Coronavirus has cost more than 100,000 people their jobs. So why aren’t rents going down?
Published in The Seattle Times April 15, 2020
As the novel coronavirus ravages the region’s economy, resulting in the fastest pace of layoffs on record, Seattle-area rents are continuing to rise, surprising new data shows. The information arrives at the same time local leaders are calling for rent and mortgage freezes in the face of widespread economic fallout, and complaints about rent increases have drawn the attention of the state attorney general.
Rents on new listings in Seattle rose 0.5% in March over February, and about the same amount year-over-year, according to research from online rental platform Apartment List. Against the advice of industry groups, some landlords are even raising rents on existing tenants, possibly to try to protect themselves when other tenants come up short.
Jillian Gibson, 38, received an “incredibly stressful” notice on March 30 that the monthly rent on the North Seattle house she lives in would increase from $2,600 to $2,700 starting June 1. Gibson, a single mom, had previously supported herself and her daughter by working two jobs as a bartender, but has been out of work since bars and restaurants closed in mid-March.
She had already been worried about what would happen if her employers didn’t pull through the pandemic closures. Even before the increase notice, making rent was “already exceeding my financial limits,” Gibson said. Gibson’s landlord declined to comment on the reason for the rent increase. Though rent increases are not prohibited by any of the local or state eviction moratoriums prompted by the crisis, the state Attorney General’s Office has said its lawyers are paying close attention to increases that might run afoul of state consumer protection law during the pandemic.
Colleen Melody, chief of the civil rights division in the AG’s office, said her unit has received a “wide variety” of complaints about situations that interfere with people’s ability to stay home per the governor’s order, including complaints involving rent increases.
Increasing rent during a public health emergency during which a tenant has no other option to move could potentially be seen as an unfair business practice under state law, according to state Attorney General Bob Ferguson.
“Raising rent on vulnerable tenants during a public health emergency is clearly morally wrong,” Ferguson said in a statement. “More than that, it may violate state law, including the Residential Landlord Tenant Act and Consumer Protection Act. My office will be looking closely at these complaints.”
Industry groups representing landlords have also advised their members that raising rent at the moment “isn’t a best business practice,” said Kyle Woodring, government affairs director for the Rental Housing Association of Washington, which represents primarily smaller landlords. But he acknowledged some property owners are doing so regardless. “It can be difficult to tell people to calm down and wait for rent and mortgage relief” to cover costs, he said. “Out of fear, they’re doing things that probably aren’t wise to do.”
Shielding from economic uncertainty The rent increases in new listings were “unexpected,” Apartment List economist Chris Salviati said. Between widespread layoffs and the statewide stay-at-home order, industry watchers expected to see a more drastic negative effect on new listings in March.
In Seattle, “there’s no immediate demand for apartments,” Salviati said. “And normally, you’d think that when demand goes down, prices would be lowered.”
By mid-March, nearly 15% fewer tenants were searching for new apartments compared to the same time last year, with interest dropping by the day, according to housing market data firm RealPage.
Instead, prices continued a slow march up, which Salviati attributed in part to pricier apartments hitting the market and occupancy rates in older buildings staying high.
It may also be too soon for landlords’ pricing to respond to the coronavirus downturn, said Brett Waller, government affairs director at the Washington Multifamily Housing Association.
Many new Seattle apartments that came online recently have been high-end dwellings aimed at the tech economy — a sector that hasn’t seen massive layoffs. In the downtown core where those rentals predominate, 26 new residential buildings opened in 2019 and early 2020, according to the Downtown Seattle Association. Typically, new apartments carry a 30% premium compared to older buildings, Waller said, driving up average rent prices.
Meanwhile, in older buildings, tenants are choosing to extend leases rather than look for a new apartment. Occupancy rates have stayed high through the end of March, even as some prospective tenants have backed out of leases or stopped their apartment search altogether.
But some tenants who choose not to move may also find themselves paying more than they bargained for, as landlords take measures to shield themselves from economic uncertainty.
At the Estada in Seattle’s Lake City neighborhood, tenants wishing to stay on month-to-month leases will pay 10% more as of June 1 than if they sign a new long-term lease.
Jason Kono, a principal at landlord Pilot Northwest, said tenants at most of the company’s other properties pay additional month-to-month fees. The company had planned for months to add those fees at Estada and other buildings, he said, and advised tenants facing difficulty making rent to propose a payment plan.
Many landlords try to minimize month-to-month rentals so they can try to control when vacancies occur, Kono said. “It’s less impactful than having 60 days of a unit vacant.”
But tenants say choosing between a rent increase or being locked in to a yearlong contract when they’re already facing coronavirus-linked uncertainty isn’t much of a choice.
“It’s hard to swallow a rent increase when I know my salary almost certainly won’t go up,” said Estada tenant Addien Wray, a University of Washington graduate student. Wray and his partner, who works in the construction industry, currently pay $1,560. The statewide stay-at-home order, which designates most construction nonessential, means her employment is precarious.
“If I’m looking at my checkbook and trying to do the math, [the 10% increase] is sustainable in the short term but not sustainable in the long term,” Wray said.
Some residents in income-based subsidized units owned by public corporation Capitol Hill Housing are also seeing scheduled rent increases move forward because their last reported incomes were higher than the previous year.
Caitlin Kernan had been paying $1,143 for the apartment she’s lived in since 2014, and she knew a rent increase was coming because she made more money in 2019 than 2018. The notice she received, dated April 1, said that because her 2019 income rose to $64,800, her new rent will be $1,620 starting June 1.
But Kernan, a 36-year-old single mom, is worried she may not have a job by the end of the month. She works for a painting contractor that already had to lay off all of its field employees.
“It’s not that I didn’t foresee an increase coming,” she said. “My concern was more timing with everything.”
Capitol Hill Housing sent rent-increase notifications to about 20 tenants who make more money than their subsidized units allow for, Capitol Hill Housing spokesperson Yiling Wong said in an email, adding that residents can contact the organization’s resident services team if they have trouble paying rent.
Officials call for action
Some elected officials are promoting the idea of freezing rent and mortgage payments to prevent a wave of homelessness once eviction moratoriums expire.
King County Councilmember Girmay Zahilay said he anticipates an “economic free fall” if rent and mortgage freezes aren’t implemented. He helped introduce a resolution this week calling on Gov. Jay Inslee and the federal government to free tenants and property owners from their obligation to make rent and mortgage payments, and said he’s received hundreds of messages from tenants and landlords about the issue.
“We are hearing from dozens of landlords saying our tenants have been laid off, they can’t pay rent and I can’t pay the mortgage, please provide us some relief,” Zahilay said.
The Seattle City Council passed a similar nonbinding resolution in late March. And City Councilmember Kshama Sawant has added her voice to some tenants’ calls for a rent strike.
Housing groups have said those proposals don’t address the problem. Rent and mortgage relief, not just absolution from payment, are necessary to protect tenants and landlords, Woodring said.
“If you have the eviction ban going, which prevents people from realizing their costs, we need policies to make sure their costs are covered,” he said.
While it’s hard to know for sure just how many landlords across the Seattle area are raising rents on tenants, Zahilay said he doesn’t think rent increases should be happening at a time like this.
“I think anything we can do to keep people housed during this unprecedented crisis is what we should be doing,” he said. “Increasing rent certainly does not accomplish that goal.”