INFORMATIONAL PURPOSES ONLY: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; this Firm does not recommend or endorse the contents of the third-party sites.
I have been watching videos and reading articles a lot
lately about inflation and the housing market.
John Oliver with Last Week Tonight did an expose educating his followers
on inflation and 60 minutes posted a video on monthly rent increases. The cost of living has skyrocketed recently
but, what does all that mean for HOAs?
There are two issues that seemed to bubble to the surface
during the pandemic. First, more and
more investors have inundated the market and purchased almost all current inventory. After the housing crisis in 2007, companies
were reluctant to keep building houses even after the economy stabilized. So, as demand has gone up, the inventory has
plateaued. This has affected new home
buyers substantially. How can buyers
compete with companies who offer straight up cash to the seller?
Investors are not just buying homes, but they are renting
the homes they buy. Instead of a
buy/flip/sell trend, they are buying then flipping (to make the home “move in
ready”) then renting. The investors are
not just getting capital from a “one and done” deal, they are seeing an
increase in revenue every month by renting the property. Plus, with the increase in short term rentals
they can make even more money. Smart,
right? Well, what about everyone else
that wants to buy a home? With the
plateau in building homes and taking the majority of homes off the market and
renting them, it makes finding home to buy almost impossible for new home
buyers.
HOAs have seen a substantial increase in investors and
rental properties in their communities.
What is concerning about the increase is that renters and investors may
not be devoted to the community. If a
renter knows that they will only be there a year, or six months, or two weeks,
do they really care about the HOA pool, or landscaping, or rising crime? If the person who owns the house is a company
who may be operating out of the state, do they really care about increased
regulation/legislation from the state legislature (other than renting regulations)? How do we get these companies involved? How do we get the companies and renters to
care about what is happening within the community? What does this mean for board positions? Is the company allowed to stack the
board? So many questions, not enough answers. The norms in housing and renting are changing
exponentially. Can we keep up? Is the American Dream to own a home dead?
All hope is not lost.
I wish the investors, management companies, lobbying groups (both from
the homeowners and the HOAs), lawyers, cities, and legislators, could come
together to find some solution without agendas getting in the way. There are people investing their whole life
savings to own a home and find peace in their lives. I think the past two or three years have, at
the least shown us that we have to work on the current problems
collectively.