As Clark County residents try to reconcile themselves to rapidly increasing rents and home prices, one possible villain has emerged in the popular imagination: corporate homebuyers.
The notion of private investors buying available homes and pricing out local residents has even entered into the debate among congressional candidates, with Republican Joe Kent blaming prices on large international investors.
“Right now, we have a major problem where major global corporations and hedge funds like BlackRock are being allowed to purchase massive amounts of housing using our pension fund — using our money,” Kent said in a Tuesday debate.
An investigation of sales data by The Columbian shows such claims in Clark County are significantly overblown, however.
Only about 2.5 percent of the homes in Clark County were purchased by corporations, investors or local residents as investment properties over three years, according to data analyzed by The Columbian. Neither BlackRock nor any of the other companies Kent named in the debate was among those purchasers.
BlackRock specifies on its website that it does not buy single-family homes, despite viral social media allegations that it is “buying every single family house they can find.”
Moreover, real estate agents and affordable housing advocates contacted by The Columbian say they are unconcerned with corporations buying homes. They attribute rising prices to low housing supplies, an extremely competitive market and laws allowing landlords to raise rents with no limitations other than a six-month warning.
But the question remains: In Clark County’s crisis-level home market where many local residents can’t afford to buy a home, should corporations or even locals owning a second home for additional income feel like they’re contributing to the issue?
In some metro areas, corporations purchased homes at record-high levels in 2021, according to a study first published in the Washington Post. It said this type of homebuying can push potential first-time buyers out of a market that already has a highly limited supply of housing.
When the Washington Post first published the story in February, it incorrectly stated that Clark County’s home sales were dominated by corporate investors. The story has been corrected since The Columbian inquired about it.
American Homes 4 Rent purchased one home at 1305 W. 16th Ave. in La Center earlier this year. The company also bought three other homes in the same neighborhood. All were built in 2020 and have three bedrooms but vary in square footage and the number of bathrooms.
The La Center home was purchased in April for $450,000, according to Redfin. The home sale website now estimates the home is worth $478,352.
American Homes 4 Rent has bought 17 homes in Clark County since last year, including in La Center, Washougal, Battle Ground, Vancouver and Ridgefield. The company has purchased 36 homes in the county in the last decade.
According to the company’s second-quarter financial results, rents and other single-family property revenues increased 15.4 percent from the previous year to $369.1 million. American Homes 4 Rent’s portfolio grew in that quarter to 54,786 homes nationwide.
“Combined with the sustained demand backdrop for single-family rentals, we are well-positioned to deliver strong results throughout 2022 and beyond,” David Singelyn, American Homes 4 Rent’s chief executive, said in the report.
In other parts of the country, American Homes 4 Rent has been criticized for coming in with corporate money and outbidding local homebuyers, all while driving up competition in real estate markets, according to the Wall Street Journal.
The company’s purchases, however, have not seemed to have made a difference in the local real estate market in Clark County, which has been squeezed by low inventory for more than a year.
The company, which went public in 2013, was named one of “America’s most trusted companies” by Newsweek in March of this year.
Zillow Homes Property Trust was also been buying up homes in Clark County over the past two years. Zillow had attempted to invest heavily in buying homes nationwide, including Clark County, in the last few years, but the program fell apart.
And while Nylund does appear to rent out some of the homes it buys, it also renovates and sells others, according to its website.
Real estate, housing advocates unconcerned
Keeping Clark County’s first-time homebuyers in mind, local real estate agents and affordable housing advocates mostly agree that corporate homebuyers are not having a large impact on the local housing and rental markets.
“I think at this time, it’s a low percentage to the point of not making a difference,” said Amy Asivido, managing broker in Clark County with the Asivido Team at Keller Williams Premiere Partners.
Although corporations may not appear to be affecting the buying market, renters and homeowners in Clark County are still facing historically high costs of living. With rents at an average of nearly $1,700 for a two-bedroom apartment and with 30-year fixed mortgage rates creeping above 6 percent for the first time since 2008, homeownership is becoming less and less attainable for many Clark County residents.
If more investors take root in Clark County’s housing market as they have in other metro areas, they could further squeeze individuals and families out of the market. It could have long-term consequences for affordability, as homeownership is an important means of building wealth for low- and moderate-income families. Squeezing these families out of the housing market, therefore, further limits their abilities to afford a house going forward.
Local real estate agents have varying opinions on whether corporate homeownership could become a larger issue in Clark County in the future.
On one hand, Clark County is growing, having about a 20 percent population increase since 2010, according to the U.S. Census Bureau. The growth could be attractive for investors, said Asivido, especially in places like the Waterfront Vancouver that are seeing large amounts of development.
