Articles

Important Findings from 2018 Rental Housing Study

By Angie Gerrald

May 2021

Three years after the publication of this city-funded report, why is Seattle

City Council President (and Mayoral Candidate) Lorena Gonzalez disputing a key takeaway?

"I am not aware of any studies or statistics that support the theory that increased tenant regulations depletes apartment or rental inventory in our city... I don't think that that is actually happening in our city."

(4/27/21 City Inside/Out "Council Edition" on Seattle Channel, with host Brian Callanan, 21:28)

What follows is a synopsis of the findings from a 2018 Seattle rental market study, initiated by the Seattle Office of City Auditor. This overview is provided by members of the Seattle Grassroots Landlords, a group of independent, local, small-scale housing providers. Our hope is to renew City Council’s attention on the results of the study and ask for meaningful action in response to its findings.

Synopsis Overview

Background

In 2017, Seattle’s Office of City Auditor conducted a Seattle Rental Housing Study (SRHS) to understand the experiences of renters and landlords in the Seattle market and to gather baseline data that could be used for future evaluations. The study was a requirement of a suite of new landlord policies enacted by Seattle City Council in 2016, hurriedly passed without sufficient time to conduct impact evaluations. (The 2016 laws impacted screening requirements, tenant selection, security deposits and move-in fees.)

Important themes identified in the study

1. Poor quality regulations are exacerbating housing scarcity, particularly for lower income renters. Regulations are leading directly to fewer housing options, higher rents and more challenging screening criteria.

2. Landlords could help contribute to more effective legislation, but they’re being excluded from the process.

3. A substantial amount of housing is provided by small-scale landlords. While they tend to offer the most favorable experiences for renters, they are also disproportionately impacted by many regulations as compared to larger, corporate operations.

Requests for City Council

1. Establish regular assessment and publication of rental housing data to publicly track impacts/outcomes of Seattle’s rental housing policies over time. Become informed and transparent about the dynamics of the housing market and the actual impacts of legislation.

2. Specifically analyze the impacts on affordability, availability and equity of the most controversial ordinances passed in recent years (e.g., First in Time, Roommate law). Analyze small-scale housing providers separately from corporately owned apartments. Where these ordinances are shown to be counterproductive, remove or modify the laws to improve outcomes.

3. Actively include small housing providers, as well as more varied renter perspectives, in the development of new regulations prior to enacting them.

Synopsis Detail

Background

In 2017, Seattle’s Office of City Auditor conducted a Seattle Rental Housing Study (SRHS) to understand the experiences of renters and landlords in the Seattle market and to gather baseline data that could be used for future evaluations. The study was a requirement of a suite of new landlord policies enacted by Seattle City Council in 2016, hurriedly passed without sufficient time to conduct impact evaluations. (The 2016 laws impacted screening requirements, tenant selection, security deposits and move-in fees.)

SRHS was conducted by a University of Washington research team, in coordination with Seattle City Auditor, Council Central Staff, City Demographer, Seattle Department of Construction and Inspections (SDCI), and Seattle Human Services Department (HSD). The study included both qualitative and quantitative research, with outreach to landlords, tenants and related organizations. While only 8 landlords were included in the focus groups and interviews, more than 4,000 Seattle landlords participated in the voluntary, anonymous, online survey.

While a central goal of the 2018 Rental Housing Study was to “develop baseline information to inform the development and assessment of future ordinances” and the report’s conclusion highlighted the need “to develop housing policies that engage the varied strategies and priorities of a diverse set of landlords,” since 2017 Seattle City Council has passed more than 10 new tenant ordinances, and is considering numerous others in quick succession, with no landlord outreach or input, and no analysis of impacts and outcomes to Seattle rental housing.

City Council has fully ignored the city-funded 2018 SRHS and actively worked against its findings. Landlords have not been included in any city council presentations, committee meetings, city commissions, or other outreach since the 2017 SRHS study period.

