$1,000/Month Rent Increase In Seattle – What Really Happened

Free lunch is over’ for tenants: $1,000 hikes hit some older Seattle rentals
By Mike Rosenberg
Seattle Times business reporter

Hoping to strike while the housing frenzy is still hot, some eager Seattle-area landlords are enacting supersized rent increases all at once — eliminating some of the region’s last remnants of affordable housing.

In a tiny rental house pushed up against the freeway in Wallingford, landlord Bruce Wilson is looking for his piece of a housing boom that has seen prices zoom sky high across the city.

Wilson said he realized he’d been undercharging a pair of retired nurses who have been living there for the past eight years with rent at $1,460 a month. His solution? Jack up the rent by nearly $1,000 a month, all at once.

Laws for rent increases
Seattle:Landlords must give 60 days’ notice on cost increases of 10 percent or more

Seattle: Landlords now can’t raise the rent on units that don’t meet basic maintenance standards

Rest of Washington:Landlords must give 30 days’ notice on rent increases

Rent control:Illegal under state law

Source: Seattle Times research

“The free lunch is over with,” said Wilson, who said he looked only at the cold, hard math of the situation. “This was a business decision.”

Tenants Peggy Haug, 68, and her wife, Juanita Merrifield, 74, said they can’t afford the 64 percent rent hike on Social Security and their retirement nest egg. Their pleas for a smaller, phased-in rent hike were rejected.

“We couldn’t believe it. All my friends have just said that it’s not right,” Haug said. So now, they’re getting ready to move out.

In Tukwila, Reginald Wilson saw his cheap $850 townhome rent go up an extra $1,085 in April after a local investment company bought the complex and began fixing it up. Now he doesn’t know whether he’ll be entirely priced out of the area, which has traditionally been more affordable than most of Seattle and the Eastside.

“These people are all about the investment,” said Wilson, an out-of-work security officer who’s also looking for a new place. “There’s no help for people. They can do whatever they want.”

Huge hikes all at once
While much of the focus on Seattle’s rental crisis has been on steadily rising rents — an extra hundred bucks here and there — there are a small but seemingly growing number of landlords deciding to enact huge rent increases in one fell swoop, often forcing out longtime tenants.

Older, traditionally more affordable units are being hit the hardest since new buildings typically open with higher rents right out of the gate.

Property owners say they’re just pushing cheaper units up to around market rate. But those unable to afford the sudden, drastic cost change find themselves struggling to find an affordable alternative.

“It’s been heartbreaking to hear,” said Liz Etta, executive director of the Tenants Union of Washington State, which has tracked a rise in large rent hikes recently.

Because Seattle has no rent control — unlike many other pricey cities, such as New York, Los Angeles and San Francisco — landlords can raise the rent as much as they want as long as they provide 60 days’ notice in the city, or 30 days outside Seattle.

Figuring out exactly how widespread such large one-time rent hikes have become is tricky because unlike general rent prices, no one keeps data tracking that specific issue.

But those working to help tenants say there’s no doubt the phenomenon is growing. The nonprofit Solid Ground has documented a rise in distressed renters calling their hotline to report getting slapped with oversized rent increases that typically amount to a cost bump of 30 percent or more.

From 2012 to 2014, the nonprofit received an average of 25 calls a year from people in King County complaining about sudden large rent hikes. Last year, that figure more than tripled to 84, and it’s on pace to grow even higher this year.

Trish Abbate, one of the tenant counselors at Solid Ground, found this out firsthand a year ago when her landlord posted a note on her affordable studio in North Seattle: Her rent was going up 54 percent. She wound up moving out.

“There’s so much money to be made here that it’s just a matter of time before a landlord is like, ‘You know what? I could get $350 more a month, so why not?’ ” Abbate said.

The anecdotal reports of extreme rent hikes certainly match up with the overall trend in rental affordability. Seattle has in the past year been consistently featured on various top 10 lists for cities with the fastest-rising rents. Earlier this month, apartment research firm Yardi Matrix said Seattle rent has grown 12 percent in the past year, the most of any city in the country and double the national average growth rate.

Zillow now pegs the typical Seattle rent across all home types at $2,480 a month, up from $2,220 a year ago and $1,840 three years ago.

At the Wallingford house where Haug and her wife were hit with the $940 rent increase, they shared their story with friends on Facebook and received plenty of replies about how their rents, too, were soaring.

“I know that there are a lot more people in the boat like me,” Haug said.

Wilson, the landlord, said he consulted with experts and checked real-estate sites, concludingthe fair market rent for the house on Northeast 54th Street was much higher than he was charging.

He settled on a new rent of $2,400 a month, which is about what Zillow’s algorithm estimates the property could rent for. Wilson said he didn’t consider phasing in the price increases or accepting a lower counter-offer from Haug, citing years of steady rent.

“I put my head in the sand for a number of years,” he said, adding that he anticipated a negative reaction to his decision from the public. “You’re getting persecuted for doing the correct thing from a business standpoint.”

At the Tukwila complex where Reginald Wilson got a similar $1,000-a-month rent hike, new owner DSB Investments has been busy sending in crews to paint the building, install marble countertops, spruce up fireplaces and make other significant changes. Wilson said about a dozen of the 15 renters in the Willow Creek units on Southcenter Boulevard have moved out since the big rent hikes were handed down two months ago.

Now he doesn’t know where he’ll end up.

“The rent everywhere is horrible,” Wilson said. “When I started looking for places, I’m like, ‘Are you for real?’”

Josh Alhadeff, president of DSB, said the previous landlords let the complex run down over the last 35 years and kept the rent steady just to ensure tenants would stay and the rent checks would keep coming.

“If all your neighbors are paying (higher rent) and you’ve kind of had that one lucky landlord that let you squeak by — you never got the rent increase as the neighborhood gentrified around you — eventually, that catches up,” Alhadeff said.

Alhadeff said the company’s goal is to fix up the old townhomes to create affordable housing for future decades. That strategy still results in cheaper rents than construction of the new, often luxury apartments springing up across the region, he said.

Rent control no panacea
Most rental property managers seem to be electing to phase in more moderate rent increases to keep the tenants in place, as evidenced by the average annual rent hike hovering around 10 percent throughout the last year or so. Landlords can lose potential revenue when the property is sitting empty and it can be costly to market a unit for new renters.

To combat outsized rent increases, tenant advocates have been pushing in Seattle and at the Capitol to repeal the statewide ban on rent control, but that plan is no panacea.

While residents in cities with rent control are protected from huge rent hikes in theory, in reality those laws can have limited impact because they prevent only big increases for existing tenants. To get around this, some landlords in pricey cities try to evict longtime tenants so they can install new renters at a much higher rent.

In rent-controlled San Francisco, for instance, the number of evictions has soared 70 percent in the last four years as rents there have skyrocketed.

But the situation doesn’t always end badly.

Haug, who initially feared she and her wife would have to move far outside Seattle to find something cheap, learned last week they’ll be able to rent another affordable home in the city starting in August.

It’s only because a friend she knows through church was willing to rent it below market rate, said Haug, who says they were lucky.

“It was handed to us,” she said.




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