The Increase of Rental Property in Community Associations (HOAs) – The Subscription Economy
The increase of rental properties throughout community associations and HOA’s is on the rise, there’s no doubt. And just because you’re a “tenant”, doesn’t necessarily mean you don’t care.
When is the last time you bought a DVD? How about the last time you bought a CD? The preference of buying and selling goods and services on a subscription model, rather than a one-time purchase, is becoming mainstream and probably sits somewhere between the early and late majority on the adoption curve – I’d argue it’s still early.
What is the Subscription Economy?
Subscription models have been around for a really long time. The surge of the subscription model is trending and becoming preference for many – both business and consumer. Think trade unions, magazines, Blockbuster, and contracted services as early adopters. Today we have Netflix, Amazon, and even Walmart pursuing the subscription business model. What’s so great about a subscription model anyways? You could argue it’s two fold:
- It’s better for the business
- Steady cash flow
- Increased focus on long-term value
- Predictable revenue
- Reduced cost in customer acquisition
- and much more…
- It’s better for the customer
- Better support and service
- Easier to budget
- Less upfront commitment
Although I don’t believe the subscription economy is the only contributing factor to the increase of rental properties throughout Community Associations and HOA’s, it may play a large part in why we might be seeing an increase in tenants, especially as the newest generations begin living on their own and others realize they don’t want the long-term commitment anymore.
The American Dream
In the United States, The American Dream is/was built on a foundation of owning your own home – it made sense when the world was less accessible globally, real estate was cheap, and careers were spent at a single place of employment. In my opinion, that’s no longer good supporting evidence. I have friends, under 30, that have had 2-3 professional careers already. Real estate is a 30 year “investment” and I can be anywhere in the world in less than 24 hours.
Times have changed and I believe purchasing and or owning a home is becoming a downward trend. It’s not even a generational thing, it’s a cultural shift. People are realizing that owning a home doesn’t really pan out to be a good investment if you want to be agile, work for multiple companies, and enjoy the freedom of less commitment. Granted, if you plan on staying put and you buy at the right time, it’s a great investment. The argument can go both ways, dependent on your future plans and commitment level.
What actually drives the increase in rental property throughout the community association? I’d be interested in hearing other’s thoughts on this topic.
Some other factors I believe contribute to the increase in rental property within HOA’s and Community Associations:
- Access and speed to information
- Real estate downturn during youth (2008 R.E. crisis)
- Increased speed/pace of life
- Career duration and frequency
- Institutional investors purchasing within common interest developments