Tuesday, January 8, 2013

There Goes the Neighborhood?

Anecdotal evidence suggests that renters can be more destructive to communities than their homeowner counterparts - but at least by the measure of home property values, results are inconclusive in many research studies.  What can be said with certainty is that banks and the secondary lending market have placed caps on the percentage of acceptable rentals in a community.  Currently, FHA accepts up to 50% rentals, whereas many banks will cap rentals at 25% or 30%.  A few rentals will not drive down home values, but communities with large numbers of rentals do see an average 15% decline in housing prices.

With that being said, the dynamics have changed significantly since the Great Recession. New trends show more people electing to rent over purchasing a home, driving monthly rental rates higher and attracting a different clientele base.  In addition, some of the renters were until recently home owners, and have a different mindset (compared to “standard” renters) when it comes to property upkeep. 

In some instances, if renters "like what they see" in the community where they reside, they might opt to purchase a home there.  Outreach by the Association is critical at all stages of this residential cycle if the Association wants to foster the type of environment that raises home values, regardless of occupant status.

Community socials should be inclusive of renters, as frequent interaction with the neighbors establishes positive peer behavior.  Some committees, such as a pet or tennis group, should permit renters to take an active role to encourage interest in improving community standards.  Concerns voiced by renters should be treated as if coming from the owner. As a result, renters will be less likely participate in "destructivebehavior and more likely to want to contribute to the overall well-being of the Community.

While sensationalism fosters controversies as entertainment or to provide a false sense of self worth, managing expectations (of both renters and the Association) will draw a positive outcome while other communities permit contention to fester.  The desirability of your neighborhood translates in to increased property value if nurtured through the years.

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