In the current real estate market, investors are making up a larger and larger share of the buying pool. With rental prices reaching truly astronomical rates, investors are flocking to markets and scooping up residential properties to flip as rentals - and they are paying cash to do so. According to property data and financial services company CoreLogic, in December of 2021 investor purchases made up 20% of all real estate transactions in the country. Popular tourist destinations, like our Florida Keys real estate market, are prime targets for investors, not only raising home prices for other buyers, but further reducing inventory as these homes typically re-enter the market as luxury rentals or vacation rentals. Across the country, and primarily in these investor-favorite markets, homeowners associations are coming together to enact emergency measures to keep investors out.
Homeowners associations, or HOAs are typically volunteer residents who operate as a governing body for a neighborhood. As such they are responsible not only for enacting and enforcing neighborhood rules and regulations, but also for general upkeep of the neighborhood as well. HOAs around the country are fighting against investors coming in on several bases. Many homeowners associations are reporting a decline in property maintenance on investor-owned properties. Additionally, many homeowners associations are seeing an overall decline in the desirability of neighborhoods as a result of residential properties turning into rentals or vacation rentals. Many homeowners prefer to live in neighborhoods with live-in owners to prevent the turnover seen in rental communities. Residential neighborhoods with many rental houses tend to be less attractive to buyers.
While some homeowners associations already have in place bylaws that are designed to repel investors or buyers looking to make rental income off of a purchase, many more around the country are rewriting theirs as quickly as they can. Measures being sought include stipulations in the bylaws that require buyers of a home to live in it for at least six months - or leave it vacant for the same minimum amount of time - before it is eligible to be rented out. The lack of being able to make rental income for this length of time is believed to be a big deterrent for investors who are looking to make a profit immediately. Another solution being looked at by homeowners associations is requiring that all renters go through a lengthy approval process and increasing regulation as a way to make a neighborhood less attractive to investors. Some neighborhoods are even looking to include bylaws that essentially set a limit on the number of properties in the neighborhood that are able to be converted to rentals. These measures are increasing in popularity for homeowners associations looking to keep out investors.
In the Florida Keys real estate market, it is difficult to regulate the flow of investors. Many neighborhoods in the Keys do not have homeowners associations that can create laws such as the ones listed above. Real estate investors are always looking to invest in the Florida Keys because our rental market is always hot with tourists looking for extended getaways. As prices rise and inventory dwindles, the impact of investors on our real estate market will inevitably continue to be felt in many ways.