COLUMBUS, Ohio — After two years of searches, tours and bids, Sarah Waters thought she finally caught a break.
The house needed a few thousand in renovations, and she had to bid $10,000 over asking, but it was in her budget, had the size she was looking for, and even had a garage for her motorcycles.
Then she got word. The sellers chose another bidder, the same offer, but this time, all in cash. Waters couldn’t compete.
“It’s a lot of getting my hopes up, getting them let down, giving up for a few months or weeks, then try again and repeating the process,” Waters said.
She can’t begrudge the sellers. Cash offers are less risky than a financed buyer, but with more and more buyers putting down that kind of money, Waters said she can’t compete.
Nationwide, all-cash sales accounted for more than a third of home and condo purchases in 2022, according to ATTOM data, a nine-year high. In Ohio, those cash sales represented 43% of home purchases. Most of those cash buyers are large, institutional investors looking to convert homes into rental properties.
Waters has spent the past two years looking for a house. (Spectrum News 1/ Michelle Alfini)
As a Cincinnati city council member and vice-chair of the Equitable Growth and Housing Committee, Reggie Harris said Ohio’s major metro areas are attractive for those investors because of their relatively low real estate costs, compared to national trends combined, with a low supply of single-family housing stock.
“We know that we have to begin to drive down those forces,” he said.
At the local level, Harris said there are only two ways to do that, incentivizing new builds and dis-incentivizing investors from making more purchases. Senate Bill 76, introduced by Nicki Antonio (D-Lakewood) and Louis Blessing (R-Cincinnati) aims to do the latter.
The bill would impose a monthly tax on landlords with more than 50 houses in a single county, $1500 for every property. There are exemptions for nonprofits, port authorities, and county land banks.
The sponsors hope the bill would discourage high-volume investor home purchases or even encourage investors to break up those large portfolios, getting those houses back in the hands of owner-occupants. Harris believes it would also help local officials begin to identify who exactly these large investors are in their areas.
“Often these owners are embedded in multiple layers of LLCs,” he said.
Critics of the bill worry the 50-house standard could harm smaller, local landlords, or that the $1500 monthly tax would serve to increase rental costs further as investors may pass the costs onto their tenants.
As for Waters, she said she’s nearly given up hope on finding her first home anytime soon. Unless something changes to level the playing field, she worries rental housing will be the only thing in her reach for the foreseeable future.
“I’ve moved eight times in the past six years and I’m tired of that,” she said. “I could finally lay roots somewhere.”
SB 76 has received bi-partisan support and has sponsors from all three major Ohio metropolitan areas. It is currently in the Senate Ways and Means Committee.
