, with 26 percent saying the city’s Department of Construction and Inspections doesn’t provide clear information about how to comply with regulations.
John Stuart Mill: “Landlords grow richer in their sleep without working, risking, or economizing.” Enough sob stories about “mom and pop” landlords, a politically well-organized industry that is not shy about its public relations strategies; you can watch them unfold all across the public information spaces. Anyone who cares about housing cares about the high price of land. Those who profit by it like the price high, those who count on it for shelter like the price low. The landlords are on one side of this divide, and it isn’t on the side of those of us who think shelter is a right and not a high-cost privilege. Even the sainted Adam Smith thought the dismantling of the landlord class (along with other interest-bearing asset owners) was necessary, and as the cost of housing soars everywhere that need is more urgent than ever.
Pretty sure landlord tenant laws have come a long way since John stuart mill’s time. But sure, if you can’t find anti landlord quotes from modern era a few hundred years ago is fair game I guess.
Your comment repeats very tired and utterly false memes that certain advocacy groups and politically inclined people like to repeat. Landlords do no work? then who is maintaining the buildings/property? Cleaning units between tenants? Advertising, showing, screening, handling disputes between tenants, doing yard maintannce, shoveling snow etc. etc. We either gotta do it ourselves or pay somebody else to do it. Either way, work is being done on our sweat our our dime. (yes, our dime comes from your rent, but once its paid, its OUR dime. Most of rent goes to expenses, the nationwide statistic a couple years ago was the average profit among all landlords was 9% – and you get a lot of services and a lot of freedom from responsibility for that 9%)
Risking nothing? Please explain how the possibility is losing 10’s of thousands of dollars to a nonpaying tenant between the loss in rent and battling their free lawyer while the legal system is actively stacked against you to try and secure that nonpayer even more free rent at your expense is not a risk. Please explain how the chance of squatters occupying or vandalism or other destruction to a vacant unit you are rehabbing is not a risk. Please explain how government passing rent control or other destructive policies regulations against rental housing that limit what you can do with your property, who you can rent it to, and on what terms it may be rented on resulting in that property being worth less, or being economically unrentable, or being virtually impossible to recover from renting and change to other uses.
Ask Jason Roth if he thinks landlording carries no risk. I don’t think the article(s) published on this site trying to diminish his situation and paint him as the bad guy convinced him of his privelege and comfortable position as he sleeps in his van across the street from his house.
Landlords like property values high? Well seems to me it makes it harder to buy for us too, just like everybody else. Heck would be awesome if I could pay the per unit price I paid on my first property (bought 2006) on the next one I buy. No, what makes us jump at a property is the math showing it will likely rent for a higher amount relative to its sale price. The more expensive a property is the less likely it pencils. And the way most of us smaller operators make it pencil is buying run down fixer properties that most retail home buyers would never touch, or adding value such as converting to duplex, adding ADU, renting by room, etc. So if you want to blame somebody for driving up the price of that house you wanted, its because you were competing with other retail buyers, not any mom and pop investors. If you lived in some areas maybe you could blame Blackrock/stone or some other hedge fund, but they are barely in the picture around here. Why? Too expensive to buy non-fixer houses, they won’t rent profitably.
You can claim everything will be solved by getting rid of property ownership (I doubt you would stop at just landlords) but I suspect you would then discover severe shortages, severe lack of maintenance (why lift a finger to fix the place up if you don’t own it and aren’t allowed to profit from it) and there would be no diversity in housing. Single person? you get the standard studio. Couple? maybe you qualify for a 1br; pick from 2 floor plans. Don’t break up or its back on the waiting lists for both of you. First kid gets their own bedroom? Maybe by the time they are 12. This may be a bit snotty of a comment but it isn’t hyperbole, look at european cities with lots of social housing. The waiting lists for tiny units are years if not decades long.
