Speaker 1: What's going on. Thank you so much for listening to
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your support. End of the last hour, talking about the
legislation moving through the General Assembly of North Carolina looking
to rein in some of the practices that have turned
abusive by some hoas and management companies. This ties into
the next topic here, Institutional investors are not the villains
of America's housing market. It's a piece by Caleb Pettitt
at National Review. Okay, before I read the highlights of
this piece, I got a message here from Cindy. It's
a peak tweet and Cindy says the job of the
HOA is to help maintain property values by upholding the
laws and buy laws of property management. I completely agree
that is what hoas are supposed to do. That's why
you have the HOA is to keep the guy from
putting seventeen broken down vehicles on his front lawn and
driving down property values for all of the neighbors. Right.
That's That's the classic example of why hoas exist. And
I agree with that. I understand that. And if you
don't want to I'm not advocating that you have to
live in an HOA. If you don't want to live
in an HOA and you want to have all the
seventeen cars on your front lawn that none of them
are operable, then you can go find some property, go
live in a part of town that doesn't have hoa's right.
That's that. Cindy is exactly right, that's the intent. However,
that is a subjective and overly broad theory versus how
it is applied. Right, because I can be on an
HOA board and Cindy could be, and she's got more
I'm going to finish her tweet, but we can both
be on an HOA board and things that I don't
care about, like what color are your shutters? Right, Things
like that that I don't care about that I don't
believe actually lower the property value of neighbors. But Cindy
may or vice versa. Right, And what I've learned in
dealing with the HOA stuff for the last now almost
three years, is that there are different things that trip
people's triggers. You know. For some people it's, oh, my gosh,
I can see your garbage cans, and that's against the rules.
We have a rule in our HOA that you can't
have your garbage cans visible from the street or from
a neighbor's property. So if I look out my window
and you have your trash cans in the back of
your house up against the back of your house and
I can see them, that's not allowed. So you have
to either put the trash cans in your garage, which
on days like today when it's a you know, two
hundred degrees and let's say you happen to have just
recently adopted a new cat as we have now, we
are not big fans of keeping those garbage cans in
our garage just cooking away and stinking up the garage, right,
Or you can spend the money to build a garbage
can corral that's on the side of the house, and
that then has all sorts of rules and regulations about
how it has to you know, be painted to certain
colors that go with the exterior of the house. And
it has to be on a paverer bed, it has
to be attached to the house. So there are all
these rules, which of course drive up the cost. So
we can't just move them outside. We can't hide them
in the backyard. We have to screen them from anybody
seeing them from any property, right, and that that gets expensive.
And then if you put it outside and you've got
it like around the back or something, Now, how do
you how do you get the cans to the curb.
You're gonna have to walk them down the grass and
in the rain with a soggy lawn. That becomes you know,
difficult to do, tears up your lawn. So then you
got to put in a walking path. Then you've got
to get approval for that. There's additional costs, right, all
just to keep your garbage in a can, which is
like this idea that we don't generate garbage in my neighborhood. Anyway,
this is not an issue that trips my trigger. I'm
just noting, like this is the ramifications of the policy.
And so, but some people they really really hate the
site of garbage cans and they will call and complain
about any garbage can that's out too long on the
curb and they can see the can from there from
their window or anything like that. For other people, it's
cars parking on the street. For other people, it's cars
parking in the driveway when the car doesn't fit all
the way in the driveway because they built the driveways
too short. So now you have a big truck, you
try to park it in your driveway, it hangs out
onto the sidewalk, and now you get to complain about that.
So you can't park in the garage because it's too
big of a vehicle or whatever. Maybe you have three vehicles.
Can't park it in the garage, can't park it on
the street, can't park it in the driveway without somebody
complaining about it. Right, So some of these, some of
the these things all fall under that same banner of
protecting property values. Right because to listen to the people
the anti garbage can viewing people, they're like that, you
know that drives down property values. I disagree. I think
seeing people's garbage cans on the side of their homes
does not actually drive down property values. I do not
believe that's the case anyway, But I agree with Cindy's
point that that's the purpose. That is absolutely the purpose.
She goes honest say, I have served on HOA boards
for years and the bottom line is homeowners will eventually
comply before things escalate in paying fines the biggest problem.
