My View: HOA-industry makes housing less affordable

By Deborah Goonan, Independent American Communities

In case you haven’t noticed, in just about every city and town in the U.S., housing costs are going through the roof. (Pun intended)

Here in my home state of Pennsylvania, I’m starting to see reports of piecemeal government programs designed to increase the supply of affordable housing.

For example, WBRE reports that four Monroe County organizations have received $300,000 in state grants to tackle the problem.

Pocono Mountains United Way will use their share of grant money to provide one-time rent assistance to residents. And, Integra Home Counseling, a HUD-approved agency, plans to buy and update homes as multifamily properties, making them part of their community land trust.

Truthfully, these state grants are likely to have very little impact on housing affordability. Throwing a few hundred thousand dollars at the problem doesn’t address the root cause of high housing costs.


HOA-industry limits supply of land for sale

Monroe County has a very high concentration of HOA and condo housing. Yet it’s one of the least affordable places to live and it has a high foreclosure rate, according to one HUD representative.

Ironically, the HOA industry has promised the public for decades that common interest housing makes housing more “affordable.” Obviously, history reveals that claim to be untrue.  

An Integra Home Counseling rep doesn’t tell WBRE whether most Monroe County foreclosures are initiated by lenders or HOAs. (I wonder. 🤔)

Here’s the very real problem that nobody talks about — there’s almost no land for sale that isn’t owned by a real estate developer or investment company. And that land is earmarked for HOA-governed residential development (either condos or planned communities).

Of course, common interest housing (with shared ownership) requires homeowners to pay HOA fees. And those fees can add up, especially for communities governed by condo or townhouse associations.

There’s no doubt that homeowners are double taxed when they are obligated to pay both property taxes and HOA fees.

But there’s a more basic reason for rising home prices.


Restrictions on new construction

When private developers own most of the buildable land, a home buyer is severely limited by the type and size of home that can be built.

Nine times out of ten, local zoning, combined with the development plan’s covenants and restrictions, won’t allow the housing consumer to build a small starter or empty-nest cottage. Also disallowed: one-owner duplex homes, garage apartments, or a back yard guest houses. 

The status quo says these housing options are not prestigious enough to attract home buyers with the big bucks to afford larger, more expensive homes.

But stop and think for a moment. Who benefits from new construction of larger, more expensive homes? Home builders, real estate developers, and investors reap higher profits. And your local government increases its property tax base. 

Everyone else competes for a limited supply of smaller, older homes — many of which require expensive rehab to make them livable.

Of course, when it costs more to build and buy homes, rents increase, too. Rent is out of control in most of the Keystone State and across the country, especially in towns where a handful of landlords own the majority of rental properties.

That’s why consumers end up paying more for housing. That’s why housing is becoming less and less affordable in Pennsylvania and across the U.S.


What about community land trusts?

In my opinion, government-owned land trusts aren’t any better for housing consumers.

The owners of land trusts claim to “help” make housing more affordable, by purchasing land and then leasing it to property owners. But, in reality, owners in a land trust are also beneficiaries of the land trust, through collection of rent from tenants or land lease agreements.

Some non-profit community land trusts are responsible stewards of land and the public trust. Some are not. Private and government nonprofits are certainly not immune from corruption. And we’re seeing more and more reports of bribery schemes that result in affordable housing units owned by people who can well afford to pay market prices.

Community land trusts almost always control purchase and resale prices of homes. Because of those price controls, it you invest in a land trust home, you won’t build equity in the property. You’ll be lucky to break even when you sell.

(See full explanation of a community land trust in the reference section below)


Housing Policy changes needed

If you stop and think about it, both HOA-governed communities and land trusts rob Americans of the opportunity to own a home AND the plot of land it occupies — free from arbitrary and onerous deed restrictions that benefit developers, non-profit agencies, and local governments, but not necessarily taxpaying homeowners or tenants.

In order to create truly affordable housing, government must limit its involvement in the housing market, in a way that restores and enhances property rights of individuals.

That requires government to change housing policy in three fundamental ways.

1. End over-regulation and restrictive zoning of new residential construction,

2. Discourage land- and property-ownership monopolies controlled by developers and corporate landlords, and

3. Stop force-feeding or mandating new development of HOA-governed common interest communities. ♦



How Land Trusts Work by Dave Roos | How Stuff Works


Community land trusts are another type of nonprofit organization dedicated to providing affordable housing for lower-income communities. Key to understanding community land trusts is the concept of dual ownership. When you buy a home, you typically pay for both the structure and the land it occupies. With a community land trust, the nonprofit organization buys the land and the homeowner only pays for the house.

As an added benefit, community land trusts sell their homes at affordable prices independent of market fluctuations [source: National Community Land Trust Network]. To buy a home in a community land trust, you must be able to cover your mortgage and upkeep costs, and you must also agree to sell the home for the same price that you paid in order to keep housing affordable.

News Source:

Organizations awarded state grants to aid housing crisis (WBRE)
by: Brianna Strunk
Posted: Jul 12, 2019 / 08:30 PM EDT/ Updated: Jul 12, 2019 / 08:30 PM EDT

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