Real Estate Crash thread

[Toadman]

Got this in my email box this morning;

Vote to Limit “Fractional Share”, Timeshare and Corporate Occupancy

Say NO to Short-Term Occupancy.

Last fall Owners in our HOA passed an amendment to the CC&R’s to prohibit short-term rentals, defined as rental periods of less than 30 days. An overwhelming majority, 85% to 15%, wanted to ensure short-term occupancy of homes within our community was not allowed. At the time we began this balloting process in 2020, VRBO-like rentals were the primary concern relative to short-term, transient use of properties. There are now other threats rapidly developing in the real estate arena, including one that focuses on “fractional share ownership or use”, which typically targets eight owners sharing a home. They are similar to timeshares, but with fewer owners. There are two companies we are aware of in the Central Oregon market that are now purchasing homes and then trying to immediately sell fractional shares in these properties. One is Pacaso Homes (pacaso.com), and the other is Ember (emberhome.com).

Per reviewing their websites, a 1/8th ownership in a home typically results in the following:

• An Owner gets 44-45 days of usage per year of the property

• That typically happens over 6-7 visits (6-7 day average per visit, meaning that every week a different Owner comes in)

• On an exception bases, the maximum length of a stay is 14 days, i.e. their model mandates short-term stays

• The home cannot be rented but an owner can designate “registered guests”, which can be anybody the owner wants. An Owner does not have to be present for any such stay.



One home has already been purchased by Pacaso within our HOA, and the sale of fractional shares in this home is currently being marketed. Therefore, it is with a sense of urgency that we are recommending that we quickly vote to amend our CC&R’s to prohibit this fractional share ownership structure, any timeshare structure, and any other workaround-type structure that currently exists or may be developed for the purpose of creating short-term occupancy use of a home. We can’t necessarily stop the one home that was already purchased, but we can impact all future such transactions with an approved amendment.

[Danno]

Paging Art Shirk to the white courtesy phone!

[Core Shot]

How the fuck do you sell fractional shares in a hoa?

[liv2ski]

I have seen them for years as condos in B.C. (Victoria). The buyers obviously all participate in utilities, HOA and special assessment fees.

[fastfred]

Got this in my email box this morning;

these companies have been around for awhile now
one of them just folded recently based out of denver can't remember the details

it's a pyramid scheme unfortunately they need lots of buys and need to see 9/8 ownership not 8/8 to survive
the numbers don't add up and like a time share the maintenance costs are sorta hidden and will give the buyer a suprise at some point

just had a good discussion about south park (fairplay colorado) area today the writing is on the wall over there
way too over valued and one too many homeowner builds plus people who think they can build cheap over there lots of unfinished properties and lots of over valued homes on the market just sitting and other people who realized they bought a house at the end of shitty dirt road

[Conundrum]

Used to do some work with a COA that was fractional. Pain in the ass. They fired me-probably because they didn't want to hear what they needed to. Four buildings needed new roofs for a total of about $180k. They voted no because they didn't want the assessment. Without deep details, a few other bills came up due to the lack of upkeep and those bills were a lot more than $180k.

[The AD]

I have seen them for years as condos in B.C. (Victoria). The buyers obviously all participate in utilities, HOA and special assessment fees.

Yeah, you see quite a few in Whistler, too. Not sure why there would be anything shady about it and it makes more sense to me than having lots of vacation homes that sit empty for the majority of the year. Seems like some people want it both ways: no STRs and no homes sitting vacant and that's impossible to achieve.

[J. Barron DeJong]

Seems like some people want it both ways: no STRs and no homes sitting vacant and that's impossible to achieve.

I believe the dream is to have all housing for locals only, while not losing out on any of the benefits that visitors bring to a vacation town. (I say this only slightly facetiously, as a ski town local.)

[skaredshtles]

<snip> Four buildings needed new roofs for a total of about $180k. They voted no because they didn't want the assessment. Without deep details, a few other bills came up due to the lack of upkeep and those bills were a lot more than $180k.

[Conundrum]

Indeed.

[dunfree]

I believe the dream is to have all housing for locals only, while not losing out on any of the benefits that visitors bring to a vacation town. (I say this only slightly facetiously, as a ski town local.)

thats 100% what some towns want, if you define local as”person who’s check cashed”

[Name Redacted]

Mayor in one of our local towns states outright that he wishes he could figure out a way to go after second homeowners like they have the STRs.

[Mani_UT]

I’ve been a fan of shadowstats since the feds stopped counting inflation the way they used to.
Substitution is bullshit.

I’m not sure they are legit. But our government lies to us. So I trust independent sites more than the fed.

Ymmv. Or. Just look at your bills and expenses.

Here’s the beginning of the discrepancy

Attachment 420190

This is the dumbest chart I have ever seen. The "real" inflation would have been 10% on avg since 2005? Compounded that would be a x5 in 17 years (2005-2022).
Just about NOTHING went x5 in that period, let alone a basket of goods.

[schuss]

Mayor in one of our local towns states outright that he wishes he could figure out a way to go after second homeowners like they have the STRs.

In many spots they have a separate set of prop tax rates if it's not your primary residence.