“There’s such a limited amount of residential (housing) just in that specific walkable area that that will increase in value, and it’s a really good investment,” Asivido said about the Vancouver waterfront.
Additionally, though housing costs in Clark County have increased, the area is still much more affordable than some other metro areas across the country.
“What’s funny is, people that have grown up here in Clark County think that our prices are just ridiculously high,” Asivido said. “But if you’re from a very high cost-of-living area like New York or California, they’re like, ‘This is great.’ ”
As a result, housing in Clark County could serve as a promising long-term investment for corporations.
“Just as all other Habitat homeowners, the buyers of these homes will own their home through an affordable mortgage and have the opportunity to build equity over time,” he said. “The difference between these homes and traditional Habitat homes is the land will stay under the ownership of the Habitat Home Trust.”
This takes Habitat’s housing solution from being a 30-year affordable housing solution through the duration of a mortgage, to being a permanent solution to housing instability, he said.
LLCs buying homes
Most homes purchased by investors in Clark County were purchased by limited liability companies, or LLCs. The exact legal definition of LLCs varies by state, but a core definition is that LLCs give owners the limited liability benefits of a corporate structure while still providing the tax benefits of a partnership.
LLCs are a good option for business ventures that are owned by single individuals or small groups — usually the case for investor-owned real estate. However, when extended to the ownership of real property, LLCs make it hard to know who actually owns the house.
The Columbian’s investigation of corporate homebuyers showed how difficult it can be to identify who owns many Clark County homes.
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What makes LLCs attractive to small-scale owners also makes them attractive to large corporate investors looking to buy multiple properties without attracting attention — especially in a market where evictions and rental rate increases are increasing.
According to Shelterforce, an independent publication that covers affordable housing: “When a private equity firm or large corporate landlord uses residential housing as collateral, often the formal owner of the property is an anonymous LLC, one per property. It’s difficult to accurately quantify and trace the scope of this phenomenon, because there is no transparency. As these financial practices accelerate, the number of homes with untraceable or difficult-to-trace ownership proliferates. Regardless of investor size or type, LLC ownership of real property can create problems at the local level for tenants, neighbors, and municipalities.”
Some of those problems include wrongfully evicting tenants, increased rates of property deterioration and even property abandonment.
For example, the Southern California home-flipping giant Wedgewood Inc. has come under scrutiny for its sprawling network of LLCs that the company uses to purchase homes. In 2020, at least 98 active LLCs were used by Wedgewood Inc. to purchase more than 100 properties in the San Francisco Bay Area, where the company is particularly active.
One of those LLCs — Catamount Properties 2018, LLC — purchased four homes in Clark County between 2020 and 2022.
According to NBC Bay Area, a search of court filings in four counties where Wedgewood has owned property revealed more than 300 lawsuits between 2015 and 2020 that involve the company — mostly unlawful detainers where the company was attempting to evict a tenant or former owners living in a home it recently purchased.
Additionally, American Homes 4 Rent purchased multiple homes in Clark County under three different LLCs: one through AH4R LLC, 16 through AH4R Properties Two LLC and three through Amh Nb Development Wa LLC.
Individuals purchasing multiple homes using multiple LLCs is also common in Clark County, according to The Columbian’s analysis. For example, 372 homes were purchased by LLCs that did not purchase any other homes between 2020 and 2022. Some of the owners of those LLCs can be found using secretary of state filings, revealing that some individuals own multiple homes through multiple LLCs in Clark County.
While purchasing homes using an LLC isn’t inherently frowned upon, the practice has sometimes been criticized for contributing to the financialization of the housing market — treating housing like stocks and bonds.
Transparency is also an issue with LLC homeownership, and issues with LLC owner identification have prompted some states, such as New York, to pass laws that make it easier to unmask owners.
To ensure housing is more affordable for the county’s homebuyers, Bovee recommends the county focus on increasing housing stock rather than worrying about corporations buying homes. Some ways of accomplishing this would be using government subsidies to incentivize construction of new homes and passing more legislation that enables zoning for more housing units, she said.
“That would potentially increase our supply and keep prices hopefully still affordable in our county,” Bovee said. “I think it would open up homeownership to, hopefully, more first-time homebuyers.”
This story was made possible by Community Funded Journalism, a project from The Columbian and the Local Media Foundation. Top donors include the Ed and Dollie Lynch Fund, Patricia, David and Jacob Nierenberg, Connie and Lee Kearney, Steve and Jan Oliva and the Mason E. Nolan Charitable Fund. The Columbian controls all content. For more information, visit columbian.com/cfj.