Evan McKenzie on the rise of private urban governance and the law of homeowner and condominium associations. Visit evanmckenzie.wikispaces.com for my published articles and services.
P R O P A G A N D A"You have a partner in your investment."How about providing a happy, healthy place to live vs. a commodity - investment?
Deborah are you arguing that the purchase of a home is not an investment and an significant one?CAI isn't responsible for creating or managing any community, but we do provide extensive education and support to boards, owners, managers, etc.I would argue that owners being knowledgeable, holding boards accountable to be informed regarding documents, laws, etc. and ensuring the community hires qualified and appropriately insured professionals to support them, all contribute to not only a harmonious place to live but also to protecting what, for the vast majority of American families, is their most significant investment.Repeated, reputable research indicates that 9 out of 10 Americans living in communities believe that their boards are doing a good job and protecting their investments. Congress should dream of such an approval rating.I could also point out, as you and I have discussed Evan, that community living certainly is not for everyone and some folks can never be made happy regardless of the circumstances.
More industry talking points. All of them misleading. I am saying that a home is FIRST a place to live, and second, an investment. But let's not overlook the fact that perhaps a third of CID resisents are tenants, not homeowners. Why else is CAI lobbying for Congress to push FHA to relax owner occupancy restriction for condominiums?No one can take seriously CAI's own political "research" surveys. Let's have a neutral third party, with nothing to gain from positive results, to do a non-skewed, credible survey of CID residents. For example, it is highly questionable that the respondents of CAI's surveys are representative of CID residents in general. In answer to the survey question:" In your current community, have you ever attended anycommunity association board meetings?" Are we really supposed to believe that 7 in 10 residents have attended a Board meeting? All we hear from CAMS, Attorneys, Board members and owners alike is “No one ever attends the meetings!” Most CIDs would not even have the capacity to handle 70% of their residents if they showed up for a meeting. They cannot even handle 10-20% of residents in most communities! And with regard to the question " Do you currently or have you in the past served on a homeowners association or condominium board"? Who actually believes that 1 in 5 (20%) of residents have served on the Board at one time? All we hear is that “Nobody wants to run for this thankless job!” We hear from owners all the time that either Boards become entrenched for many years or the community cannot find enough people to serve.So of course, such a high number of survey respondents served on the Board and regularly attend board meetings, some of their reponses are likely to be skewed positive in terms of believing their board do a good job. Why don't you publicly report some of the less positive and contradictory responses to your 2014 survey, as follows: 36% of members think they are paying too much for assessments26% think that their Association does NOT enhance property values, and 4% say it harms valuesAND only 9% rate "property Values" as the "best thing about living in a CID"Only 18% say there is "nothing bad" about living in an Association, and 17% say paying assessments is the worst thing, 18% said that the exterior home improvment restrictions are the worst1 in 4 have had a significant dispute with their HOA, and almost half of those issues were either unresolved (12%) or handled to the dissatisfaction of the resident (37%)12% of respondents admit to being delinquent on assessments, and the Association has refused to work with 1 in 4 of those delinquent owners on a payment plan of some sort. While 45% of respondents said that the manager adds value, 46% DID NOT ANSWER the question. Usually, a non response rate that high that invalidates a survey question.
National Association of Homebuilders (NAHB) has just released additional market research information on home buyer preferences for neighborhood types and availability of amenities. The September 2015 study also compares buyer preferences by generation.The following news release suggests, once again, that the majority of homebuyers tend not to prefer many of the most common community features marketed by Community Associations Institute (CAI) as selling points for homeowners' and condominium associations.Check out the article here:Boomers prefer Suburbs and Cul de Sacshttp://eyeonhousing.org/2016/02/boomers-prefer-suburbs-and-cul-de-sacs/Let's take a look at some excerpts of key NAHB survey results:For home buyers in the Boomer generation, the most desired of these features is a “typically suburban” community (defined as consisting of all single-family detached homes) rated desirable or essential by 70 percent of Boomer respondents. After that comes a group of three community features rated essential or desirable by 61 to 64 percent of Boomers: being near retail space, a park area and walking/jogging trails.At the other end of the scale, tennis courts, high density (defined as smaller lots and attached/ or multifamily buildings), other mixed use (homes near office or other commercial buildings, to distinguish it from homes near retail space like grocery or drug stores), a golf course, baseball or soccer fields, and daycare center are relatively unpopular, each being rated essential or desirable by fewer than one-fifth of Boomers.And the results are similar across generations of home buyers, as clearly illustrated below: (Source: 2015 Survey of Home buyer Preferences, NAHB)Isn't it common sense? Of course, younger generations with children at home