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Push and pull: corporate home purchasers vs. community land trusts

On Behalf of | Aug 24, 2021 | Community Associations |

There are two competing interests in the California real estate market. They are corporate investment companies purchasing foreclosed homes to create rental income and housing advocates opposing that trend. A new initiative by California may disrupt this national struggle.

$500 million appropriated for community ownership purposes

California has now set aside hundreds of millions to assist groups in purchasing and rehabilitating foreclosed homes. The proposal will allow organizations to build community-owned housing. The necessity of this is to offset the little-talked-about trend of corporate home purchasing.

CNN covered the national trend of corporations moving into the residential landlord industry. The move and investment are a sound strategy, as foreclosed properties are inexpensively acquired and have steady rental income. However, some criticisms of the strategy include:

  • The lack of maintenance on investment properties
  • The practice appears to target disadvantaged communities
  • The worsening of California’s ongoing housing crisis

It is in this vein that California has taken actions to support more community ownership trusts.

What happens now?

The investment in creating more community trust organizations will undoubtedly create more competition in the foreclosure purchasing market. That competition may lead to higher costs and fewer long-term profits.

However, one of the more fascinating results will be the creation of more community-owned organizations. While these would fall under a different set of rules as manufactured homes or mobile home parks, these communities will still require significant legal guidance familiar with California real estate regulatory matters.