If you’ve owned a house in Seattle for a while, you know the letters: plaintive pleas from couples with names like Brad and Janet desperately searching for a home just like yours where they could fulfill their dreams and raise their exemplary children (Tyler aims to become a concert pianist, Meghan wants to be a doc with Doctors Without Borders). In the housing booms that peaked in 2005 and 2022, when listings commonly sparked bidding wars and sold for tens of thousands of dollars above asking price, would-be buyers sold themselves to try and buy a house. Agents meanwhile pestered incessantly with phone calls and texts, trawling for listings.
Last year the pleas and calls briefly eased, as interest rates soared and a recession and housing bust seemed to loom. Now they’re back, along with rising prices. The other day I got a letter from “Jen and Ivan,” who’ve “spent the last 3-plus years dreaming of finding the perfect home to call our own,” where Jen can “delight at being in such close proximity to wildlife and nature” and Ivan can “support the surrounding community at the local coffee shops, bookstore, and other small businesses.”
Now the Jens and Ivans have professional competition. Last July and again in August I received this postcard from a “small business” owner named “Julie” who also wants to buy my house. To show she’s the kind of person I would want to sell my house to, Julie includes a photo of herself—not too young, not too old, in a sunny meadow, with a warm smile, wrinkled T-shirt, discreetly torn jeans, and a winsome collie. (Cute, stalwart pooches—never a pitbull or toy poodle—have become essential accessories for candidates and others trying to induce trust and rapport. A dogless author I knew borrowed a retriever for his book-jacket photo.) No hardboiled real estate investor she.
So I stopped by the postcard’s return address, a first-floor office in a looming five-story bunker near Northgate where I used to go to get my mortgage refinanced, and asked for Julie. There was no Julie there until I insisted on seeing her rather than selling my house to anyone else, and then there was a Julie but she was out and would I like to speak to someone else on that team? No thanks, I said, snagging a brochure on the way out.
That’s how I learned that “Julie’s small business” is actually one of 1,100 brokerages in the global Keller Williams Realty empire, “the largest real estate franchise in the United States by sales volume,” with “over 200,000 associates worldwide as of 2022.” It’s also a link in the chain of Ben Kinney Companies, which includes 11 brokerages and 1,400 agents “servicing over seven counties in Washington State, in addition to the master franchise rights to all of the United Kingdom.” There’s got to be a Julie in there somewhere.
Across the country, investors have acquired a growing share of America’s single-family homes. In 2021, they completed a fifth of U.S. home purchases. This massive infusion of capital has driven soaring price appreciation, outpricing would-be first-time homeowners and shoring up the market against the predictable bust as interest rates rose. It also consigns an ever-larger share of Americans to renting, cutting tens of millions off from the essential engine of intergenerational wealth accumulation.
This effect is especially pronounced in Seattle, once a model “middle class” city with relatively high degrees of economic equality and home ownership (67 percent homeowners in 1960). Today Seattle has as many homeowners as it did then but 200,000 more residents: the U.S. Census Bureau finds that in 2021, only 45 percent of Seattleites were owner-occupants, while 55 percent were renters. This decline in homeownership is especially pronounced but hardly confined here: The Bureau reports that from 2009 to 2015, in the wake of the Great Recession, 46 states saw statistically significant declines in homeownership. By 2019 homeownership had recovered partially in 31 of them but, on average, was still 3 to 4 percent below the peak years of 2005 to 2009.
Though it’s the top brokerage franchise, Keller Williams is a bit player (“a gnat,” in one veteran realtor’s words) in the grand game of residential property consolidation. Hedge funds, institutional investors, sovereign wealth funds, even Alaska’s state fund have piled into the American housing market, joining and outbidding traditional smaller landlords. Billion-dollar Blackstone, Inc., “the world’s largest alternative investment manager,” and the even larger BlackRock have taken turns as the largest purchaser of single-family homes. In 2021 24 percent of homes sold went to investors; in the last quarter of that year, institutional investors’ share topped 18 percent.
These investors have proven prescient—or influential—as legislatures in state after state, goaded by the development lobby and housing advocates, have moved to eliminate or drastically curtail single-family zoning, allowing more density (and profit) on formerly constrained lots. Housing availability and affordability are the stated goals, but the results are more ambivalent. In Seattle, this typically means replacing a modest older home (and the trees around it) with three “affordable” townhouses priced at $700,000 to $800,000.
Even homeowners with no interest in selling or buying are incessantly reminded of the transformed home market. With housing inventory—the number of homes for sale—at its lowest level in 40 years, investors and brokers are again clamorous in their search for available properties. Christmas provided a welcome break in the daily spam calls and texts, but I know they’ll soon be back. And “Julie” has either changed identities or gotten competition in her own office. Two months after her last postcard, I got another from “Jamie” at the same address, offering a quick and easy all-cash offer, no tricks or hassles.” This time, no pooch.
