Both landlords and tenants are suffering during the pandemic.  If the various eviction moratoriums expire as of December 31, 2020 as scheduled, $70 billion in unpaid back rent and utilities will come due, according to estimates by Moody’s Analytics Chief Economist Mark Zandi.  While the estimates of the number of potential tenants affected vary, the number of tenants who could face eviction is in the millions.  The Aspen Institute’s research says that up to 40 million people could be threatened with eviction over the coming months.

According to Stout, an investment bank and global advisory firm, an estimated 11 to 13 million renter households are at risk of eviction. It predicts there could be as many as 6.4 million potential eviction filings by January 1, 2021 if the CDC moratorium is lifted.

While the focus has been on tenants, Stacey Johnson-Cosby, president of the Kansas City Regional Housing Alliance, says more than 40% of the landlords surveyed in her coalition said that they expected to have to sell their units in the coming months due to rental income losses.

A Rental Housing Finance Survey shows that just over 40 percent of residential units are owned by individual investors. Without rental income, a significant number of noncorporate, “mom and pop” landlords, who may be coping with their own unemployment or additional expenses related to the COVID-19 pandemic, are struggling to pay their mortgages, utilities bills, property taxes, maintenance costs, and other property-related expenses.  The National Rental Home Council said the eviction ban leaves many landlords with two grim options – go deeper into debt or sell.  The sale of these “mom and pop” rentals is likely to result in higher rental prices.

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.

That Fair Housing laws overrule homeowners’ association rules?  Many homeowners’ associations (HOAs) have rules and regulations that all community residents must abide by.  However, even a validly enacted, substantively sound covenant can be unenforceable if it discriminates against members of a protected class.  Washington added marital status as a protected class in 1973; marital status is defined as the legal status of being married, single, separated, divorced or widowed.  A landlord who denies tenancy to unrelated singles because HOAs rules allow only single families could be fines by the Washington State Human Rights Commission, even if just following the rules.

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.

That, on average, one-bedroom rental prices are down more than on other properties?  There are several reasons for this, starting with a larger inventory of one-bedroom rentals.  Demand is down because some tenants are moving out of one-bedrooms into two-bedrooms to save money; half of a two-bedroom is less expensive than all of a one-bedroom.  Others are moving out of one-bedrooms into two-bedrooms because they are working from home and want a separation between work and home or because there are two or more residents working from home and need separate work areas.

According to Zumper, rents for one-bedroom apartments in Seattle are down 17% year-over-year.  Two-bedroom apartments are down an overage of 11%.

	median rent	year-over-year change	# apartments
1 bedroom	$1,550	-17%	2,858
2 bedrooms	$2,052	-11%	1,283

While the rental market stayed strong through the summer, the impact of the pandemic has been increasingly felt this fall.  Some apartments are offering as much as twelve weeks of free rent.

The inventory of single-family home and condo rentals has also increased significantly.  There are currently 346 rentals advertised in Seattle on the NWMLS with an average DOM of 64.  In the period from 10/15/19 to 11/15/19, 111 properties rented in an average of 49 days.

Traditionally the rental market improves after the first of the year.  Whether that will be true this year, we just don’t know.

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.

That before hiring a property management company, it’s important to verify that it is licensed with the Department of Licensing? 

The AG’s office filed charges against an unlicensed property management company in Auburn and a King County Superior Court Commissioner ordered NW Property Solutions to pay a total of half a million dollars for making unauthorized modifications to homes, making false and misleading representations and refusing to pay homeowners. Property management services were advertised for free, then homeowners were pressured to sign contracts the commissioner described as “unfair” and “unconscionable”. The contracts gave the company’s owner, Jackson, sole control over the properties in exchange for monthly rental payments to the homeowners. Those contracts contained provisions hidden in fine print that gave Jackson’s company the right to withhold rental payments if the owners attempted to contact Jackson via phone about issues at the properties.

Without telling homeowners or obtaining their approval, Jackson built new interior walls to expand the number of bedrooms in the rental properties he controlled. In one case, Jackson built three additional bedrooms into a home zoned for no more than six and then packed the home with 14 tenants. When local government officials imposed fines and penalties, Jackson refused to pay and left homeowners to foot the bill.

The company was found guilty of multiple violations of Washington’s Consumer Protection Act.

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.

That although the local sales market has seen little impact from the pandemic, the rental market has been negatively impacted?  Insurify researched the twenty cities with the most significant decreases in rent costs during the pandemic.  While nationwide rents have been stable with an average change of .0067% between March and September, rents have declined appreciably in some cities. 

In 17 of the 20 cities with the greatest decline in rent, rents are still at least 35% higher than the national average.  Bellevue has the 17^th highest reduction in average rents while Seattle has the 16^th.

Bellevue, WA

*Average percent decrease in rent: -9.69%

*Average rent for a 2-Bedroom apartment (9/2020): $2,115

*Change in rent year-over-year (2019-2020):  -7.9%

Seattle, WA

*Average percent decrease in rent: -9.88%

*Average rent for a 2-Bedroom apartment (9/2020): $1,940

*Change in rent year-over-year (2019-2020):  -8.8%

The cities with the greatest decreases are in previously low rent areas; Odessa, Texas with an average decrease between March and September of 26.4% and Williston, ND with 24.45% reduction in rent.

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.

That King County has a program to assist small landlords who have tenants with unpaid rent due to the pandemic?  The Small Landlord Fund assists landlords with nine or fewer tenants who have unpaid rent that became due on or after March 1, 2020. Small landlords with properties in King County are eligible. The funding is awarded by a lottery.

Tenants must pass eligibility standards and landlords must agree to:

1. Accept three months of rental assistance on behalf of the participating tenant at the lesser of either: (a) 80% of the otherwise applicable total rent for three months; or (b) fair market rent for the three months. Any rental debt owed by the tenant for more than the three months must be forgiven. If rental debt is less than three months, assistance may be paid for past due and future rent up to three months not to extend beyond December 2020.

2. Not terminate or refuse to renew the participating tenant’s tenancy absent good cause until March 31, 2021.

3. Not raise rent on current tenant(s) served by this program until March 31, 2021.

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.

That during the governor’s press briefing on Thursday, he announced that the eviction moratorium will be extended to the end of the year?  The specifics of the next (#5) eviction proclamation will be given on Monday, October 12^th. 

Tenants cannot be evicted for non-payment of rent, but rent does continue accruing.  While there are a variety of federal, state and local programs to assist tenants, those programs are not able to meet demand.  Tenants who are unable to pay rent can’t be evicted, but they are unlikely to be able to pay for multiple months of  back rent once the moratorium is lifted. If landlords and tenants can’t negotiate a settlement/payment plan, many tenants will lose their housing and landlords will be unlikely to ever recover the lost rental income.

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.

According to Rentec, the number of tenants unable to pay rent in full has increased with each month of the pandemic.  As of September 10th, rent payments received nationwide by property managers and landlords they polled were 35% lower than rent received for the same period in March.

At the same time, Brookings Institute researchers found a tenant’s inability to pay rent has a disproportionate impact on landlords making less than $50,000 a year, who are also more likely than higher earners to have lost a job or employment income during the recession.

Their research shows that roughly a third of individual landlords who own residential property are from low-to moderate-income households (those with incomes of less than $90,000 a year). Rent makes up 19% of household income for those making less than $50,000 a year, and 15% for those making $50,000 to $89,000 a year. By comparison, residential landlords who make more than $200,000 a year derive about 5% of their annual income from rent.

We are here to help you and your clients with all aspects of the rental market. Please contact us for further assistance!

Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.