And I agree with that too. Most homeowners do comply.
The case that I mentioned in the last hour, the
homeowners were not even aware, they were never told, and
their HOA was then making money. They were getting a
cut off of the fines and the violations and stuff,
and the property management company was getting a revenue off
of that. And that's a perverse incentive that needs to
be eliminated. You shouldn't make money by nailing your neighbors,
you know. The biggest problem, she says, and the reason
we have to have hoas is we have allowed rental
companies to buy properties who do not maintain them well,
and the renter is not obligated to take care of
the property. We have to communicate with the owner, who
could be in Texas or by the time they respond
to the violation, it could be months down the road. Meanwhile,
the house looks like garbage and it starts to bring
down the home values in the neighborhood, so you can
just find them out the wazoo. But they don't care.
So here's one thing. Yeah, here's one thing you could do.
I don't know what your bylaws state, but ours says
that the HOA can actually go and do maintenance on
a property. So if somebody's not mowing their yard, like
we could actually send in a crew mow the yard
and then bill you for it and then shut down
all of your keyfob access to all of the amenities,
to the pool, to everything else, Like you don't get
access to anything until you pay off the debt. Now,
and maybe the companies don't care, but at least you're
mowing the yard. You're throwing that on the bill, and
then eventually when they do have to settle at some point,
then you can you can get your money back. It's
not ideal, don't get me wrong, but yeah, and I
don't know, I don't know how else you address that.
But again, this is the challenge whenever you're trying to
write a policy, is like you're trying to get at
these abuses, and there are abuses, but it's a fair point.
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peatmeal from Greg. I just paid three hundred and nine
dollars and ninety five cents to leave my HOA. I'm
selling a condo and moving on. Somebody told me once
quote you live in an HOA neighborhood, move the view
will be much nicer. Yeah. And look, I have no
experience with like the condo or multifamily HOA stuff that
I think that's a different kind of a beast because
you've got shared walls and roofs and you know, HVAC systems,
like all of that stuff is ooh, it's a whole
different animal. Let me see here. This is from Tim
who says a few years ago in a development down
the street and HOA dispute resulted in three people from
three different houses getting killed all over some trees not
being trimmed to the hoa's wishes. Good lord, that's what
I mean. These are political positions and like you, you
got to try to problem solve this stuff. And some people,
just like in any political entity, they get a little
bit of power and it goes right to their heads.
Some people, you give them a whistle and they've never
had a whistle, and now they have a whistle, and man,
they love to blow it, you know. Dean, Welcome to
the program. Hello Dean, Hi Pete.
Speaker 2: Hello, I've just been listening to you, you know, list
all the issues and problems, and it's absolutely true. It's
a totally flawed organization. Hoas were set up by developers,
and the developers made sure that when they wrote them
up the first time that it covered gave them one
hundred percent of the power. And once they fill the
development and made all their money and have no other
invested interest in it, they just pass that same document
over to all the homeowners and somehow expect them to
make it democratic when the whole document isn't democratic. And
where I find the big flaw is this that the
management companies and attorneys and all that. If you say, look,
instead of like forty five pages of HOA documents, let's
write five pages and make it simple, because it's going
to be administrated by people regardless they say, oh no, no, no,
you need sixty seven percent of the vote. This is
going to cost you, you know, more money than you
could imagine. Nobody's going to agree to it. So you know,
the problem gets perpetuated with a bunch of volunteers, as
you say, running the running the prison and changing every
three years to boot make it worse. I don't know,
that's how that's my experience with hi's you just got
ignore them and have thing. Do you know that if
violations you can collect, if they haven't paid their dues,
you can put a lian on their house. But actually
violations aren't collectible. You can't lean a property for a violation.
So theoretically they can just sort of add up and
you can ignore them and not have to deal with
it until you sell.
Speaker 1: Until you sell, yeah, but.
Speaker 2: And then it becomes you know, then it becomes a negotiation.
So so you know, I mean, it's just it's it's
sad because you know, people live in a community or
they all they all have one house, one vote, and
you think they would all want to live together. But
it's just like you know, starting like the government, as
long as you have Republicans and Democrats, you can make
sure that, boy, there's never going to be an agreement.
