The housing market is undergoing a critical transformation marked by growing demand and price increases. Recent data from CBS News reveals that nationally, 27% of homes sold in the first three months of 2025 were purchased by real estate investors – almost a 10% increase from the 2020-2023 average. While some stats show a decline in investor purchases for Q1, it’s merely a reflection of the investor’s high sensitivity to market uncertainty. In the second quarter, the market has again found balance. However, even with slight volatility, there is no denying that the state of Arizona is a hotspot for investment, driven by factors such as its strong job market and affordability compared to states like California. The trend of investor purchases raises important questions about the role investors play in local communities—especially in the context of homeowners’ associations (HOAs).
Investor Activity: What the Numbers Say
Institutional investors—typically large entities such as hedge funds, private equity firms, or real estate investment trusts (REITs)—have steadily acquired Arizona housing over the past several years. These groups aim to generate profits through long-term rentals, short-term vacation stays, or eventual resale. In many metropolitan areas, such as Phoenix and Tucson, this trend has contributed to tighter inventory, rising home prices, and increased rent burdens.
Investor Impact on HOAs: Short-Term Rentals, Fair Housing, and Community Integrity
Over the years, tensions have escalated in communities where investors buy homes and convert them into Airbnb-style rentals; this changes the character of neighborhoods, increases noise and traffic complaints, and puts added pressure on HOAs to enforce potentially outdated rules, often without clear legal authority or guidance.
Investor-owned homes used as short-term rentals often lead to transient occupancy, inconsistent rule enforcement, and confusion over liability when problems arise. HOAs must frequently update governing documents to clarify rental restrictions and enforce the rules in their communities. This may trigger an influx of disputes and present a financial burden if they acquire legal fees, forcing HOAs to walk a tightrope as they work to cater to the needs of their community without violating state and federal laws.
Legal Gray Areas and the Role of State Policy
Arizona lawmakers have begun to respond to concerns about investor influence in housing. Some proposals under consideration include limiting the number of properties an entity can own in a given area or restricting how homes can be used (i.e., short-term versus long-term rentals). However, efforts to regulate investor activity often clash with property rights advocates and face resistance from real estate lobbies.
HOAs are not state regulators, but they do have an obligation to enforce community standards. At the same time, they must navigate fair housing laws, avoid discriminatory practices, and respect owners’ rights—even when those owners are LLCs or large investors.
HOAs must be careful not to create policies that unintentionally discriminate against protected classes, such as limiting occupancy in a way that could be seen as targeting protected classes, such as families. Additionally, Arizona law requires that enforcement be reasonable and consistent. This is especially important when complaints lead to legal action.
The Future of Community Associations in a Shifting Market
As investor activity potentially cools, many community associations may hope for some relief from the intense pressure of recent years. But even with the current movement in investor activity, many neighborhoods are already saturated with investor-owned homes, meaning the effects will linger. The impact is greater in popular metro areas like Phoenix, where investor purchases accounted for 10% of homes, and it remains one of the top 5 cities for investors.
To manage this, HOAs should take proactive steps, including:
- Reviewing governing documents to ensure rental restrictions are current and enforceable.
- Consulting legal counsel when drafting or updating rules related to leasing, noise, or usage restrictions to avoid potential litigation.
- Educating board members and residents on fair housing compliance and the legal limits of HOA enforcement powers.
- Engage with local lawmakers and publicly support legislation that reduces investor impact.
- Be open and transparent with residents regarding the measures taken to garner trust and support.
- Stay informed about pending legislation that could impact association governance or investor behavior.
Associations that are well-informed and legally prepared will be in the best position to maintain their community values. Whether or not investors remain a dominant force, HOAs must lead with clarity and compliance.
A Community-Level Approach to a Statewide Issue
Ultimately, Arizona’s investor-heavy housing market touches nearly every aspect of residential life—from affordability and availability to neighborhood culture and property maintenance. As the state seeks long-term solutions to its housing shortage, community associations will play a vital role in shaping how investor ownership is managed on the ground.
While the fluctuation in investor purchases may signal a moderation in investor appetite, the need for proactive governance is more important than ever. Vigilant HOAs that respond with clear policies, legal diligence, and a community-first mindset will be best equipped to protect their residents and uphold neighborhood standards.
For homeowners and board members alike, the question isn’t just whether investors are buying homes—it’s how their presence changes the fabric of communities, and what associations can do to respond wisely, fairly, and within the law.