These organizations, known as homeowner associations, spend a significant amount of time enforcing rules governing things like lawn care and parking. However, they frequently have broad powers to regulate how homes are used.
Some of these associations now believe that the increase in home purchases by rental investors has resulted in a drop in property maintenance, making their neighborhoods less desirable. According to these organizations, investors are also making it more difficult for local families to purchase homes.
Homeowner strategies include limiting the number of homes that can be rented in a specific neighborhood or requiring rental tenants to be approved by the association board. Most associations require a two-thirds majority to pass these measures.
Members of the Whitehall Village Master Homeowners Association in Walkertown, N.C., near Winston-Salem, are attempting to amend their covenants to require new buyers to live in a home or leave it vacant for six months before renting it out. They believe that this action will effectively prevent investors from purchasing any more homes.
"They're coming in and basically bullying people out with cash offers," said Chase Berrier, the president of the association who is leading the effort. He claims that some of the homes in the subdivision owned by investors are now in disrepair, and that absentee owners are difficult to reach in order to resolve issues.
According to housing research firm CoreLogic, investor purchases have increased in recent years and accounted for more than one-fifth of all home sales in December. Their impact on the housing market and local communities has become a contentious issue across the country. During the pandemic, home prices have also risen at historically high rates, and prospective buyers say they are having difficulty competing with companies that pay in cash.
According to some housing analysts, preventing investors from entering neighborhoods could harm renters, who are frequently less wealthy than their homeowner counterparts or struggle to find affordable housing. "Renters face a fairly deep and pervasive social stigma," said Jenny Schuetz, a senior fellow at the Brookings Institution.
It is difficult to say how many associations have proposed measures to prevent investor buyers, but the number is likely to be in the thousands.
According to an analysis by the real estate technology company InspectHOA for The Wall Street Journal, about 30 percent of the more than 1,000 amendments from HOAs in 21 counties in Florida, Arizona, North Carolina, and Texas since the beginning of 2019 were leasing and usage restrictions, including restrictions on short- or long-term rentals. This is an increase from the previous year's figure of 21% of amendments filed in the same counties.
State legislators are debating how much authority homeowner associations should have over rentals. California now prohibits associations from imposing some limits on long-term leases as part of an effort to encourage homeowners to build small rental properties on their land.
"The only real purpose of restricting rentals in a given community is to keep renters out," said David Howard, executive director of the National Rental Home Council, a landlord trade group.
In recent years, the real-estate industry has worked to pass legislation in Tennessee, Georgia, and Florida that prohibits associations from retroactively prohibiting investors who have already purchased and begun renting out a home, though associations can still prohibit future investor purchases with amendments in those same three states.
Scott Weiss, a homeowner-association attorney in Nashville, Tennessee, said he writes hundreds of rental amendments each year. "It's become such a problem in middle Tennessee because Nashville is such a hot market," he explained.
In other areas, where there are few investors, new rules are being enacted to pre-empt corporate buyers.
Only a few of the 170 homes in Indianapolis' Grassy Creek neighborhood are owned by investors, but the homeowner association imposed new restrictions in January after noticing an increase in rentals in nearby subdivisions, according to Candace Trzaskowski, a member of the association's board. "It's making its way into our neighborhood," she said.
A citywide housing study in nearby Fishers, Ind., with a population of about 100,000, discovered that over 900 homes were purchased by nonowner occupants between 2016 and 2021, accounting for 9.4 percent of all home sales during that time period. Out-of-state investors made up about one-third of those purchases. Scott Fadness, the mayor since 2015, expressed surprise.
"They're denying an entire group of individuals the opportunity to build equity and accumulate wealth in an asset," he said, referring to corporate home buyers. "We've been looking into what options there are for regulating this."
According to Mr. Fadness, the city intends to hold a town hall meeting with HOAs in the coming months to help them understand their options.
Most homeowners' associations require a large majority of homeowners to vote on restrictions. Mr. Berrier of Walkertown would need 80 percent of Whitehall Village's single-family homeowners to agree to the proposed changes. This summer, he and a group of neighbors plan to knock on doors and set up a stand at the neighborhood pool to drum up support.
"We don't want a lot of rentals," he explained. "We paid money for houses so that families could live there for years."