Investors have been snapping up growing numbers of homes amid one of the hottest housing markets in living memory. Now, homeowner associations are fighting back, rewriting their rules to try and prevent investors from buying homes in their neighborhoods.
Some homeowner associations are reportedly concerned that a rise in homes acquired by investors could lead to a decline in property maintenance, making their neighborhoods less desirable. They also say investor activity prevents needy families from becoming homeowners.
Homeowner associations believe they have the power to stop investors from grabbing too many homes in their neighborhoods. As such, some housing groups are attempting to cap the number of homes that can be rented out in a neighborhood. They may require rental tenants to be approved by the association’s board.
One such move was taken in Walkertown, N.C., where the Whitehall Village Master Homeowner Association is trying to amend its rules to require that new buyers live in a home or they must leave it vacant for six months before they can rent it out. That would prevent investors from purchasing any more homes in the neighborhood.
“They’re coming in and they’re basically bullying people out with cash offers,” Chase Berrier, the association’s president, told The Wall Street Journal about the movement.
In Fishers, Ind., a town of about 100,000, more than 900 homes were purchased by non-owner occupants between 2016 to 2021. About one-third of the home purchases were from out-of-state investors, The Wall Street Journal reports. The mayor of the town says it’s “denying an entire group of individuals an opportunity to build equity” in the town by being shut out by investors.
Trying to capture the hot housing market, investors have increased their buying activity. Single-family rentals have become a huge growth area, too. More than one in five home sales in December 2021 were investor purchases, according to CoreLogic housing data.
As more homeowner associations take steps to try to ban renters, investors aren’t happy. The homeowner associations’ actions also are attracting lawmakers’ attention in many states as they debate how much power homeowner associations should have in limiting renters in their neighborhoods.
“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 Wall Street Journal.