KB Home recently found out that controlling HOAs doesn’t always provide cover from owners’ wrath when the builder wants to inject smaller houses into their communities.
At its Kenion Grove subdivision in Hillsborough, N.C., owners balked when KB began offering spartan 3,000-square-foot houses for half of what owners there had paid three years earlier. And responding to owner complaints, the Texas Residential Construction Commission initiated an investigation of KB’s advertising for several communities in San Antonio, where KB wants to build lower-priced homes to meet buyer demand.
KB has been defusing these disputes by agreeing to make architectural and design changes to its new homes. “As we’ve made product moves over the past 18 months, we’ve had to get everyone into the process,” says Vince DePorre, KB’s regional president in Jacksonville, Fla.
HOA boards, whether builder- or owner-controlled, are rarely the most popular kids in town, especially when they’re sending out foreclosure notices over delinquent dues or blocking the installation of solar panels. But their influence is undeniable, with roughly 60 million people living in 300,000 HOA-run communities. Two leading property managers suggest that HOAs could serve as liaisons for builders that want to alter their community’s vision to meet buyer demand.
Melinda Masson, president and CEO of The Merit Cos., an Aliso Viejo, Calif.–based firm that manages more than 250 communities, doesn’t believe HOAs can legally prevent a builder or developer—the “author” of the community—from building what it wants to. She also doesn’t accept the proposition that smaller, more-affordable new homes necessarily diminish the value of a community’s existing homes. But Masson says builders need to explain the “why” of their subdivision when they request changes. “The challenge for the builder is to keep management at the table,” said Masson.
Steven Blumfield, vice president-operations of Wentworth Property Management’s Lifestyles division in West Long Branch, N.J., which operates in 13 states, says well-written “declarations” that tie a subdivision’s ground to the association will include square footage minimums but also leave wiggle room to make product changes in midstream. “Communication is the key. The developer’s and the community’s interests aren’t mutually exclusive.”
Learn more about markets featured in this article: San Antonio, TX.