Since the start of COVID-19, the number of housing providers selling or occupying their rental properties in Washington state has increased significantly year-over-year. This increase is largely due to the financial stress the extended eviction moratorium has caused them.
In Washington state, roughly half of all rental homes are owned and managed by small housing providers. Often times, these individuals cannot weather extended loss of rental income. If you look at the cost of rent, 90 cents of every dollar of rent goes to costs like property taxes, maintenance, and utilities – and housing providers may face bankruptcy and foreclosure if they don’t have the income to meet these essential payments.
With no rental income, housing providers are sinking deep into debt and may be forced to sell or foreclose their rental properties.
The sale and foreclosure process will inevitably lag behind non-payments of rent, as housing providers assess their individual situations and determine what they need to do in the months to come. Nationally, seven percent of mortgage holders were in forbearance in early September 2020 – with many more behind on their payments
As more housing providers sell their homes, Washington’s rental housing affordability crisis could worsen. When property owners sell as a result of these types of blanket ordinances, it creates volatility in the market that wouldn’t exist otherwise. In Washington’s hot housing market, once rental properties are sold, they may be off the rental housing market forever if the new buyer plans to reside in the property instead of renting it out. And even if a property remains a rental, new ownership almost always means that the rent will go up to offset the cost of the down payment and lack of equity.
Moving forward, Washington’s policymakers should prioritize an effective offramp that modifies the current one-size-fits-all policy to protect small housing providers that are trying to stay afloat. Not to mention – they should also continue to create and approve rental assistance programs and funding to make up for the loss of rental income, which in some cases, is well over a year’s worth.
Seattle Housing Provider Story – Carol Willison
One housing provider, Carol Willison, is facing this struggle now. Willison lives in Capitol Hill with her husband. Together, they own five rental homes between Seattle and Portland. They have been in the rental housing business for more than 45 years and launched the business as self-employers to support their children’s college funds.
Willison and her husband did as much as they could to support their tenants. Last year, they reduced the rent for two of their homes by $400 for five months and have continued to set up monthly payment plans.
Now, even with all their tenants paying rent on time, Willison and her husband still plan on selling all their homes as soon as the current residents move out. Though the couple started selling their rentals before the impacts of COVID-19, they feel the lack of support for housing providers in the city of Seattle in the past year has made it too difficult to continue. They sold two of their units in 2020, including one they have owned for more than 40 years. They were concerned that new tenants would take advantage of the eviction moratorium by not paying, so once the previous tenants moved out, they opted to sell. One of the properties Carol and her husband sold has increased rent by $600 per month.
“We have been slowly selling our rental properties off due to the difficulty we feel in remaining a responsible housing provider in the Seattle area,” said Willison.
When rent is paid, housing providers can continue to maintain their rental properties, pay taxes, and their mortgages. To restore the alarming number of rental properties being taken off the market, lawmakers need to prioritize comprehensive rental assistance and a productive offramp to transition Washington state into a healthier housing space.