History, politics, people of Oly WA

Re-examining the out-of-town (or just corporate) real estate investment in Thurston County

Back in July 2021, I took a deep dive into the number of houses that were owned by corporate out-of-town investors. What I found then was the scale of investment was within the bandwidth of what could be expected.

It turns out I chose about the least opportune time to take a snapshot of corporations buying single-family homes. I didn’t track it at the time, but 2021 and 2022 were the largest years for this kind of transaction in the records I found. My first look was just a bit too early to catch it.

In this analysis, I will take a look at the four largest corporate owners of single family homes in Thurston County. I’ve been trying hard for months to finish this post, so the data I used is a few months out of date (January 2024). I assume nothing major has happened since then.

Counterintuitively, two of the four corporations are headquartered here in Thurston County: Rob Rice Homes and Walter Cox Company. The other two are out-of-town corporations, Invitation Homes (from Dallas) and Home Partners (Chicago). That said, their portfolios are on a completely different scale.

Prior to 2016, Rob Rice and Walter Cox were pretty much the only institutional buyers in Thurston County. Home Partners began to purchase in 2016 and then really took off in 2021. Invitation Homes not only appeared on the scene in 2022, but dominated the market, changing the scale altogether. Their 121 homes purchased just in 2022 was just a couple dozen shy of all the homes purchased by the top four since 1995.

It is worth noting that while Invitation dominated, Walter Cox (headquartered in Lacey) also bought more homes in 2022 than they had in any other year.

Comparing these purchases of the top four across the entire housing transactions in the county, you see the percentage go from barely perceptible to actually measurable (above 3 percent of all transactions) in 2022.

What is interesting is 2022 was not necessarily a banner year in home sales in Thurston County. The year prior was the all-time peak, with 2022 representing a cyclical slide down. These purchases also came at a time when mortgage rates were sliding up. The average price was also still climbing in 2022. These three combined: total sales sliding down, mortgage costs increasing with the climb in sale prices not abating, seemed to have combined to mean a mixture of circumstances that benefited corporate purchasers.

Despite this, the out-of-town ownership level in Thurston County (not counting our two local owners) is not high compared to the rest of the country. The Owned Away From Home analysis by Regrid:

Let’s talk geography:

Generally speaking, all the top four are clustered towards the edges of the northern Thurston County cities, especially towards southern Lacey and Hawks Prairie. There are some definite clusters:

  • Home Partners and Invitation are pretty typical, but with strong clusters in Hawks Prairie.
  • Almost all of Walter Cox houses are in two or three neighborhoods along College in Lacey.
  • Rob Rice follows a similar pattern, but with a broader reach out towards Tumwater.

Years built

This is interesting, because unlike the hockey stick of the purchase-by-year chart, the homes built-by-year is different. While there is a peak in newer homes by local Rob Rice in 2022 and 2023, most of the homes purchased have an average age of at least 10 years. Meaning, even though they’re newer than the average home in Thurston, they weren’t being bought directly from developers, but by individual sellers.

I’m not sure if I’m ready for a total revamp of my opinion about corporate ownership of single family homes. I feel there’s a bit of classist hand wringing about this phenomenon that doesn’t exist for people living in apartments owned by large out-of-town corporations. Additionally, apartments aren’t for everyone and buying isn’t for everyone. Not everyone lives in a place long enough to make buying a home make a lot of sense. And we shouldn’t relegate those folks to apartment living if they don’t want to. So, the moral framing of corporate ownership of single family homes doesn’t do it for me.

That said, a recent discussion in the Strong Towns community makes an argument that I do find compelling. That this isn’t an issue on a broad countywide or national level, but rather on the neighborhood level. Additionally, it can theoretically be a problem, especially with out-of-town owners causing a decline in the economic fate of a neighborhood. And, we know that corporate ownership in Thurston County is clustered in certain neighborhoods, so it is worth exploring that risk.

Getting back to the Regrid research, they find a correlation between household incomes and out of town ownership. They created a map that compares incomes against out of town ownership. Again, they didn’t measure all corporate ownership, just the ones that weren’t near where they owned homes. In Thurston County, they found one neighborhood in West Olympia that had a high correlation between low incomes and high out-of-town ownership:

What is interesting is that the neighborhoods with high clusters of corporate ownership in Hawks Prairie and south of Yelm Highway in eastern Lacey that aren’t on this map.

What further research I would like to see is taking an even finer comb to the Thurston data and measure parcel-by-parcel in the really high cluster neighborhoods and see what developments have the highest percentage of out of town ownership. Now that I think of it, it woudn’t be that difficult, but it is a measure for another post.

1 Comment

  1. Gordon White

    Emmett, Nice work pulling this information together so we can see the who and where of corporate ownership of homes in TC. Do we know much about the criteria these in town and out of town home rental businesses use to decide the location. I am with you on standing back and not judging if this is a good or bad thing. Are the rents comparable, do they lead to the way for all landlords of SFH to raise rents….

    Home rentals have long been a tradition throughout the county. My first guess on the reason for the locations is proximity to the three colleges–Evergreen, St. Martins and the community college. Though it may be more with proximity to major transportation corridors where renters will be likely for commuting to jobs. Great start on learning more. Thanks for doing this great data to map assessment.

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