Also, as long as it costs 500K to build a cramped 1br housing is never going to be “affordable” for people who have very limited income. How much is land cost really adding to that? Not much when they are building 40 units on top of a former duplex site. Yet it still costs that much. Its labor, materials, taxes, regulations, MHA and other fees, and so on that makes it expensive. In fact, expensive labor and government fees drive DOWN the value of vacant land because builders can’t afford to pay as much for it with all the permitting and tax costs.
Those pushing for your “divide” claim to be pro-housing, but yet the primary goal seems to be to get rid of the people who are in a position to supply the most of it for the best price. I really don’t understand that.
Oh of course, how stupid of me. Everyone should pay not only 40% of their pay for shelter, it should be much, much higher. The logic is indisputable, I’m sure.
where did I make that statement?
Unfortunately, this is just another example of what passes as “journalism” these days. This activist piece ran with the headline that the auditor’s report “validated” that small housing providers in Seattle aren’t selling more than some unspecified “national trends.” It almost felt like Erica Barnett tried to take a victory lap, gloating about how the damaging new policies aren’t to blame.
Erica’s conclusion: We ARE losing diversity of housing supply and weeding small housing providers out of the market at record levels, but that’s OK because it’s happening all over the country and not because of policies that are obviously and dramatically raising the cost of providing housing.
No, it’s not OK, Erica. This will have long terms effects on the housing supply. Rent prices will go up for everyone. These new housing policies ARE raising costs to a level that many small housing providers are simply not able to stomach.
The study by Crowder et al. is misleading. This group of sociology researchers measured the response to one piece of legislation—the First-in-Time (FIT) laws that were passed in 2017-2017. FIT did not raise costs for housing providers significantly. FIT may have increased the chances to rent to a resident that would eventually stop paying rent, but did not increase the costs to remedy non-paying residents. Even still, the chart at the top of the article shows that sales of single-family RRIO homes nearly doubled from 2016 to 2017 (259 in 2016 to 459 in 2017, up 77%). Was that in line with national trends?
However, eviction bans SIGNIFICANTLY increase the cost to remedy non-payment of rent, doubling and sometimes tripling the cost for the housing provider. Seattle’s winter eviction moratorium passed in Febraury 2020, when sales of single family homes exploded higher by another 65% (517 in 2019 to 857 in 2020). Combined with the pandemic-era eviction moratorium, sales of single-family RRIO homes skyrocketed once again 52% in 2021 from the previous year and over 500% since 2016! How can you gloat about this, Erica??
As of December 2022, Seattle had 17,647 single-family rental properties registered with in the City’s rental program. Since 2016, 4,721 single-family RRIO properties have been sold, representing over 26% of the total! And many of these single-family homes were sold by a small housing provider who just doesn’t have the budget to continue running their property as a rental any longer.
I’m sure Erica is thinking, “So what? These people just sold a house! They’re going to be fine! Not like the tenants who are struggling to make ends meet.” While that may be true, that argument is missing the forest for the trees. Losing this rental housing supply has ripple-on effects. People who have the means to afford higher-cost single-family homes will be crowded out. They will come into the apartment sector and price out the poorest people, pushing up rents for everyone. People who have been priced out of market-rate apartments will push into affordable housing and price out the most vulnerable people in our society.
The Department of Commerce says that housing supply is the #1 factor in rising homelessness! (https://www.youtube.com/watch?v=X8NUHqpPf-U) No matter how much we spend on homelessness, it continues to rise to record numbers because of the housing supply problem. We need as much housing as possible to be offered in the open market. We need to incentivize ALL housing providers to offer their housing as soon as possible, NOT to make it as difficult and as costly as possible. If more housing is put on the open market, rent prices will stabilize and potentially even decrease! That’s the solution to housing and homelessness.
I am a small landlord with less than 5 properties for rent. I have decided NOT to buy any more rental properties and to sell out as time permits because of the bias against landlords.
It took me 4 months to get a certificate in Tacoma to allow me to proceed with an eviction for a tenant that simply stopped paying rent. It would have been even longer except I started to email and call everyone associated the Center for Dialog and Resolution https://www.centerforresolution.org/ daily as they just stopped answering calls for weeks.
