Editorial: Wall Street is another hurdle for first-time homebuyers in Seattle
Big institutional investors who are buying houses and converting them to rentals create another hurdle for struggling potential first-time homebuyers.
Seattle Times Editorial
INSTITUTIONAL investors are paying cash for Seattle-area houses and converting them to rentals. That’s more bad news for beleaguered first-time homebuyers, who already have enough trouble with stagnant wages, student-loan debt, rising prices and tighter lending standards.
Now they get to compete with Wall Street.
Institutional investors, including private-equity firms and real-estate investment trusts, bought about one in every 14 houses that sold in the Seattle metropolitan area in 2013, Times reporter Sanjay Bhatt reported Sunday.
They bought five times as many houses last year as in 2012. In parts of Kent, Federal Way and Pierce County, investors accounted for 10 percent or more of all single-family sales.
For the most part, these were houses likely to appeal to many first-time buyers. About half were bank-owned or in foreclosure. Many cost less than $300,000.
Now they’re for rent, not for sale.
The big investors say they’re serving a growing number of people who either can’t or don’t want to buy, and there’s some truth to that. Homeownership post-bust is at record lows.
But owning a home remains a core component of the American dream. More than two-thirds of renters surveyed in a Gallup poll last year — and 90 percent of renters under 30 — said they plan to buy in the next 10 years.
That won’t be easy if recent trends continue. In the Seattle area, the share of single-family houses occupied by renters jumped from 13 percent to 18 percent between 2006 and 2012, according to a USA Today analysis of census data.
Market forces brought institutional investors onto the single-family rental scene, and market forces could push them out. They already are cutting back their purchases in other markets as prices rise.
Some economists say that, if home prices continue to increase, big investors might find it’s more profitable to sell off their inventory than continue to rent it.
But that’s speculation. For now, the institutional investors are a growing presence in Seattle’s single-family housing market. And that’s a mixed blessing at best.
Editorial board members are editorial page editor Kate Riley, Frank A. Blethen, Ryan Blethen, Sharon Pian Chan, Lance Dickie, Jonathan Martin, Thanh Tan, William K. Blethen (emeritus) and Robert C. Blethen (emeritus).