If you notice more of your fellow homeowners have acronyms after their names like LLC, LP or Inc., you’re not alone.
In the past decade, the number of single-family homes in Pierce County owned by various investment companies — limited liability companies, limited partnerships or incorporated companies — has grown nearly threefold, to 6,374 this summer from 2,207 in 2006.
In that same time, the total number of single-family homes in the county has grown by nearly 13 percent, or nearly 24,000 more single-family residences than a decade ago. The figures from the Pierce County Assessor’s Office don’t include apartments or condos.
96.7 percent Share of Washington-based investors who own homes in Pierce County in 2006
64.6 percent Share of Washington-based investors who own homes in Pierce County in 2016
Since 2006, far more of these types of owners are from out of state. Then, almost 97 percent of homes owned by LLCs, LPs and Incs were based in Washington. By mid-2016, that share of Washington-owned homes dropped to about 65 percent. Almost a quarter of single-family dwellings in Pierce County are owned by investors based in Texas, the bulk of that fraction by Invitation Homes.
We are not alone. Nationwide, homes are increasingly bought by out-of-state investors, according to ATTOM Data Solutions, a real estate data firm. A recent analysis from the company shows 3.4 million single-family investment homes — 16 percent of all such properties — are owned by investors in a different state than the property.
Corporation- and LLC-owned homes can still be good neighbors, said Maureen Larson Bonck, president of the Northshore Homeowners Association in Northeast Tacoma, where homes have north of 3,000 square feet.
“We actually haven’t had too much of a problem,” Bonck said, especially with the larger nationwide companies. “So far it hasn’t been a problem with us as long as they choose good renters. I haven’t noticed a difference.”
Even owners and renters have a problem with yard upkeep, and at times need to be reminded of community standards, she said. “If they have a yard service, there’s no problem.”
SURGE IN INVESTOR-OWNED HOMES
After the housing crash, Pierce County’s median home sale price — half of homes sold for more and half sold for less — in November 2012 was $199,000. That’s $91,000 less than the median home price at the market’s peak in March 2007, according to real estate data firm Zillow.
Shortly after the market cratered in 2012, investor companies swooped in to scoop up deals, the data show.
More than 1,200 Pierce County homes were bought in 2013 by LLCs, LPs or Incs, the data show. The assessed value of those homes also was lower compared with all single-family residences.
The median assessed value for investor-owned homes in 2016 is $189,850 — $23,450 less than single-family homes as a whole.
That makes sense to Tom Dickson, a Tacoma real estate attorney who does much of his business in Seattle. People are buying homes, placing them in a limited liability company, fixing them up and selling them for a profit, he said.
“They want the LLC name on them because it’s insulation from liability. It’s also anonymity for them,” Dickson said.
He and his firm help people and developers set up LLCs for their properties.
“If they have five homes, we would say five LLCs,” Dickson said. “Some of these people out there will have hundreds of them.”
If they have five homes, we would say five LLCs. Some of these people out there will have hundreds of them.
Tom Dickson, a Tacoma real estate attorney
If something bad happens on the property and you owe more on the land than it’s worth — a complicated environmental cleanup might do that — then your personal wealth is safe while the LLC that covers the property can quietly go bankrupt, Dickson said.
“The LLC is only as valuable as the house is,” he said. “They can’t come after you personally.”
Giant investment funds buy up properties on the cheap, fix them up, rent them and might eventually sell when the market is high. Companies such as American Homes 4 Rent, THR Washington and Invitation Homes own thousands of properties in Pierce County — a practice covered in depth by The News Tribune three years ago.
Nationwide, 2.7 percent of all single-family homes sold in the first seven months of the year were bought by investors buying multiple properties, according to ATTOM Data Solutions, a real estate data tracking firm.
“Twenty years ago you didn’t buy single-family homes as rentals because you couldn’t get the return on them,” said Al Morken, a local real estate agent. “Now because of appreciation you are getting fabulous returns. The rents have risen so rapidly.”
COMMUTE KEEPS PRICES DOWN
The Seattle housing market, which includes parts of Pierce County, is among the top five in the nation, according to a recent report by ATTOM Data Solutions. The homes gaining the most value are closest to Seattle and other job centers.
“The Seattle region remains staunchly a sellers’ market and this will likely not change until next year, at which point, I expect to see an increase in resale listings and new construction development,” said Matthew Gardner, chief economist at Windermere Real Estate in Seattle.
Morken said Pierce County’s housing market is in no danger of becoming a twin to King County.
Without traffic, it should take a little more than 30 minutes to get from downtown Tacoma to Seattle. Problem is, Interstate 5 is clogged with traffic more often than not.
“It’s almost like you can’t get there from here anymore,” Morken said. “ … I don’t know why anyone would want to make that drive from here to Seattle.”
It’s almost like you can’t get there from here anymore. … I don’t know why anyone would want to make that drive from here to Seattle.
Al Morken, a local real estate agent
Foreign buyers interested in a Seattle abode are unlikely to be wooed by Tacoma or Pierce County “unless they can utilize mass transit for their commute,” he said.
As home prices continue to improve nationwide, and fewer distressed homes are on the market, investors are pulling back on their buying frenzy, ATTOM reports. However, King County’s market and the region continues to outperform the country, Gardner said in a news release.
Investors bought 30 percent fewer Pierce County homes in the first half of 2016 than the same time in 2015, the report says.
That doesn’t mean investors are gone altogether. Pretium Partners LLC, a New York-based investment firm, bought a house in Roy in an April foreclosure sale for $227,600, according to Pierce County assessor’s records.
“There will always be investors,” Morken said. “Long-term, real estate has always been a good return. It has its ups and downs, certainly.”