Homeownership loses its luster

The economic downturn and stricter mortgage standards are driving much of that decline, but economists say there's also a growing belief among many that they can live better by renting rather than straining their finances to buy a house.

Adding to that is a sense among many younger adults that they will need to move for their careers, making them hesitant to buy lest they be forced to sell at a loss.

"We're becoming more of a renting/sharing society," said David Sleeth-Keppler, a psychologist who tracks consumer sentiment for Strategic Business Insights. "People are staying less bogged down, in case something bad happens."
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The pundits are saying people are so traumatized by the enormous volatility in residential real estate during the previous decade that they see homeownership as too risky an investment. However, as long as mortgage interest remains income tax deductible, that tax policy will provide an abiding incentive to own rather than rent and a hedge against downside investment risk.

Nevada PAC wants cap on HOA collection fees

A Nevada organization called CHAMP (Concerned Homeowners Association Members PAC) describes itself as "a broad-based group of concerned Nevadans that includes homeowner associations, residents, investors, credit counselors, business organizations, labor unions, chambers of commerce, minority groups, and many others" and advocates a cap on fees charged by HOA collection companies.

The name CHAMP seems familiar and the organization may not be a new one. It appears connected to an issue that exploded this past summer in Las Vegas, where investors looking for good deals on foreclosed properties within HOAs complained they were being hit up with excessive collection fees levied by HOA collection companies for delinquent assessments unpaid by the erstwhile owners. The fight is in the courts as noted on this blog in September.

Nevada HOA inmates rally against "bully boards," call for legislative curbs

Used to be some odd symbol of “belonging”—or for some, status—to be a part of an HOA (no trailer trash here!) neighborhood. What with all the cookie cutter neatness, lack of individuality and security gates, it’s the facade of a picture perfect community. And a mere facade it’s seemingly become for some folks in Nevada—with a rather ugly behind-the-scenes picture.

An article in the Las Vegas Review-Journal shares what basically boils down to a case of schoolyard bullying—only the playground is now the development, and the bullies are the HOA boards. Those who feel they’ve been bullied (e.g., one homeowner was unjustly fined for the transgression of erecting a fence for which the HOA had previously approved the plans) have now joined voices, if not forces, to rally last Monday against HOA “bully boards”. They’re mad as hell and they want the folks in Carson City to do something about it.

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After several years of silence, Silver State HOA inmates are letting their voices be heard in Carson City. I imagine Phil "The Ghostbuster" Testa, who organized a similar revolt a dozen years ago, is cheering them on from the grave.

HOA reform group targets law that allows Texas associations to repossess homes over HOA rules

Activists seeking to retool the way homeowner associations operate in the state headed to Austin today to do their thing like so many other special interests do.

But this group is particularly cohesive and adamant about current state laws that allow associations or lenders to repossess a home for infractions of association rules.

“And we now have our first lobbyist, Robert Doggett, who is helping us pro bono,” Beanie Adolph, who has been a tireless solider in the battle, said in an interview with Texas Watchdog. Among the things that the group is fighting for this session is to make HOAs subject to the state’s open records and open meetings laws.

The state effort is part of a national move to police HOAs, which activists allege have become political fiefdoms and sometimes profitable machines for real estate and development companies.
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For the rest of the story by Texas Watchdog and to learn the identity of the HOA inmate activist sued by a community assocation industry plaintiff and solon, click here.

Modesto Neighborhood May Hire Armed Guards To Cut Down On Crime « CBS Sacramento

Modesto Neighborhood May Hire Armed Guards To Cut Down On Crime « CBS Sacramento: MODESTO (CBS13) – Residents in a Modesto neighborhood are so concerned about crime they may bring in armed security guards.

The residents are members of the College Area Neighborhood Alliance.
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I gather that this "alliance" is a voluntary neighborhood association. Normally this sort of thing fails because of the free rider problem: not enough people contribute to pay for the services. The free rider problem gets solved in HOAs by mandatory membership, the power to assess for common expenses, and the sometimes-Draconian assessment collection methods. That solution, however, leads to all the abuse of power issues that we see so often.

Philly Homeowner Declares He's 'Foreclosed' on Wells Fargo - The Consumerist

Philly Homeowner Declares He's 'Foreclosed' on Wells Fargo - The Consumerist:
Thanks to Mystery Reader for this "man bites bank" story. We need more of this.

Facing Foreclosure Without Missing A Payment: One Couple's Housing Nightmare

Facing Foreclosure Without Missing A Payment: One Couple's Housing Nightmare: "No one, the Parkers say, told them their loan had been sold. With no word from the new servicer, New Jersey-based PHH Mortgage, the Parkers sent their first payment to the original bank, which mailed the check to PHH, according to documents the Parkers provided to The Huffington Post. But that check went missing. The Parkers say that despite the fact that they made every other payment, that missing check led to foreclosure proceedings, and a wrecked Kendra Parker's credit rating.

Soon, the mortgage company informed the Parkers that they were three months past due and owed over $3,000."
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Nice system we have in place here. Maybe we could prevent things like this by making it a crime to foreclose without cause and putting some of these bankers in jail. Just a thought.

California Attorney Fees in HOA actions

Here's a link to a blog on California attorney fee cases concerning HOAs. Who gets their fees paid?