Key Source Material

• UW Seattle Rental Housing Study Report

  • UW Seattle Rental Housing Study Report Appendix A: Report on Qualitative Analysis

  • UW Seattle Rental Housing Study Report Appendix B: Analysis of Landlord-Owner Survey

  • UW Seattle Rental Housing Study Report Appendix C: New Rent Data Tool

• 7/24/18 Presentation at City Council’s Human Services, Equitable Development, & Renter Rights Committee:

  • Meeting Video

  • PowerPoint Presentation (7/24/2018)

Data Collection

• The SRHS team sought to develop new forms of low cost and flexible data collection. This included a data needs survey across a range of city departments to develop a comprehensive list of data sources currently in use and to assess additional data needed to answer core questions about the operation of the Seattle housing market and related processes of population change.

• SRHS team noted there is significant need for additional sources of data on multiple aspects of the rental market.

• They developed an automated system to scrape information from for-rent Craigslist ads. They found ads for units in larger buildings tend to have substantially higher rents than those in buildings with smaller numbers of units, highlighting the important role of smaller buildings in providing opportunities for relatively affordable rents.

Consortium Development

• SRHS team fostered relationships with partners at the university and broader community with intent of enhancing quality of research.

• Building on tools developed to generate a new system for continually collecting data on rent patterns in Seattle metro area.

• Receiving continual feedback from City demographer, Office of Housing, local housing authorities, representatives of real estate industry and other commercial data users to ensure data are maximally useful.

• “By serving as an objective broker of the data collection process, we have attempted to make progress in generating new dialogue between the City, tenant representatives and local landlords.”

Important themes identified in the study

Following are each of the key themes identified in reviewing the study. Each section presents statements and findings extracted from the study that illustrate and substantiate these themes.

Theme 1 - Poor quality regulations are exacerbating housing scarcity, particularly for lower income renters. Regulations are leading directly to fewer housing options, higher rents and more challenging screening criteria.

• About 40% of landlords have sold, or plan to sell, property in response to City ordinances governing the housing market.

• About 40% of landlords reported they have already adopted stricter rental requirements. Another 24% plan to adopt stricter standards.

• Attitudes toward First-in-Time ordinance are especially negative, with large majorities of landlords -- and especially those reporting flexible rental standards -- reporting that the ordinance places undue burden on landlords and may reduce housing access for lower-income renters.

• Tenant representatives and tenants from all focus groups and interviews named housing cost as the biggest barrier to obtaining and maintaining rental housing in Seattle.

• Many tenants identified competition for housing and scarcity as problematic.

• In the case of regulations that require landlords to rent to people with criminal records, many argued that this shifts considerable cost and risk of liability to landlords. They also noted that “market demand and property taxes put upward pressure on rents but that city ordinances will diminish the stock of affordable housing by placing the biggest burdens on smaller-scale landlords and those managing the most affordable housing, forcing them to shift their focus to provision of more expensive housing or short-term rentals.”

• Many property owners/managers suggested that in response to ordinances they will have to implement stricter rental application requirements, thereby reducing access for some. They suggest that it will make it more difficult to take a chance on people who don’t qualify.

• Some suggested they had or may move toward more high-end or short-term rentals, or leave the market entirely.

• Close to 22% of landlords reported that they increased rent at least in part in response to new city ordinances.

• About 60% agree FIT would have unintended consequences of limiting landlords’ ability to rent to applicants with few economic resources.

• Well over 50% of respondents report that they agree with the notion that they make flexible leasing decisions that allow them to rent to applicants who do not meet the standard rental requirements. [Important note: this flexibility is no longer allowed due to First-in-Time.]

Theme 2 - Landlords could help influence more effective legislation, but they’re being excluded from the process.

• Many of the landlords who participated in the study reported feeling vilified in recent public policy debates and viewed the City ordinances as overly punitive, believing they would inadvertently reduce housing access.

• Large majorities of landlords who responded to the survey reported feeling left out of debates about the development of the City’s housing ordinances.