Speaker 1: You lost me on the last part. It's like, if
you're managing your HOA for the best interest of the community,
and you're engaging with them and doing you know, communications
with homeowners and explaining stuff and full transparency, then most
of the time a lot of these issues get settled
pretty quickly. That's been myselt.
Speaker 2: But you're administrating an ambiguous document that gives you the lattitude.
Just like what you said. If the president comes in
and he hates Rosebushes because it reminds him of his
former wife, he you know, he has the power to
administrate that. There's architectural committees, you know, sort of really
at the core of all the dictatorship and power.
Speaker 1: Well, but that's why you end up with the large documents, though, Dean,
is because people try to they try to limit that
kind of subjectivity, so they spell everything out and they
make it so tightly regulated that you end up with
the you know, the eighty page document. It's yeah, I mean,
that's just sort of the nature of the application. I
appreciate the call. I mean, these are again, every HOA
is different, and it's going to and the direction and
the actions are dictated by the people that volunteer, which
is why I say, good competent people need to volunteer
for these positions in local government and your hoas and
your civic organizations, otherwise they will become governed and led
by bad incompetent people. All Right, if you're listening to
this show, you know, I try to keep up with
all sorts of current events, and I know you do too,
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more transparent. Melissa, It's a Pete tweet. Melissa tweets at
me um. You can take the used cat litter and
bury it under mulch around your shrubs and plants. It
keeps deer and snakes away. It breaks down over time.
Wait are you talking about like when I'm cleaning out
the litter box, like doing the big clean, or you
saying like, after I scoop it, I need to take
the cat pooh and pee and bury that around my
house in the shrubbery because that's gonna stink. I don't
know if I'm gonna do that. No, I'm I'm like
one hundred percent certain not going to do that, although
there is this neighbor that I know I'm kidding Or
is it just like the litter you just dumped the
litter because after a while, you know, you got to
change out all the litter. So I don't know, but
I've not heard that keeping away snakes though, that's a
good We do have them in our neighborhood. So and
everything is a copperhead, that is what I've learned. Also,
every snake is a copperhead snake. In Charlotte, Melissa also
says I was on the HOA board for a minute.
No Roberts rules, no order whatsoever, complete chaos and idiocy.
I quit I will tell you that's the first thing
that I did. The first thing I did was I
implemented Robert's rules of order to run the meetings because
I had been to the meetings and I was like,
this is insanity. These meetings are taking, you know, two
to three hours. Everybody is like arguing about stuff that
is not germane. It's not relevant to what we're supposed
to be doing here. And you know, people are arguing
with each other and all of this other stuff. And
like there was they had a sign and it said
el moo e l m O. Okay, it was like
a you know, it's like a printed out piece of paper.
It's just big letters E l m O. And they
handed them out to everybody. So we all got one
of these sheets and we were supposed to hold it
up when basically somebody's talking too long and so why
elm Well, it's it stood for enough, Let's move on.
So I said we should just have an Elmo doll, Like,
if we're gonna go Lord of the Flies were like,
I have the conk, you know, if we're gonna do that,
then just have like an Elmo doll. But and that's
the thing, like and whenever anybody arguing with somebody, they
would just hold it up when the other person was
responding to them. It's just it didn't work. So yeah,
so I was like, we're doing Robert's rules here, like, oh,
I don't know how it works. Like, okay, it's fine,
I'll show you how it works. And after you know,
a couple of meetings, a couple months go by, people
now understand how it rolls, and we're out of there
in less than ninety minutes. So yeah, that's that's what
I mean, Like, you have to treat these things with
the you know, with the mechanisms that exist in order
to make them function. All right, So let me get
to this piece by Caleb Pettitt National Review dot com.
Home ownership is increasingly becoming out of reach for Americans. Federal, state,
and local lawmakers have turned their attention to targeting large
institutional investors in the single family rental market over the
past decade. People are worried that these institutional investors are
raising rents and making it more difficult for families to
buy a home. Those a pose those to institutional real
estate investors have pushed for restrictions or outright bans on
single family rentals or sfrs by institutional investors, but he
says most of these purchases are actually made by small investors.