Daniels 1, Obama 0 - The Daily Dish | By Andrew Sullivan

Daniels 1, Obama 0 - The Daily Dish | By Andrew Sullivan:
Mitch Daniels may run for the Republican presidential nomination, and he is combining fiscal responsibility with moderation on social issues. Once upon a time there were quite a few Republicans like that. It will be interesting to see how he fares in the primaries. There are plenty of right-wingers lining up.

Villagers outraged after police order them not to protect garden sheds | Mail Online

Villagers outraged after police order them not to protect garden sheds | Mail Online: "Residents in Surrey and Kent villages have been ordered by police to remove wire mesh from their windows as burglars could be injured."

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Property rights don't count for much in the UK anymore...

The HOA Murders by Leon Robertson in Mystery & Crime

The HOA Murders by Leon Robertson in Mystery & Crime: Thanks to Fred Pilot for letting me know about this new novel. Haven't seen it yet.

Obama proposals on mortgages worry real estate pros | McClatchy

Obama proposals on mortgages worry real estate pros | McClatchy: "MIAMI — Mortgage rates could rise and the federal government would play a much smaller role in the housing market, according to proposals outlined in a much-anticipated report released Friday by the U.S. Treasury Department.

In South Florida, foreign investors and all-cash buyers have played a disproportionate role in the housing market in the past year, as a tight credit market, high unemployment and a foreclosure crisis have turned traditional home buyers into a minority."
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And elsewhere around the country, other unconventional, all-cash buyers such as newly-formed real estate syndicates are buying up many properties. They are purchasing blocks of condo units and taking over associations. This is creating some interesting situations for the remaining owners who actually live there.

Aside from those problems, consider how disrupted the housing market still remains, going on five years after prices began to tank and three years after the economic crash began. Housing prices are still falling. Mortgage rates are rising. Banks are reluctant to lend, despite having been given access to virtually free money from the Fed. New housing starts are near historic lows around the country. Unprecedented numbers of owners are underwater on their mortgages. Sales of foreclosed properties make up the bulk of the market in many places, and there are many more foreclosures to come this year. The real estate development industry is in disarray. There are zombie HOA subdivisions and condo buildings, unfinished and largely empty, all over the nation. Untold (because there are no public records) thousands of condo associations and HOAs around the country are failing. Local governments still haven't awakened to the reality that mandating CID housing is a bad idea and no doubt plan on continuing to do it when they can.

I am not opposed in principle to re-privatizing Fannie and Freddie in some fashion. I see how it would limit taxpayer exposure to loss from bad mortgages, which is a good thing. But I don't see how it will fix the horrific situation of the housing market, and it could very well make things worse if it causes mortgage interest rates to spike, which I think it will.

And consider recent history. From 1995 to 2008, the relationship between public and private entities in real estate is exactly what crashed the housing market and the economy.
Now, what exactly do the Obama people want Fannie and Freddie to do? What do they want private corporations to do? How are they going to get them to do it? What is the model? They don't know. They have three different proposals, all of them equally vague.

I see only a few certainties:

1. As it stands, the taxpayers still will have to bail out Fannie and Freddie to the tune of at least $150 billion, on top of all the other bailouts we are responsible for (and will spend a generation or two paying off). Depending on how long this redesign takes (and I think it will be much longer than the 5-7 years they are talking about), that amount could grow enormously.

2. If private banks and mortgage companies are going to be operating with less of a federal safety net, they will raise mortgage interest rates and other charges. This is inevitable.

3. This is a long-term policy. It will take many years for risk-averse private lending institutions to get into the business of buying mortgages from the initial lenders and doing all the other insurance and securitizing and off-loading things that Fannie and Freddie do.

4. Therefore, the policy will not be coherent. It will eventually be taken over by Republicans, who will want to push it in different directions than the Democrats. It will end up being a huge political football. This is an $11 trillion dollar market.

5. And all of that means there will be many unintended consequences, and we are headed into a Brave New World in which the federal role in the housing market is being completely reconsidered.

A ray of hope in Arizona for HOA abolitionists

For at least the last dozen years or so, there have been two camps of displeased Privatopians: Those who want to take on the community association industry and try to reform HOAs to make them more democratic and more accountable to those owning property within their jurisdiction. And those who see HOAs as essentially FUBAR with abolition the only way to deal with them.

The latter group will undoubtedly be pleased to learn proposed amendments to an Arizona bill, S.B. 1326 this week would ban new detached unit CIDs going forward. (Condos are not within the scope of the bill). This is a very important development because to my knowledge, it is the first piece of state legislation that would bar future formation of CIDs with mandatory membership HOAs -- and the restrictive covenants upon which they are based.

This is also an important development because it could be a harbinger of an emerging realization in Sunbelt states like Arizona -- where practically all new freestanding homes built of the past 15-20 years are within CIDs with mandatory HOAs -- that privatizing local government may be great in theory but suffers from inherent defects in the real world.

The chances of S.B. 1326 moving forward are slim given that it would likely face a solid wall of opposition from residential developers, local governments and of course the so-called "community association" industry. But the fact that legislation that would effectively close the door on the future expansion of Privatopia in Arizona is even being considered shows "the times they are a changin."

Thanks to Pat Haruff for the link.

Donald Bren's legacy

Donald Bren's legacy

The L.A. Times profiles one of the founding fathers of Privatopia and the creator of the one of the earliest and biggest mass market CIDs in the nation.