Cowlitz County landlords are selling properties to cover back rent not collected during eviction moratoriums

The rental eviction moratoriums are drying up Donna Britten’s savings plan.

After not receiving a check in four months, Britten said she sold one of her rentals — part of her retirement nest egg.

“Everyone thinks landlords have a million bucks, and that’s not the case,” she said. “It’s been pretty tough for a lot of people.”

Landlords have not been able to evict tenants due to the inability to pay since March 2020. In June the federal and state eviction moratoriums were extended to July 31.

The orders aim to help those who lost wages during the pandemic maintain housing, but now landlords are facing thousands of dollars in back rent they may never see.

Fearing a lack of compensation, landlords are selling to homeowners, and possibly squeezing the already small local rental inventory even tighter.

Deficit

Britten owns 30 local rentals and New Springs Property Management in Kelso.

She said owners with rentals in her property management company are $81,000 in the hole thanks to tenants who are not paying rent — some since February 2020.

Landlords with one or two properties are hurting the most, Britten said. When rent for one property doesn’t come in, owners struggle to cover the mortgage.

The majority of tenants in her property management company’s 300 rentals are paying, she said, while about 10% are behind and trying to catch up and another 5% aren’t paying at all.

Britten said tenants who owe money are sent to collections, but landlords are rarely compensated.

She said security deposits often don’t make up for damages left by renters, either. One owner of a rental she manages was left with $10,000 in back rent and had to invest another $19,000 in the property before the unit could be placed on the market to sell, Britten said.

Tight rental market

Britten said 27 units under her property management company were sold because tenants weren’t paying rent.

In some cases under the state eviction moratorium, tenants can be removed when the property changes ownership.

Britten said most of the units were single-family homes that went to first-time homeowners — creating less rentals among an already small local inventory.

“It takes the houses right out of the rental market,” she said. “I think we’re going to see more of a housing shortage.”

The Washington Center for Real Estate Research reports the Cowlitz County’s two-bedroom apartment vacancy rate was 0.5% this spring. That is 7.5% lower than what the state Department of Commerce deems a healthy market.

Keller Williams Realty Broker Sheri Evald, who lives in Castle Rock, said she has seen more rentals sold recently because the market favors sellers, not because tenants aren’t paying under eviction moratoriums.

According to the Northwest Multiple Listing Service, the May median closing price for Cowlitz County houses and condos increased nearly 19% to $352,000 over a year. That means a seller of a home purchased in May 2020 could have pocketed roughly $57,000 if the property sold in May 2021.

Dispute centers

A new state law requires landlords to use mediators to establish repayment plans before tenants can be evicted.

A dispute center is planned to open in Cowlitz County. In Clark County, Savenia Falquist helps renters and landlords create repayment plans as the executive director of Community Mediation Services.

Falquist said tenants who are not paying are hurting themselves. If renters’ incomes have not lowered due to the pandemic, she said they may not qualify for rental assistance or repayment plans.

Those renters will likely be evicted, she said, and owe the rent they haven’t paid. If they can’t pay, their credit and ability to rent again will be hurt, Falquist said.

She empathizes with some renters’ procrastination, but urged them to take the first step to contact a dispute center to start repaying.

“People are scared, and I get it,” Falquist said. “This is a heavy, heavy load.”

Since most tenants can’t be evicted during the moratoriums, Falquist said the area’s small rental inventory will likely increase when landlords can remove people from their homes.

“I do project the inventory will go up after the moratorium,” Falquist said, “because people will get evicted.”