5 Cities Where Homes Aren't Selling - Yahoo! Real Estate
Las Vegas, Phoenix, Tampa, Miami, and...where else? Motown. This is based on decline in prices and time on market. All these places except Detroit are CID Central.
Thanks to Fred Fischer for this link.
6 comments:
More evidence that HOAs do not preserve property value. The HOA management companies around here are claiming "it's because the CCRs aren't being enforced". Of course the HOA vendors profit from accusations of noncompliance and are constantly attempting to come up with new oppressive rules to generate discontent and chaos in these projects - it's quite lucrative.
Rather than using the HOA to put homeowner money in the pockets of the HOA vendors, shouldn't many of these HOA boards make the intelligent business decision to go out of business for the best interests of their members?
"Rather than using the HOA to put homeowner money in the pockets of the HOA vendors, shouldn't many of these HOA boards make the intelligent business decision to go out of business for the best interests of their members?"
HOAs are corporations. The purpose of a corporation is to make money, not to act in the other interests of its members.
If HOAs behaved like other companies, they would lay off their employees, with the executives cashing out their golden parachutes. Hmmm...
Which brings me to something I've been brainstorming about the past few days, continuing the chain of thought I started last month about why conservatives and libertarians should question the value of HOAs, rather than be their cheerleaders:
According to the theory of capitalism and free markets advocated by conservatives and libertarians, a corporation that provides a defective product or service, or behaves poorly in some other way, will lose customers. The loss of customers is how the market is supposed to punish these businesses.
But who are the customers of the HOA corporations?
In theory, it's the homeowners. But homeowners are "captive customers"; they can't change HOAs without going through the incredible hassle of moving. Not to mention the declining percentage of non-HOA housing available, and the possibility of ending up with the same management company and lawyers in a different HOA.
Nor should the homeowner have to move if he is being served poorly, unless you believe that the interests of the HOA corporation take priority over the rights of individual property owners, as many conservatives and libertarians apparently do.
Even if a homeowner does move, the HOA corporation still has a guaranteed stream of revenue from the home, because somebody has to own it, even if its the bank or another entity.
Since the HOA corporation is not interested in serving the homeowner, but in extracting revenue from the property itself, it doesn't matter who the actual owner is. Unlike most other businesses, there is no market incentive for the HOA to keep a specific homeowner as a "customer." They can treat their "customers" as poorly as they wish, without any fear of the market correcting their behavior.
If the homeowners are the "customers" of the HOA corporation, then the theoretical model of company-customer relations, and therefore the capitalistic free market, is seriously flawed; to the detriment of the rights of individual property owners.
Or perhaps conservatives and libertarians can just admit that HOAs are not creatures of the free market, and adjust their views accordingly.
Since I have to get ready for leave for work, I'll leave it as an exercise to the reader to determine why homeowners, the "members" of an HOA corporation, are not analogous to a corporation's share holders, either.
HOAs represent a huge risk to property values because if a critical mass of "homeowners" fall behind, they intensify -- rather than mitigate -- the collective action problems inherent in a transitioning neighborhood. If neighbors are falling apart in a conventional neighborhood, you still at least have the city to count on for services, unless you're in Detroit. But if you're in an HOA, and the HOA itself gets into financial trouble, what do you have? Lots of mini-Detroits. Perhaps the answer is legal limits on the size and service roles of HOAs.
DBX said "Perhaps the answer is legal limits on the size and service roles of HOAs."
Notably to reinforce your argument, in California local governments cannot be formed unless they demonstrate to their county Local Agency Formation Commission at the outset they are financially sustainable.
Anon wrote:
"HOAs are corporations. The purpose of a corporation is to make money, not to act in the other interests of its members."
Not all corporations are for profit. There are many types of nonprofit corporations and HOAs are one.
Fred,
You are correct that HOAs are non-profit corporations.
However, isn't the purpose of even a non-profit corporation to make enough money to be "financially sustainable," regardless of what their mission statement is?
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