Eric,
How do you reconcile your post with links like these?
https://www.blackrock.com/us/individual/insights/buying-houses-facts
“BlackRock is not buying individual houses in the U.S.”
https://www.blackstone.com/housing/our-track-record-in-housing/
“Blackstone owns approximately 0.03% of single-family homes in the US. More broadly, institutional owners of single-family rentals own only 0.4%.”
By way of order of magnitude IF Blackstone owns approximately 0.03% of single-family houses in Seattle it owns about 50 houses. If those numbers are accurate, I don’t think we need to be concerned.
But maybe you have different numbers?
(And it would be surprising to rent detached units en masse because of costs to manage/maintain. The reason there is so many single-family houses for rent is because many landlords ignore their own labor costs and discount them to zero.)
I can believe that “Blackstone” owns few homes – they can doubtless arrange corporate identies to suit whatever picture they want to paint. It’s surely going to be futile to try to exercise any control over what kind of entity does the speculation – large/small, foreign/national, etc. – it’s too trivial to mask one entity under another. In Denmark, after Blackstone’s activities generated plenty of bad publicity, now it operates as “Kereby.”
But the massive amount of money out there, global and national, is going to find its parasitic ways. The 0.4% figure can’t represent reality.
From a 2014 Seattle Times article “Wall Street buyers snap up thousands of local homes for rentals” referring to the Seattle area —
” By year’s end, Blackstone’s Invitation Homes had hoovered up at least 1,585 single-family homes here, according to market researcher RealtyTrac. “
If anyone is curious about how I derived the number of houses owned by Blackstone, according to this usually reputable source:
“We have plenty of land in this city. So much land we have the luxury of having more than 165,000 homes dedicated as single structures on a large lot.”
https://www.theurbanist.org/2021/03/25/seattle-has-the-space
O.03% (Blackstone ownership) x 165,000 (total number of single-family houses in Seattle ) = 49.5 houses owned by Blackstone
If you use the other number of 0.4%, institutions own about 660 rental houses in Seattle. That’s a considerable number but not a considerable number out of 165,000.
So what are the facts? Sincere question. Are Blackstone and Blackrock misrepresenting and distorting?
I often receive letters, postcards and email messages from people wanting to buy my house — no strings attached, the letters, cards and messages state, my choice of closing date, all cash offers cite the latest assessed value. Phone messages are rare now. No letters or cards have graced me with photos of people or critters — a good thing because I promptly put all of them into the recycling container.
My daily calls (not answering the ones my phone provider lables “spam”, but the unidentified numbers I do answer) are almost always from someone with a foreign accent. They always ask the same questions, and I always give the same answer, giving them a “yes, I will sell today for $X (1 million over assessed value)”. Next question is whether that number is negotiable. “Yes; $X+100k”. They protest, and I point out changes in city code reducing minimum lot size to 3,500 square feet, and the new state law that allows 4-6 units per lot. I even do the math for them, telling them how many units they could build on my (admittedly very large) lot. And then they hang up on me. Because what all these predatory buyers seemingly have in common is a belief that we homeowners, especially those of us in certain neighborhoods, are stupid, desperate, or both. And that we should be happy to be “presented with a fair and generous offer” that happens to be far below comparable selling prices in the immediate area.
I can tell you how this works in Tacoma.
The man who purchased the house next to me in 2012 did so under cover of an LLC business license.
In 2013, there were 10 associated LLCs licensed to this man.
This is standard operating procedure for corporations. Hide the holdings under LLCs that have to be individually researched with the state business licensing records, sometimes through several layers of obscuring business structures, to find who truly owns a property.
My neighbors & I discovered how to do this when a slumlord bought a property on our block which has been housing drug dealers for 10 years.
I wouldn’t mind getting just a letter or a postcard, except for the waste of paper. Anything but the phone calls and texts. But while I’m sorry, hat you’re getting inundated, it’s almost a relief to know I”m not the only one. I was getting a little paranoid. ( “Why are you bothering ME?” )
“There is nothing in the data to show that Wall Street has been the big buyer of homes in the U.S since 2000. If you want to pin the blame on someone, you’re going to have to condemn those avocado-toast-eatings kids, the Millennials, who started buying homes in 2013 and were the largest percentage of homebuyers until mortgage rates rose in 2022. Since then, Gen Xers and Baby Boomers have once again come out on top, according to the National Association of Realtors”
https://finance.yahoo.com/news/no-wall-street-investors-haven-015642526.html
Thanks for the `heads up`. I`m going to put preserving several trees on my lot in a covenant on my lot.