Approximately sixty percent of metropolitan rental home investor purchases are
made by investors who have ten or fewer houses, while
investors who own one thousand or more homes never make
up more than about two and a half percent of
home purchases, and they rarely exceed one and a half
percent of home purchases. America's housing market is not dominated
by large corporations. In other words, also institutional SFR investors
improve and increase the supply of housing because these large
institutional housing investment companies, which were rare before the two
thousand and eight housing crisis. After eight, Fannie May held
a large nonnumber of foreclosed houses and needed to remove
them from its portfolio. In twenty twelve, the government passed
the Real Estate Owned to Rental Initiative to help Fanny
May sell off foreclosed houses in bulk. Once Fanny May
sold off most of those foreclosed houses, institutional investors needed
ways to expand the number of houses they owned. Today.
They employed two methods. They purchase and renovate individual homes
or more and more. They're just partnering with the developers
to build entirely new communities. And he says both methods
are good for the housing market because they increase the
supply of homes. You want more affordable homes, have more homes.
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Single family rentals as single family rentals that are owned
by what are called institutional investors. Those are the big ones,
the big corporate entities. Did you know that those institutional
investors by existing houses to rent, and then usually on average,
before they list the house, they make anywhere from on
average fifteen to thirty nine thousand dollars worth of renovations
and improvements to the homes, whereas new homeowners spend about
six grand when they move in, so they improve the properties. Also,
institutional investors actually lower rents by increasing the supply of
rental housing. Research published by NYU professor Joshua Coven shows
that institutional investors are responsible for both an expansion in
housing supply and decreases in rent in the American single
family rental market. For example, the city of Austin, I
believe we talked about this a couple of months ago
when this report came out that Austin, Texas had gone
on this like building spree. They were like build board
houses everywhere and all this stuff, and lo and behold,
the rental supply increased fourteen percent and the median rent
fell by four hundred bucks a month. More housing supply
reduces the rental costs, right, because now people can move
around and landlords are going to have to offer deals
when you have a limited supply. And the I think
the sort of the textbook case in this is Ashville.
They hate any kind of development of new housing. There's
some of that sentiment here too. Oh another apartment building
going up? Okay, so what would you prefer? But because
like the growth is happening, So where would you prefer
that happen? How would you prefer that occur? More single
family homes to be built? Okay? That takes a lot
more space than the rentals or the apartment buildings. See
I am an all of the above kind of guy
on this stuff. I don't want to see stuff banned.
I don't want you. I don't want the ban on
by cul de sac, neighborhoods. Those are important for different buyers.
All of the above. Some people would like to rent
homes and will be good renters. And here's the other
thing too. I thought for years that you know that
you you got to have a house, and that you know,
builds generational wealth and all of that, but that's not
actually the case for every person in every situation, especially
with you know, the cost of housing so high that
your mortgage, your housing costs. When you own your home,
that mortgage is your floor. That's your The housing price
or the cost of maintaining that house is above and
beyond just the mortgage. Anything goes wrong with that, you know,
hvac repairs, roof replacement, whatever, all of that is above
and beyond the mortgage. That's the floor. You rent an apartment,
that's the ceiling. You're not going to pay anything more
for that housing than what you're charged with the monthly rent,
and sometimes that's better for people. Institutional investors also do
not appear to have a significant impact on home ownership rates.
Get this, The American home ownership rate peaked in two
thousand and five and then steadily declined as the subprime
mortgage housing bubble popped. Since twenty fifteen, homeowners so for
the next decade. Since twenty fifteen, though home ownership rates
have steadily grown to the point where they now exceed
the pre nineteen ninety five average, we do have a
good number, a good percentage of ownership. Much of the
recent shift away the home ownership can be attributed to
increased regulation following the eight financial crisis. Since then, mortgage
lending has been more heavily regulated, which has caused the
average FICO score of borrowers at mortgage originations to increase.
To actually solve the problem of high rents and housing affordability,
the mortgage market should be deregulated to facilitate more home building,
and zoning laws should be rolled back to make building easier.
And I completely agree. All right, that'll do it for
this episode. Thank you so much for listening. I could
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thank you so much for listening, and don't break anything
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