Some homeowner associations are taking steps to keep investors out of their developments.
The groups are eyeing measures to discourage investors from buying in their communities, the Wall Street Journal reported. Institutions’ share of American home purchases reached a two-decade peak last year, largely because they are buying single-family homes to rent them. That’s what some homeowners are looking to stop.
Some homeowners associations have capped the number of rentals in their development or required rental tenant approvals. Leaders of these associations say investors are making it hard for traditional buyers to purchase homes.
“They’re coming in, and they’re basically bullying people out with cash offers,” Chase Berrier, president of the Whitehall Village Master Homeowners Association in North Carolina, told the Journal.
The HOAs see several downsides to having lots of rentals rather than owner-occupied homes, including more transient residents, less upkeep of properties and lower property values. Not restricting rentals, however, can make it easier to sell because it broadens the pool of buyers. Cash offers typically allow for faster and easier closings.
Investors in recent years have taken a bigger bite of the apple than ever before. Last year, they bought almost one in every seven homes across 40 major metropolitan areas, according to Redfin. Their share of home purchases reached its highest level in at least two decades, and they targeted newly built homes in particular.
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Determining how many associations are passing rules to restrict investors is difficult, but the number appears to be growing.
Restrictions on usage and leasing have made up about 30 percent of the amendments passed by HOAs in Florida, Arizona, North Carolina and Texas since 2019, up from 21 percent from the previous three years, according to the Journal. It’s estimated thousands of associations passed such restrictions.
Not every community is in favor of fighting back against the investors. Some cite the importance of rental options for those struggling to purchase homes. California is one state where investors have more leeway, as the state has banned HOAs from placing certain limits on long-term leases.
“The only real purpose of restricting rentals in a given community is to keep renters out, actions which in our view are both harmful and dangerous,” David Howard, executive director of the National Rental Home Council, told the Journal.
[WSJ] — Holden Walter-Warner