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.