(EDIT: A local writer crunched some numbers in response to my first post, “Practical ways to keep housing prices and rents reasonable.” If you haven’t read that then please do! They called their article “The scale of out of town real estate investment in Thurston County is small,” and so I responded with this new post titled, “That’s not a small increase… it’s the steepest jump!” I guess you can see we disagreed! Please read both after this one!)
Great local journalism on the data and I am glad to see someone took my campaigns positions seriously. I disagree with there analysis of what that data shows and the tone in which they present the data but it’s a good continuation of the discussion we started. What do you all think?
I think the data points to exactly what I was speaking about. A few disagreements:
1. I am concerned with out of town ownership of apartment buildings. I think that apartments can be owned by the occupants, they call that a condominium, that’s the major difference. But even if the apartment buildings aren’t owned by the occupants it would be better if they were owned locally. For a number of big reasons, ability for the owner to be held accountable, keeping the money local, tax revenue, better quality management.
2. The allowances of more duplexes, quadplexes and 6-plexes means that outside ownership concerns may increase quickly. While I’m not against those in certain areas, I’m only really for them if they do what they are supposed to do, create more housing stock and therefore decrease rent. Unfortunately housing is one of those things that doesn’t fluidly follow simple supply and demand economics. As I stated before, if the new housing built is owned by an outside investor and held by a real estate management firm they can hold it off market until they get the price they demand and lock it in with contracts. Mom and pop landlords generally can’t do that and so are more market responsive.
3. Property management firms play an important part in all this. If for any reason it’s the shear fact that they are middlemen, which causes an increase in price already, although people could argue some efficiencies there as well. Trump Inc. is basically a property management firm, he didn’t own a lot of the buildings that his name was on, but I digress… I think we need to know what their vacancy rate actually is, not by just counting what’s up for rent, but also in realizing what is not up for rent but what should be. AirBNB comes into this discussion as well. Regulating these groups is what good government does and in a housing shortage with skyrocketing rents that’s when you step in and dig deeper.
4. In the data it shows upticks in buying to rent and outside investor owned, there is similar upticks after the 2008 collapse, this exactly reflects my point that the downturn pushed some people out and that there is money looking for deals. It might not seem to us poor workers that our houses are good deals but to the folks who rake in money, turning that money into real hard assets is a good deal. They can weather ups and downs on their investments whereas we workers cannot.
5. An increase from 2-5%, that straight last line going up sharper than any in the past, that’s a 250% increase in outside investor buying. Judging by what I am hearing from people trying to purchase, that may be just the beginning! That number also doesn’t reflect actual number of rentals combined over time owned by investors. These investors put their properties into property management firms and hold them until the point where they are redeveloped. The actual number of homes owned by outside investors in Olympia already might be huge! Considering around 46% of all units are rental in Olympia and that the national number is 30%, we already have a problem here!