I was out almost 6 months rent plus damages, plus utilities before I could even submit the paper work to start an eviction. When I got the eviction submitted the court date was set for almost another 6 months out. Why would I want any more rental properties in any city, county, state that provides NO help for the landlord, that assumes we are always the ones in the wrong? The profit margin on properties is just not that big, 12 months of no rental income wipes out the profit on the other properties for that year.
So, does that influence my decision to buy more properties? yes. Do I know others landlords, ex landlords who have the same experience, yes. Do I have friends that have told me the reason they would never get into the rental market it because of the laws that protect the tenant and always force the landlord to bear the financial burden. It feels like the governments thinks we don’t have our own mortgage to pay and family to support.
I would rather invest with large organizations that manage multiple units, enforce rent increases to the maximum allowed by law, ignore requests for maintenance as long as possible, consider the cost/profit before any decision is made, start evictions immediately, ignore individual situations and only consider the numbers when selecting renters.
This is the way once you force the small landlords out.
Houses suitable for families (are we still allowed to say that word?) with 3+ bedrooms are on the way out, and studio apartments are on the way in. The unit count is fine. Nothing to see here. Move along.
Boy its obvious we have an upcoming legislative session. First, undermine the opposition viewpoint with cherry picked information and biased conclusions. Then, its only a matter of time til the article advocating rent control article drops.
But in the meantime, I highly recommend people reading this article also read the source material, conveniently linked at the top of this article. At LEAST read the actual city audit, but also the harvard data. Its tune isnt’ quite so cut and dried. In fact, of its nine recommendations to the city council, the FIRST recommendation is and I quote from the audit:
“If the City of Seattle wants to preserve single-family and small multi-family
property rental housing, it should consider enacting policies that support the
continued presence of this type of property in Seattle’s rental market. When
considering such policies, the City should involve stakeholders most impacted by
rental housing policies.”
their second recommendation to the council is:
“The Department of Construction and Inspections (SDCI) should coordinate with other City departments
such as the Seattle Office for Civil Rights (SOCR) to provide more and better targeted information and
resources to rental property owners. These resources should include comprehensive information on
landlord-tenant regulations and programs and offer updated and accessible guidance on how to
remain in compliance with the City’s landlord-tenant regulations, beyond what is covered by SDCI’s
Rental Registration and Inspections Ordinance (RRIO) and Renting in Seattle outreach programs. This
could involve:
• Improving current materials by including an easy-to-understand guide summarizing landlordtenant regulations and programs.
• Providing a regularly updated list of City of Seattle legislation affecting property owners,
complete with direct links to the specific municipal codes for easy reference.
• Developing a checklist of rental property owner (landlord) compliance requirements and a
rental property owner (landlord) FAQ section that answers common questions about Seattle’s
rental regulations.
• Resuming and offering more training and workshops to help property owners understand how
to meet City of Seattle rental regulations.”
”
The audit also states that among those wild-and-woolly small operators there were only 39 complaints that rose to the level of an investigation around the FIT law since it passed. I don’t know how many tens of thousands of new tenancies commenced during that time, but this puts some perspective onto the actual weight of the problem. The audits own assessment of FIT is that it is a complicated law that is tripping up smaller, less experienced LL’s and those without property managers. Also thats also the law that small landlords call out the most as being troublesome for them. Weird.
The claim that Seattle’s rental regulations are having no impact on mom and pops is made (again, despite every mom and pop ever asked saying differently) this time by negatively correlating a rise in sales rate of smaller properties with mortgage interest rates. That is to say, more sales activity with lower loan rates. Well last I checked, it was buyers who were more concerned about interest rates, not sellers. The only reason a seller would be is if they were intent on reinvesting in a different property. And yes, mortgate rates are largely a result of national trends, so of course any correlation between mortgate rates and sales activity would be visible both inside and outside seattle. But what is it they say? Correlation is not Causation.
