This story was originally published on MyNorthwest.com.
In a move to preserve homeownership opportunities and combat escalating housing prices, a new bill — Senate Bill 5496 — has been introduced in Washington. The bill seeks to limit business and investment entities from acquiring excessive numbers of single-family residential properties. If passed, the legislation would prohibit any entity owning more than 25 homes from purchasing additional properties, with certain exceptions.
The bill aims to address growing concerns about the increasing presence of institutional investors in the state’s housing market. Supporters say these investors, particularly real estate investment trusts (REITs), have been purchasing homes at an alarming rate, driving up prices and decreasing availability for local buyers.
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Supporters say Washington bill will help families trying to buy homes
Senator Emily Alvarado (D-West Seattle), a key sponsor of the bill, expressed her concerns during public testimony on Wednesday about the state of homeownership in Washington.
“As we all know, homeownership is out of reach for so many families in Washington, and even families who have the income to buy a home — especially a starter home — find that more and more they’re outbid by all-cash offers,” she said. “And that’s especially true on the lower-cost price point homes.”
Alvarado said many times the cash buyers are institutional investors, making it harder for first-time homebuyers to compete.
“In these times, I think we need to do everything possible to increase access to homeownership,” she said. “And that’s why this bill takes preventative steps to stop institutional investors from buying single-family homes and crowding out Washington homebuyers.”
The bill would prevent entities that own more than 25 single-family residential properties from purchasing or acquiring additional homes, except in certain cases such as nonprofit corporations involved in the redevelopment or construction of new homes.
In 2024, the Government Accountability Office (GAO) released a report showing that prior to 2011, no single investor owned more than a thousand single-family homes. By 2022, however, 32 institutional investors collectively owned roughly half a million homes and in 2024, one in every six homes sold in the U.S. was purchased by an investor.
Alvarado pointed out that while Washington’s market share is more modest — investors purchased roughly 9% of homes in the Seattle Metropolitan Statistical Area (MSA) in Q2 of 2024.
“These homes otherwise would have been purchased by Washington families,” she said.
“The 25-unit threshold would likely capture a significant number of local housing providers, many of whom provide affordable housing in their communities, and many of whom are family businesses, not Wall Street hedge funds,” he said.
This issue is not unique to Washington. Legislators across the country have introduced similar measures to curb the influence of large-scale investors in the housing market.
Alvarado cited efforts in Illinois, Indiana, New York, North Carolina, Nebraska, California, Minnesota and Ohio, where bills have been proposed to either prevent institutional investors from buying single-family homes or to impose taxes on them.
While acknowledging the need for more homes to be built, Alvarado was clear the bill is not intended to restrict homebuilding.
“We need more homes that are built so we have more homes for people to buy,” she said. “But we have a vested interest in making sure that in a tough market, Washington families have a leg up in buying homes in Washington.”
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But not everyone was on board, including the Building Industry Association of Washington.
“We have concerns about some of the unintended consequences and potential chilling effect that this can have on new investment,” Brent Ludeman said. “We believe this legislation is not ready for prime time.”
Riley Benge, representing the Washington Realtors Association testified on Wednesday that the 25-home limit will hurt locally based home developers.
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The bill also includes exemptions for investors involved in redevelopment efforts, allowing them to continue purchasing homes for modification or expansion.
“This bill explicitly includes an exemption for investors who buy homes that are purchased as part of a redevelopment effort,” Alvarado said.
The bill had its first hearing on Wednesday by the Senate Housing Committee. The committee chair has not set a date for a possible committee vote.
Matt Markovich often covers the state legislature and public policy for KIRO Newsradio. You can read more of Matt’s stories here. Follow him on X, or email him here.
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