(The Center Square) – A bill to limit major investors from buying up large numbers of single-family homes got a public hearing in Olympia on Wednesday.
Senate Bill 5496, according to a brief summary of the bill, “Prohibits an investment entity, or a business entity that has an interest in more than 25 single-family residential properties, from purchasing, acquiring or otherwise obtaining an interest in another single-family residential property, with certain exceptions.”
The legislation would also create a civil penalty that may be enforced by the Attorney General’s Office under the Consumer Protection Act.
Sen. Emily Alvarado, D-Seattle, is the bill’s sponsor.
She told fellow Senate Housing Committee members that too many Washingtonians are priced out of the starter home market, and investor groups buying up properties are making matters worse.
“Even families who have the income to buy a home, especially a starter home, find that more and more they are outbid by all-cash offers,” Alvarado continued. “That’s why this bill takes preventative steps to stop institutional investors from buying up single-family homes and crowding out Washington homebuyers.”
Alvarado cited statistics from the federal Government Accountability Office.
As reported by GAO, “Millions of homeowners defaulted on their mortgages during the 2007–2009 financial crisis. Institutional investors (i.e., companies that own a large number of single-family rental homes) grew large portfolios of single-family homes and converted them to rental properties to help meet growing demand for rental housing….low housing supply and elevated housing prices and rents have raised questions about the effect of institutional investors.”
Alvardo went on to note, “Prior to 2011, no single investor owned more than a thousand single-family homes. By 2022, 32 institutional investors owned half a million single-family homes, and in 2024 across the U.S., investors bought roughly one-in-six homes that were sold.
She conceded that the number of investor homes in Washington is not nearly as high, but said it’s still an issue.
Ethan Robinson, advocacy and policy manager for Habitat for Humanity in Seattle-King County, spoke in support of the bill.
“The families we serve embody the very spirit of our state, hardworking individuals who dream of providing for their children with the security and opportunity that comes with calling a place home,” Robinson said. “Across the country, we’ve seen how the entry of large investor-owned firms into single-family home markets can reshape communities and limit homeownership opportunities.”
Lobbyist Brent Ludeman, speaking on behalf of the Building Industry Association of Washington, testified against the bill.
“We have concerns about some of the unintended consequences and the potential chilling effect this could have on new investment,” Ludeman told the committee. “This legislation is not ready for prime time, and there needs to be more consideration of the real-world impacts on the housing market.”
He said lawmakers should consider what happens when there is a market downturn.
“What happens when a builder gets into financial trouble and needs to offload properties quickly?” Ludeman asked, suggesting the bill would worsen the state’s housing crisis. “Who will they sell to?”
Initiative activist Tim Eyman also spoke in opposition to the measure.
“This is infuriating. We’re talking about a willing buyer and willing seller who wants to sell it for as much as possible,” Eyman said. “That’s the marketplace, and that’s supply and demand, and all I’m seeing are bills like this one that are messing with the market because you guys messed up the market based on bad policies, so now you’re putting Band-Aids on the bad policy that you created in the first place.”
He suggested the bill is about penalizing sellers, who may just be trying to create retirement income.
“I think you’re penalizing sellers and not allowing sellers to sell for as much as possible,” he explained. “This bill and a rent-control bill moving ahead this session will make things worse than they are right now.”
The rent-control bill Eyman referred to is House Bill 1217, also sponsored by Alvarado, which received a public hearing in the House Appropriations Committee on Monday after passing out of the House Housing Committee. HB 1217 would cap rent increases at 7% of tenants’ current rent.