BTW the City audit has something to say about that too. When they asked LL’s who said they DID sell a rental property during the study period, what if anything did they reinvest in? In sum about 50% said they reinvested in rental property OUTSIDE seattle, or in less heavily regulated commercial rental property. Only 1% said they purchased another residential rental property in seattle. BTW this is EXACTLY my scenario so I contributed to those stats as a respondent to this survey. I sold a duplex certainly not entirely due to seattle regulations, but in part because of it. I reinvested those proceeds in another rental property…. In Everett. That new property is larger (seven units instead of two) so its a step up for somebody working to get to self sufficiency through providing housing but was in far worse shape, so I’ve also now spent 100’s of hours and about 200K or more on renovations. I’m sure there are properties in seattle I could have done this work against instead, but instead sold for demolition in part due to lack of interest from people like myself to stay in seattle.
I will repeat what I said in a prior comment on the Mom-and-Pops-arent-being-forced-out article a while back (also linked as a reference from this article) which is to say that the decision to sell a rental property by a small operator is a big decision involving many factors. Yes, of course potential profit is a factor, but almost anybody who has owned RE for more than a few years has a potential to profit on the sale, yet many people and investors hold for decades. So it isn’t that simple. This article like the others tries to make it out as the primary reason us so-called greedy property owners choose to sell. Once again this article tries to dismiss the statements collected in survey of hundreds of landlords in the city as to other reasons they are selling.
The city’s own auditor’s first recommendation was a suggestion to change policies and procedures to stem the loss of smaller rental properties. Sure, they might be getting offset in terms of unit count by new construction, but that means treading water instead of making more significant gains. Also overlooked in that statement is that the older properties and SFR homes being lost to the rental market are overall larger units more conducive to use by families, while many of the new units coming online are studios and tiny 1brs. Try fitting your family of 4 in that.
One reoccurring theme here at Publicola is the idea the Left can somehow corral the government and corporate America into doing what they want. Like the idea that the Seattle Transit Riders Union can go up against big property management companies and win. Or that Seattle’s addiction problems, problems that often started with drugs peddled by Big Pharma, can be solved my “medically assisted treatment”–with other drugs (like Suboxone) peddled by…. you guessed it! Big Pharma.
50+ years ago, the Left had a saying. “Never trust the Man”. Still great advice to this day. You think Publicola, and their friends on on the Seattle Left, would be a little worried about mom and pop landlords losing market share in the Seattle rental market. Because in the end, the big property management companies have the lawyers and the political clout to get the better of Seattle renters. Mom and pop landlords are good guys here. Sell out to Man at your own risk.
I’d guess big West Coast property management companies will take rent control though the courts to the GOP controlled US Supreme Court. The more small mom and pop landlords Seattle lose, the worse it’s going to be in the end.
My final question for the Publicola and the Seattle Left would be…. why not focus more on personal success? It seems to me that Seattle flipping from a City of home owners to a majority of renters can’t be a good thing. I’m all for the “little guy” owning their own home. Renter protection seems like closing the barn door long after the cow has run off. Home ownership is, and always will be, the right answer.
I need to grab a big cup of coffee and read through the report, but it isn’t nothing that City Council asked to look into this, so good for that.
But, I can’t be the only “mom and pop” mulling over whether to get IN to the housing rental market, and noping out after everything I’ve seen and heard.
“One reoccurring theme here at Publicola is the idea the Left can somehow corral the government and corporate America into doing what they want.”
Funny, most Leftists I know are anticapitalists. They want to shut down corporate America completely.
As for the government? The Left has learned that USPS and PUDs run more efficiently than private businesses. The Man is in the boardroom, not The White House. And never trust The Man.
The march towards a return to company owned housing continues. Amazon, Costco, etc. will pile in soon. Bad news, you are fired. Worse news, you are also evicted.
The City Auditor is utterly unreliable and finds what someone on Council wants them to find.