Some HOA groups around the country are considering measures to discourage investors from buying in their communities.

HOA Groups Reining In on Institutional Investors

Some homeowner associations around the country are looking at ways to keep investors out of their developments.

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HOAs have capped the number of rentals in their communities.  Others have require rental tenant approvals.

Citing the argument that investors (and their deep pockets enabling cash offers) make it difficult for traditional buyers to purchase homes, Chase Berrier, president of the Whitehall Village Master Homeowners Association in North Carolina, said, “They (investors) are coming in, and they’re basically bullying people out with cash offers.”

Investor Market Share of Residential Properties Hit Peak in 2021

The Wall Street Journal recently reported that the share of American home purchases by institutional investors reached a two-decade peak in 2021.  Why are they buying?  Because they want as many single-family homes as they can get in order to rent out those homes.

Redfin research indicates that institutional investors bought almost one in every seven homes across 40 major metro areas in 2021.

HOAs Consider Pros & Cons of Institutional Investors

HOAs see the downsides of having institutional investors buying in their communities as having many (too many?) rentals rather than owner-occupied homes, more transient residents, less upkeep of the properties and lower property values.

The upsides of institutional investors can make houses in the community easier to sell due to having a broader buyer pool.  And, institutional investors typically make cash offers, preferred by sellers, which in turn allow for faster, easier closings.

HOA Restrictions on Usage & Leasing Increasing

According to The Wall Street Journal, HOA amendment restrictions on usage and leasing have increased from 21% to about +30% since 2019.  The bulk of those restrictions have taken place in HOAs in Florida, Arizona, North Carolina and Texas.

California, on the other hand, has banned HOAs from placing certain restrictions on long-term leases.

David Howard, executive director of the National Rental Home Council, told the Journal, “The only real purpose of restricting rentals in a given community is to keep renters out, action which in our view are both harmful and dangerous.”

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Thanks to The Wall Street Journal and TheRealDeal.

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