On Monday, the Patchogue Village Board unanimously under ignorance, denied an owner the right to rent their unit. The trustee that tabled the motion – Gerard Crean believed it would help protect property values.
First off, the whole “gotta protect property values” is a bunk argument. The role of the board is not to “protect property values”. I’ve not seen a single bill of legislation that has indicated the role of a HOA or condominium corporation is “protecting property values”. They often indicate a mandate to maintain the physical infrastructure and to ensure services. Arguing property values is just a weak excuse a board uses to falsely justify their often ill and often mean decisions. You ever hear “we did this for property values” know that there is likely some sad decision that the board has made.
But let us also evaluate this argument that allowing rental property reduces property values. The neat thing is, the argument is completely false.
An in-depth study by Tsur Somerville – Director University of British Columbia Centre for Urban Economics and Real Estate, Sauder School of Business, Chris Kay – Head of Acquisitions, Fairmont Pacific Development Ltd, and Seang Dong – PhD Student, Sauder School of Business found:
Rental Restrictions in general Decreases property values by 3.3% to 5.4%.
Wow. That is substantial.
Tangential to this, we can also look at the effect of affordable rental housing on neighbouring property values. “Affordable rental housing” often causes shivers in local owners, as they imagine hordes of smelly dirty people with chipped teeth and pan handling tins at the ready invading their neighbourhood. What really happens to property values as found by the Real Estate Board of Greater Vancouver relying on American publications:
There is increasing evidence that affordable rental units are not a threat to local property values and are instead a net plus.
Yup – those huddling masses of poor (our imagination of them, not reality) are a net plus. So if we’re talking about private owners renting their own asset, who aren’t seeking tenants who are the huddled poor, the positive value should be even better.
And an article by Smart Money indicates that no-rental policies are more likely to force foreclosure or empty units, as depriving an owner of rental income to pay their condominium fees places greater units into fiscal failure. With multiple units in foreclosure, values of the other units are significantly reduced. For single family houses – each one within a block will decrease the surrounding buildings by almost 1%. Especially in today’s market boards should do everything they can to stop foreclosures.
The Iowa Property Owners Alliance indicates:
An outright ban on rentals may not make sense, particularly in an economy where there are many properties on the market. An HOA should consider if it would rather have vacant properties or occupied properties with renters. Additionally, some buyers may be reluctant to purchase a home in a community that does not allow rentals, so an outright ban could also lower property values by creating less demand for properties in the community.
All arguments point to the justification (which is a stupid justification all on its own) that “rental reduces property values” is completely bunk, wrong, stupid, and dim witted.
Remember how I said above that if you hear someone use the property value excuse to justify a sad board decision, it applies is spades to Gerard Crean and the Patchogue Village Board. They denied Lori Patton the right to rent her unit to help cover the costs of treatment for her two-year-old daughter’s rare blood disorder. It is a disorder that requires costly transfusions and, at some time, a wonderfully expensive bone marrow transplant.
Way to go Gerard Crean and the Patchogue Village Board! You win the current award for “stupid decisions that show you have no humanity, using arguments that are completely contrary to facts”. You. Are. Awesome.
More links indicating rental effects of property values:
How Do Rental Properties Affect the Neighborhood?
There Goes the neighborhood: The Effect of Single-Family Mortgage Foreclosures on Poperty Values
Field Guide to Effects of Low-Income Housing On Property Values