Homeowners Associations Taking Steps to Thwart Investors
Homeowners associations are groups of residents who volunteer their time to help run the neighborhood in which they own property. In addition to managing the maintenance and aesthetics of the neighborhood - things like organizing landscaping contracts and informing residents when general upkeep of their property is needed - the HOA is also responsible for passing and administering the enforcement of community bylaws. Today, homeowners associations across the country are rushing to come up with plans to keep real estate investors from swooping in and buying homes that will eventually be flipped as rentals. Many associations have noted that their reasons for doing so stem from observations that investor-owned rentals often do not meet minimum standards expected from neighborhoods in terms of maintenance and general appearance. They are also concerned that residential neighborhoods will see increased rates of instability as renters move in and out much more fluidly than owners - eventually making the neighborhood less appealing to buyers.
According to the Wall Street Journal, record numbers of homeowners associations across the country - especially in popular vacation spots - are amending their bylaws with new steps to put off investors. Some neighborhoods are enacting stricter measures for renters and landlords, including tougher approvals processes and higher standards. Others are adding amendments that for all purchases in the neighborhood, the home must either be lived in by the buyer or left vacant for extended periods of time before a rental would be allowed. Associations are hoping that by eliminating the possibility for immediate rental income, investors will look elsewhere. One of the most extreme measures being seen nationwide is the implementation of a strict ceiling on the number of rentals allowed in a neighborhood.?
Why are more homeowner associations feeling the need to take these steps now? The percentage of properties across the country that are being bought up by investors is reaching record levels, and growing still. The end of 2021 saw between approximately 18-20% of homes purchased by investors - adding to the struggles of average homebuyers by raising home prices and competition and reducing inventory further. Industry insiders see this trend continuing through 2022 as rental prices skyrocket and investors see a good opportunity to profit in the short term and hedge against the rising inflation. Markets like our Florida Keys real estate market are primed for investors, as rentals are always popular where people want to vacation. Though Monroe County has begun steps to reign in the excessive vacation rentals present, long term prospects represented by this wave of real estate investors could mean even less inventory in our already depleted market unless further action is taken.