Idle Assets and Exclusive Policies

When a house sits empty, several problems arise.

• broken windows
• squatters may take posession.
• grass grows out of control
• bad for morale of neighborhood.

The number of vacant houses in the US is growing. Rapidly. The following chart is brought to you by Calculated Risk

I recommend reading the Full Article.

Clearly, the owners of this idle asset have an interest in cutting their losses. But so does the neighborhood: ultimately, empty houses (condos, whatever) is bad for property values.

So one of the first issues we are going to tackle is the idea of regulation within a community (e.g., the Home Owner’s Association), and whether we ought to expect that HOA’s will, en-masse, take actions to effectively lower the barrier to entry in the community. Such regulatory changes could affect things like:

• parking constraints (no commercial trucks)
• bans on daycare businesses within houses
• bans on multi-family occupancy
• bans on renting housing

My guess is that HOA’s will move in this direction for the simple reason that it allows them to reduce the number of empty or abandoned houses.

At the high end of the market, this would have a negative effect, as exclusivity is a major selling point. We’ll have to keep our eyes on this.

What might the secondary effects of this kind of change be? How would it affect the way people choose housing? What is the nature of the platform that could turn this trend into a competitive advantage?