• There is a “clear need for … engaging landlords on the development of future ordinances.”

• Landlords and property managers often report feeling vilified in, and excluded from, debates about strategies to improve housing access. They also anticipate repercussions of recent ordinances may inadvertently reduce housing access.

• 78% of respondents disagree that city officials consider their perspective.

• Survey Conclusion: These findings point to opportunities to develop housing policies that engage the varied strategies and priorities of a diverse set of landlords. However, there appears to be strong consensus among landlords that their perspectives are ignored, resulting in ordinances that are highly burdensome and ineffective.

• More than 80% of landlords believe the no criminal background check ordinance places unreasonable burden on landlords. About ¾ agree that it will jeopardize the safety of other residents in their buildings.

• Landlords indicated they see limited value in city council’s efforts to affect the rental market and in the potential effectiveness of specific recent ordinances, with the most pessimism oriented around the First-in-Time (FIT) ordinance.

Theme 3 - A substantial amount of housing is provided by small-scale landlords, well over half of whom are middle to lower income. While they tend to offer the most favorable experiences for renters, they are also disproportionately impacted by many regulations as compared to larger, corporate operations.

• The majority of landlords in the study own or manage only a small number of units and/or buildings. Over half of respondents are both manager and owner of their property. Rent increases tend to be more common, and larger, among landlords managing large and moderate-sized buildings.

• Landlords who manage larger buildings are substantially more likely than those who manage smaller buildings to report strong adherence to standard criteria [less flexibility]. Managers of larger buildings are less likely to relax these criteria in a way that may allow applicants with less than perfect applicant characteristics to rent a unit.
  

• Longer-term, small owner/operators tend to offer more naturally affordable housing, which needs preserving. Landlords who have managed or owned property for at least 10 years tend to report lower rents for their units. When these units disappear from the market, they are replaced by owner-occupied housing or much more expensive rental units, decreasing options for new tenants.

• Owners/managers with few units have been conflated with big property management companies that have more bureaucratic and financial resources to navigate regulatory.
  

• A large majority of rental housing owners (61%) rely upon their rental property as a long-term retirement asset or secondary source of income. Only 12.7% of respondents rely on rental income as their primary source of income. The regulatory environment is decreasing opportunities for people to use rental housing investments as retirement savings/income, and likely also decreasing chances for more diverse people to build equity through property ownership.

• Surveyed Landlords reported:

  • More than half (58.4%) in sample report have total (rental and non-rental) income of less than $75,000.

  • 45% of landlords managing single-family units reported no increase in rent.

  • Large rent increases are most common among managers and owners of large (20+ units) and moderate-sized (5-19 units) buildings.

  • Large rent increases are also much more commonly reported by managers of large numbers of buildings than by those managing fewer buildings.

Requests for City Council

Based on the findings in this study, it is urgent that the city council take immediate action to prevent the continued degradation of Seattle’s rental housing market resulting from misguided legislation. Therefore, we request the following:

1. Establish regular assessment and publication of rental housing data to publicly track impacts/outcomes of Seattle’s rental housing policies over time. Become informed and transparent about the dynamics of the housing market and the actual impacts of legislation.

2. Specifically analyze the impacts on affordability, availability and equity of the most controversial ordinances passed in recent years (e.g., First in Time, Roommate law). Analyze small-scale housing providers separately from corporately owned apartments. Where these ordinances are shown to be counterproductive, remove or modify the laws to improve outcomes.

3. Actively include small landlords, as well as more varied renter perspectives, in the development of new regulations prior to enacting them. Pause all new legislative actions until a framework for small housing provider input is offered.

Further Reading

As a companion piece, we recommend reading Seattle Small Landlords & the Legislative Tsunami: A Five-Year Recap. Despite the city’s findings in the 2018 Rental Housing Study, in subsequent years, local landlords have been dealt a tidal wave of complex new laws. This recap details the onslaught of legislation that is dramatically decreasing rental housing availability, affordability and stability of small-scale, community-owned rental housing in Seattle.