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February 25, 2020
3 min read time

Affordable Housing Policies could Bring Changes to your Community

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Homeownership rates are steady, but that can change at any time. Affordable single family homes are hard to find in most areas, and particularly difficult in more expensive urban centers.

Jurisdictions at all levels are trying to address the affordable housing issue in a number of ways, some of which might affect homeowners and condo associations. Not all of the effects are going to be negative.

The heart of the matter is a recent U.S. Supreme Court ruling that determined that if somebody is asserting discrimination under the Fair Housing Act they don't have to prove intent. This could affect associations in a number of ways. Other trends and concerns might impact community associations.

Dues or Assessment Caps May be Coming

It's possible that if your association contains people in an affordable housing program, you may be required to cap increases in dues and/or special assessments. One association in Boulder has come under fire for charging middle and low income residents assessments that are higher than their mortgage, in one case just under $1,200 a month, not affordable for many people.

Because of this, associations might want to consider a slight dues increase to build up reserve funds, rather than risk having a major repair be needed and then discovering that because they have residents receiving housing assistance they aren't allowed to charge a high enough special assessment to cover costs.

However, they may go routes more beneficial to associations, such as providing grants to associations that have a lot of low-income residents so you don't have to raise assessments.

Your Zoning May Change to Allow ADUs

ADUs, or accessory dwelling units, are also called mother-in-law suites or granny flats. In many places the law is being changed to allow them in neighborhoods that, in the past, have not permitted them.

If this includes your association, you may or may not be able to change your restrictions to ban them; the best bet is to check the wording of the law and consult with your lawyer. If you do have to allow ADUs, you may be able to put rules on appearance and style, such as requiring they are built in the same architectural style as the main dwelling, or that entrances are located so as to reduce the traffic impact. In most cases, you should be able to restrict ADUs to at least some degree, but you should make sure you have those restrictions in place before any change in the law. Another common zoning change is to allow more duplexes, townhouses, etc. For areas where the focus has historically been on single family homes, this may change the character of neighborhoods. Some people might be concerned about the effect on property values and it's possible associations may see higher turnover if higher density projects are built nearby.

Lending Rules are Changing for Condos

The FHA has changed its rules to make it a lot easier for people to get an FHA-insured mortgage for a condominium. This may actually be good news for many condo associations, especially if you have a high level of vacancies; the new guidelines open up between 20,000 and 60,000 units for FHA-insured financing. A big change is they now allow single-unit approvals, rather than the entire project having to be approved.

The rules may also cause the demographics of condo ownership to drift younger; many people buy condos to downsize as they get older, but the greater availability will probably cause more young people to opt for a condo as their first home. This is something condo associations need to bear in mind when deciding how to upgrade and improve facilities, particularly if your property is not already FHA approved.

Various steps are being taken to try to resolve the affordable housing crisis, and in most cases the impact on community associations may not be predictable yet. However, there almost certainly will be an impact, and it is likely to be both good and bad.

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