value playgrounds, and older generations don't want to spend a great deal of time mowing their own lawn or shoveling their own snow.The NAHB survey does not specifically ask homebuyers about their preferences either for or against HOAs - i.e. - the words "homeowners association" are not explicitly mentioned in the survey. However, virtually all new construction built with high density, mixed use, or community recreational amenities automatically includes -- usually requires --- the establishment of a mandatory HOA, according to local building codes and land use plans.Now, if you read CAI's industry hype about the benefits of living in HOAs (which they call "community associations"), you would think that homebuyers are clamoring for planned communities and multifamily lifestyles, surrounded by elaborate amenities. But the market research seems to indicate that most buyers and homeowners place little value on living in a planned community.Let's consider the features that homebuyers do desire in their neighborhoods - "typically suburban, park area, near retail space, walking/jogging trails, a lake, a swimming pool, and exercise room." Common sense once again: suburban locations preferred by most homebuyers already tend to have commercial and public land uses that provide those most desired neighborhood preferences. The communities tend to already have fitness centers and Public parks, for example.(As for Boomers and Seniors wanting Outdoor Maintenance Service , there's no need for an HOA to take charge, when the individual owner can simply hire the help directly, at a similar or lower cost than HOA assessments. )
According to the Census Bureau’s Survey of Construction (SOC):See page 2 of the SOC report, and note that, of homes built for sale in 2014, 73% were built in HOAs in the U.S.Broken down by region of the country, the figures are as follows:46% Northeast55% Midwest80% South73% WestSo, how do these figures compare to the mere 20% (or less) that actually want what government policy is approving and what the HOA industry is promoting?NAHB's research confirms what housing consumer advocates have been saying for the past 2 or more decades: there is an oversupply of homes burdened by a mandatory HOA, and a shortage of homes without the imposition of this onerous requirement.SO..."if community living is not for everyone" then why is the standard Land Use plan all across the USA to build nothing else BUT CIDs with mandatory Owners' Associations? Clearly, the COS Census statistics point out that in many housing markets these days buyers do not have adequate choice -- they either buy a home with an HOA or COA or they rent.
Deborah writes:SO..."if community living is not for everyone" then why is the standard Land Use plan all across the USA to build nothing else BUT CIDs with mandatory Owners' Associations? Clearly, the COS Census statistics point out that in many housing markets these days buyers do not have adequate choice -- they either buy a home with an HOA or COA or they rent. ------------------------The simple answer as Evan has explained many times is $$$$Local governments REQUIRE CID development as it allows them to avoid many of the costs associated with the community such as trash removal while still collecting 100% of the property tax.Developers love it because in return the government allows them to build denser properties.And Urban Planners love it because it reduces sprawl and maximizes infrastructure investments.Not rocket science.
Deborah writes:More industry talking points. All of them misleading. I am saying that a home is FIRST a place to live, and second, an investment. But let's not overlook the fact that perhaps a third of CID resisents are tenants, not homeowners. Why else is CAI lobbying for Congress to push FHA to relax owner occupancy restriction for condominiums? ...........__________________Not going to respond to every point here as I don't have time to teach an Intro to Statistics course, but I will point out that we publish all the results of our surveys, otherwise you couldn't quote them, despite the fact you misinterpret them. Nevertheless, we and many others would welcome additional research in the area. Anytime you want to drop the $75,000 to $100,000 for a statistically valid, national survey with a reputable survey company please feel free. We would be happy to discuss the results.I will address you first question/accusation though. And as far as why we lobby FHA to reduce the requirement for owner occupied properties, if you understood the regulations you would realize that reducing that requirement enables more condo associations to apply for certification by FHA and thus enables more potential buyers to qualify for FHA insured condo mortgages, which makes owning a home significantly more affordable for a substantial segment of the population.
I see. Everyone's needs are met except the home buying consumer. Explains why this election cycle is contentious, doesn't it? The housing sector is not meeting market demand. Instead governments and real estate interests are telling us what we ought to want and need in a home.
I am not misinterpreting the statistics as reported by Public Opinion Surveys. The numbers speak for themselves. They come straight from the management report provided to the CAI research foundation. As for loosening the FHA certification requirements even further, it may result in more buyers for condos. But those condos will not necessarily be a good value, nor affordable. Depends on how low FHA certification standards are set. Low owner-occupancy rates for condo associations at low end price points tend to struggle financially. That usually leads to deferred maintenance, low reserve accounts, higher than average delinquency rates, building code violations. FHA is supposed to promote long term owner occupancy rather than subsidizing investor-landlords.
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