Sunday, August 29, 2010

HOA is the problem?

Home Owners Associations serve a very useful purpose in helping subdivisions and condominium complexes maintain uniformity and desirability by enforcing certain rules for the benefit of all. One of these rules that applies more to condominiums than to single family homes, is a rule that states only a certain portion of the condos in the complex are rentable. The idea is that owners would be better care takers than renters, thus maintaining a certain level of standards. However, as the outward appearance is maintained by the HOA, why should it matter to the HOA who lives in the unit and what the unit looks like inside, be it the owner or a renter?

This worked well in the good times when real estate prices kept rising, but it has now become a thorn in the side for some complexes where there are fewer buyers and rental limit has been approached. While some units have been listed at steep discounts, even investors that can afford to buy, don't want to buy a property that they cannot rent out as it is a loosing proposition for them. The net result has been that these units have to be discounted deeply and be listed far longer to find qualified buyers that plans to live there for a very long time. Thus these units sit idle and vacant, dragging down the prices of other units along with it, and continues to be a downward spiral for the entire complex. Immagine a few units that is listed at 60% of the price of comparables that is sitting idle, while you want to put your condo up for sale around its fair value.

I think the time has come for the HOAs to adapt to the times and get rid of this rule, as it has now become a rule that unnecessarily brings down the property values of the whole complex. As the HOAs often view it as just another rule to be enforced, and not as their problem, it is up to the home owners to realize that this is a real problem that affects every one, and to urge the HOAs to change the rules. The down side, of course, might be having a renter that dosent care for the upkeep of the unit as an owner would. However, the HOA should still be able to penalize the property owner and the renter if any other applicable rules are broken or neglected, shouldn't it?

1 comment:

gdiamy1 said...

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