[J. Barron DeJong]

This is the dumbest chart I have ever seen. The "real" inflation would have been 10% on avg since 2005? Compounded that would be a x5 in 17 years (2005-2022).
Just about NOTHING went x5 in that period, let alone a basket of goods.

Your memory must just be poor. I graduated college just about 17 years ago, and was making about $50k/yr. Living large: driving a brand new BMW M3 that only cost me $15k, renting a fantastic apartment for only $400/month. Taking my future wife out to a fancy dinner only cost $20! Amazing times!

[CarlMega]

17 years ago? Oh man, a long distance phone call was like .75/min. I'd hate to think of what that costs today! Don't get me started on vulcanization fees in the modern era! Have you priced Kinkos mimeographs lately?

[Toadman]

How the fuck do you sell fractional shares in a hoa?

It's not fractional ownership in an HOA, it's fractional ownership of a house that is in the HOA neighborhood. Last week a Redfin listing popped up in my inbox for a fractional ownership of 45 days. Cost was around $450k. Selling 8 shares. This house is not worth $3.6 million. It's a big house, but no way is it worth more than maybe $2 million. I will see if I can find the listing and post it.

[dunfree]

17 years ago? Oh man, a long distance phone call was like .75/min. I'd hate to think of what that costs today! Don't get me started on vulcanization fees in the modern era! Have you priced Kinkos mimeographs lately?

2005? long distance was free with cells. I think you mean 27 or 37 years

$15k m3 weren’t a thing

[Core Shot]

This is the dumbest chart I have ever seen. The "real" inflation would have been 10% on avg since 2005? Compounded that would be a x5 in 17 years (2005-2022).
Just about NOTHING went x5 in that period, let alone a basket of goods.

Yes. It’s legit unless you substitute

Your memory must just be poor. I graduated college just about 17 years ago, and was making about $50k/yr. Living large: driving a brand new BMW M3 that only cost me $15k, renting a fantastic apartment for only $400/month. Taking my future wife out to a fancy dinner only cost $20! Amazing times!

Yep.

It's not fractional ownership in an HOA, it's fractional ownership of a house that is in the HOA neighborhood. Last week a Redfin listing popped up in my inbox for a fractional ownership of 45 days. Cost was around $450k. Selling 8 shares. This house is not worth $3.6 million. It's a big house, but no way is it worth more than maybe $2 million. I will see if I can find the listing and post it.

My point was that with a HOA, how the fuck can you do fractional ownership. Unless it’s in the bylaws. HOA is supposed to keep shit legit.

[Hott Butt Mud]

My point was that with a HOA, how the fuck can you do fractional ownership. Unless it’s in the bylaws. HOA is supposed to keep shit legit.

I'd say HOA would have to prevent LLC's from owning the property which I'm sure most will not do since it is so common.

[Toadman]

My point was that with a HOA, how the fuck can you do fractional ownership. Unless it’s in the bylaws. HOA is supposed to keep shit legit.

Okay, gotcha. HOA is slow to the party. Amongst other things.

Here's the listing. My bad, house is bigger than I remembered. Probably could get about $2.6-$2.8 million for it pre mortgage rate hike. Might be tough now.

https://www.pacaso.com/listings/3345...2-f91f317c2ba3

Well, Pacaso actually paid over market - No wonder the owners sold to the highest corporate bidder. Weren't we just having this discussion...

https://www.redfin.com/OR/Bend/3345-.../home/77535326

[Core Shot]

Holy fuck. Pacasso got called an asshole.

I didn’t know that was possible. I mean yeah. There’s timeshares or fractional ownership in large buildings. But a random single family nice house going fractional?
That’s insane.

[phatty]

Okay, gotcha. HOA is slow to the party. Amongst other things.

Here's the listing. My bad, house is bigger than I remembered. Probably could get about $2.6-$2.8 million for it pre mortgage rate hike. Might be tough now.

https://www.pacaso.com/listings/3345...2-f91f317c2ba3

Well, Pacaso actually paid over market - No wonder the owners sold to the highest corporate bidder. Weren't we just having this discussion...

https://www.redfin.com/OR/Bend/3345-.../home/77535326

Interesting that the fractional price is the same as the price they paid. Assume there's owner's/management fees they are taking or there doesn't seem to be much benefit to them. For a lot of people, this type of arrangement makes sense. I know that I likely wouldn't use a vacation home much more than 7 weeks a year until I retire. This helps keep the cost more reasonable and you can still get access in nice locations. Not much different than families/friends have been doing forever. Just adding a Corp in the middle to keep things from getting personal.

[Mani_UT]

Yes. It’s legit unless you substitute
.

Huh no.
Pick up what you want. Truck? Not x5. House? Not time 5. Eggs? Meat? definitely not x5. I have a spread sheet with every purchase I have made (from a single coffee on) since 2008 (missing 3 years to 2005 granted) and no. Nothing went x5 let alone an average of everything.

A VW passat was 25/30k in 2005. Do you think it's 125/150k now? LOL.

[NakedShorts]

This is the dumbest chart I have ever seen. The "real" inflation would have been 10% on avg since 2005? Compounded that would be a x5 in 17 years (2005-2022).
Just about NOTHING went x5 in that period, let alone a basket of goods.

You suck at math. 10% inflation doubles every 7 years. So about 2.5xs not 10.