WA bill aims to preserve single-family homes for first-time buyers, limit large investors
It has become increasingly hard for first-time buyers to purchase a home in Washington. One proposed solution heard in the Senate Housing Committee on Feb. 5 would limit large investors’ single-family home purchases.
Senate Bill 5496 sponsored by state Sen. Emily Alvarado would effectively bar investment entities — business entities with interests in more than 25 single-family properties — from excessive home buying. It also would create a civil penalty that the state Attorney General’s Office could enforce under the Consumer Protection Act.
Homeownership is out of reach for many families across Washington, Alvarado said in committee. Prospective first-time buyers often find that they’re outbid by cash offers.
“In these times, I think we need to do everything possible to increase access to home ownership,” the Seattle Democrat said. “That’s why this bill takes preventative steps to stop institutional investors from buying single-family homes and crowding out Washington homebuyers.”
Backers of the bill argue that it would help ordinary folks obtain their first home and build generational wealth. Detractors contend that, although well-intentioned, the bill could have negative consequences on the overall housing market.
Alvarado cited a recent report by the U.S. Government Accountability Office showing that before 2011, no investor’s portfolio included more than 1,000 single-family homes. Fast-forward to 2022: That year, 32 institutional investors collectively owned about 450,000 such homes.
Similar proposals to SB 5496 have been introduced in state legislatures across the country, as well as the U.S. Congress, Alvarado said. Her bill isn’t meant to limit home building, she added; it features an exemption for investors who purchase houses bought as part of a redevelopment effort.
In a tough market, lawmakers need to ensure that regular families can get a leg up, Alvarado said. State legislators have worked to help first-time buyers with down-payment assistance — but such buyers need “homes to buy to use that down-payment assistance.”
“And unlike investors, families who buy homes are more likely to stimulate the economy by using Realtors and by getting mortgages through local banks,” Alvarado said. “This bill is simple: It’s preventative, and it’s about putting Washington families first when it comes to home buying.”
Among those who expressed support for the bill was Ethan Robinson, an advocacy and policy manager with Habitat for Humanity for Seattle-King and Kittitas Counties. He said every family in the state deserves the opportunity to create a secure future through owning a home.
From rising interest rates to limited inventory, the country has witnessed how big investor-owned firms can restrict opportunities for regular homebuyers, he said — and “reshape communities” in the process.
Speaker Kevin Hunter told the committee that as someone who’s lived in Tacoma’s Hilltop neighborhood, he’s seen what happens when investors gobble up homes. Homeownership is the primary tool for building generational wealth, he said.
When investors sweep neighborhoods, existing residents can be displaced, Hunter said. That contributes to Washington’s huge housing crisis.
“It’s not saying, ‘No, we shouldn’t be allowing people to make a profit and increasing value to some of these historic neighborhoods,’” Hunter said, “but it simply is limiting it ... to get people into homes, keep neighborhoods stable, keep neighborhoods safe — allow kids the kind of places that we all want to see.”
Opponents of the bill also weighed in Feb. 5, some more forcefully than others.
Brent Ludeman spoke on behalf of the Building Industry Association of Washington. He said the organization appreciates the bill’s exemption for new-home construction, but he aired concerns about a “potential chilling effect that this can have on new investment.”
In the association’s view, the legislation isn’t ready to be signed into law, Ludeman said.
Another detractor, initiative activist Tim Eyman, called the bill “kind of infuriating.” He said that when there’s a willing buyer and seller, the “person who’s selling it wants to sell it for as much as possible.” That’s just supply and demand, Eyman said: the marketplace at work.
Eyman said the bill would throw sellers under the bus.
“I believe that bills like this, or rent control — or any of the crazy things that you guys are doing — are just simply going to make the marketplace even worse than it is now,” he said. “It’s bad in Washington now. You’re going to make it even worse with crazy bills like this one.”
This story was originally published February 6, 2025 at 5:00 AM.
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