The American Dream – Housing Crises and the HOA

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.