Why can’t home buyers find the modern non-HOA homes they really want?

By Deborah Goonan, Independent American Communities


If you’re in the market to buy a home, you’ll relate to today’s post on IAC.

Have you noticed that there’s a huge housing market mismatch between the kind of homes buyers want, and the supply of homes available for sale?

But, contrary to standard political messaging these days, it’s not just a matter of high home prices and a lack of so-called “affordable” housing.  Based upon careful observation, I’ve pinpointed the real problem: there’s no free market for residential real estate in the U.S.


No free market in U.S. home construction

Think about it. It’s common sense.

If consumer demand were driving the housing market, home buyers would be able to easily find the type of housing they need, when they need it, and at a price they could afford.

Unfortunately, new residential development is severely limited by restrictive land use zoning at the local government level. At the same time, the “market” is heavily influenced by the moneyed interests of real estate developers.

Put simply, the real estate industry no longer exists to serve the needs and wants of housing consumers.

For at least three, if not four decades, new home construction has been limited to the the type of housing that real estate developers want to build, and further limited by the new development standards local governments are willing to permit.

At the heart of the problem, local government has systematically ignored consumer demand, in order to increase its bottom line (more tax revenue), in its endless pursuit of “growth.”

The end results:

  • a dwindling supply of vintage homes that no longer serve the needs of today’s home buyers, and
  • a near complete lack of new or newer construction that fills those unmet needs, at a price that ordinary people can actually afford.


By way of example, allow me to share my personal house hunting experience.


Frustrating house hunt

Like many U.S. home buyers, my husband and I are near retirement age. We no longer need a large house or a big back yard. We’d like to downsize, but we’re definitely not interested in a condo or townhouse, for dozens of reasons already explained in previous articles on this website.


HOA industry makes its case for affordable “attainable” housing

7 things to consider before buying a townhouse

We’d like to buy a new or nearly-new one-story home. It could be 2 or 3 bedrooms, preferably with 2 baths, maybe 1,200-1,400 square feet.

Like most U.S. homebuyers, we are looking for detached housing only. No shared walls, ceilings, or floors.

Like most home buyers in the U.S, we’re also looking for a price point at or below the median price for our market.

Also, we’re looking for a house that will retain its value. We’re definitely not interested in leasing the land beneath our home! That excludes mobile or modular homes, a housing sector that is increasingly controlled by corporate landlords.

Most importantly, we want a small home located on a small piece of land that we own, free from onerous deed restrictions.

Having done so before, we’re not willing to buy into another HOA-governed community with common ownership of lands or “amenities.”

Priority number one: No HOA fees, no condo fees, and no common interest.


Does the house we want exist?

Unlike other parts of the country, the northeast U.S. still has many existing home options to avoid an HOA. But for ‘newer’ construction, there are far fewer non-HOA options.

In our target locations, our only home buying choices are:

  • 20-30 year-old townhouse-condos with deferred maintenance and high HOA fees, or
  • existing homes at least 50 years old.

Obviously, the townhouses are off our list.

Of the existing homes on the market, the majority are two-story or split level homes, many of them built between 1965-1985, and sized for growing families. Too many stairs. Too much space to heat and furnish. And, in many cases, too much lawn to mow.

When a modestly-sized one-story “ranch” comes on the market, if it’s in good condition, it sells within days. There’s huge demand, but a very limited supply.


The ‘flip’ house, today’s ‘cookie cutter’ home

An older, outdated home, if it’s well-located, gets snapped up by a cash-buying house flipper.

The home gets a complete remodel with today’s trendy standard formula for quick resale. White kitchen cabinets, white bathrooms, waterproof wood-look floors, light grey paint on the walls, and pops of color in various shades of blue.

Ho hum.

It’s the house-flipper’s smaller-home equivalent of brand new, builder-grade, cookie cutter homes. And this sea of grey and white gets re-listed at a premium price.

I say, no thank you.

Dozens of other existing homes sit on the market a long time. Those are the houses that need costly repairs, such as basement waterproofing, a new sewage line, foundation repairs, a new roof and siding, or a major landscape overhaul.


Where are the small detached homes buyers want?

Like most Americans, we don’t buy into the recent political push to do away with detached single family home neighborhoods.

It’s a movement driven by stakeholders in urban development, as they win over some of their local government cronies. Urban developers insist that the only way to make housing more ‘affordable’ is to increase the number of housing ‘units’ per acre.

And, by the way, cramming more housing units onto an acre of land doubles, triples, or quadruples property tax revenue.

That’s a tempting political proposition, especially when the local government also delegates public services to private homeowners associations. What could be better for municipal fiscal policy than increasing the tax base while providing fewer public services?

That’s why local governments continue to force-feed the home buying market with HOA-governed, common interest development such as townhouse and condominium communities.

And that’s why the needs and demands of homebuyers in the U.S. have been largely ignored for decades.

It’s no wonder home buyers like us cannot find the kind of housing they actually want.


U.S. housing consumers reject high density

By now, most housing consumers know that too much housing density — a lot of new development in a small area of a city or town — tends to increase home prices. It gentrifies neighborhoods, attracting mostly affluent buyers who can afford to pay for newer, more modern housing. The high cost of housing forces out modest income households.

High density construction also put a higher demand on public infrastructure. That often leads to higher property taxes.

The public is waking up to the fact that millions of owners of condos and townhouses face double taxation in the form of rising HOA fees and special assessments.

Multifamily housing might be more affordable to buy, but it’s usually not affordable to own. That’s an important distinction!

As a result of the high cost of homeownership, many Americans now rent their homes. Sometimes it’s a deliberate choice, sometimes it’s not. But the current environment is creating a high demand for rental properties.

But, despite the strong PR push for multifamily housing, guess which type of housing more and more people want to rent?

Yep. Single family housing.

Imagine that!

According to a recent report by CNBC, “Demand for single-family rental homes is surging” so, instead of selling brand new spec homes, builders are renting homes and becoming landlords.

It’s abundantly clear that there’s demand for single family housing of all sizes.

So why won’t more local governments adjust their land use policies to allow the free market to increase the supply of right-sized single family homes? Maybe then people like us would be able to buy that downsized one-story home. ♦



To Fix Its Housing Crunch, One U.S. City Takes Aim at the Single-Family Home
By Noah Buhayar, Bloomsberg Businessweek, July 31, 2019, 5:00 AM EDT

This is the ‘fastest growing trend’ in the housing industry, and investors are rushing in
Diana Olick



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