CathyA3 (Ohio)
Posts: 6,299
Posts: 6,299
Posted:
Quote:
"Last year investors bought nearly 1 in 7 homes sold in America’s top metropolitan areas, the most in at least two decades, according to data from the realty company Redfin and an analysis by The Washington Post. Those purchases come at a time when would-be buyers across the country are seeing wildly escalating prices, raising the question of what impact investors are having on prices for everyone else."
Podcast here
(Note: the Post's analysis and podcast may be behind a paywall.)
What this means for community associations
Increasing numbers of investors means an increasing percentage of owners who have no ties to the communities in which they own, and who may not even live in the same country. This will result in:
* Harder to fill board positions.
* Increased numbers of violations of the CC&Rs.
* Associations that require homeowner approval for assessment increases or things such as CC&R amendments will have a harder time getting the necessary votes.
* Increased unaffordability will result in buyers who are stretched to the limit with their mortgages and who can't really afford their homes. This will lead to increasing numbers of delinquencies and worsening financial stability for the affected associations, followed by neglected maintenance.
* These issues may drive current members and prospective buyers away - why take on the risks and expense of living in a HOA/COA if you're essentially living in a rental community?
* Higher prices will drive more buyers to condos rather than single family home communities, and condo communities already targets for investors. But single family home communities are also being targeted by investors now.
What can community associations do about this?
Associations were developed with the notion that owners within these communities have a shared interest in maintaining their neighborhoods. Investors and owner-occupants have fundamentally different goals, with the greater share of negative consequences falling on the owner-occupants. This may drive current owners and prospective buyers away. Why take on the risks and responsibilities of living in an HOA/COA if you're essentially living in a rental community - that's the worst of both worlds.
The main line of defense is a robust and enforced rental restriction. And it has to happen from the get-go. Once investors get a toehold, the nature of the community changes, and it becomes much more difficult to approve any kind of restriction.
Local officials also need to worry about this. They tend to love community associations because they can offload some of their obligations onto private citizens. But what happens when these citizens have no ties to the area, don't care whether the communities are being maintained as long as the rent checks keep coming in, and don't care if the properties are neglected until they fall down? In the long run, people (and businesses) with options will go elsewhere rather than living in a shabby area.
Lawmakers should really think twice before passing laws that make it harder to restrict rentals. Unintended consequences, don'tcha know?
TL;DR: This trend bodes ill.
"Last year investors bought nearly 1 in 7 homes sold in America’s top metropolitan areas, the most in at least two decades, according to data from the realty company Redfin and an analysis by The Washington Post. Those purchases come at a time when would-be buyers across the country are seeing wildly escalating prices, raising the question of what impact investors are having on prices for everyone else."
Podcast here
(Note: the Post's analysis and podcast may be behind a paywall.)
What this means for community associations
Increasing numbers of investors means an increasing percentage of owners who have no ties to the communities in which they own, and who may not even live in the same country. This will result in:
* Harder to fill board positions.
* Increased numbers of violations of the CC&Rs.
* Associations that require homeowner approval for assessment increases or things such as CC&R amendments will have a harder time getting the necessary votes.
* Increased unaffordability will result in buyers who are stretched to the limit with their mortgages and who can't really afford their homes. This will lead to increasing numbers of delinquencies and worsening financial stability for the affected associations, followed by neglected maintenance.
* These issues may drive current members and prospective buyers away - why take on the risks and expense of living in a HOA/COA if you're essentially living in a rental community?
* Higher prices will drive more buyers to condos rather than single family home communities, and condo communities already targets for investors. But single family home communities are also being targeted by investors now.
What can community associations do about this?
Associations were developed with the notion that owners within these communities have a shared interest in maintaining their neighborhoods. Investors and owner-occupants have fundamentally different goals, with the greater share of negative consequences falling on the owner-occupants. This may drive current owners and prospective buyers away. Why take on the risks and responsibilities of living in an HOA/COA if you're essentially living in a rental community - that's the worst of both worlds.
The main line of defense is a robust and enforced rental restriction. And it has to happen from the get-go. Once investors get a toehold, the nature of the community changes, and it becomes much more difficult to approve any kind of restriction.
Local officials also need to worry about this. They tend to love community associations because they can offload some of their obligations onto private citizens. But what happens when these citizens have no ties to the area, don't care whether the communities are being maintained as long as the rent checks keep coming in, and don't care if the properties are neglected until they fall down? In the long run, people (and businesses) with options will go elsewhere rather than living in a shabby area.
Lawmakers should really think twice before passing laws that make it harder to restrict rentals. Unintended consequences, don'tcha know?
TL;DR: This trend bodes ill.