By: Professor Mary Jo Wiggins*
Abstract
For as long as detached, single-family homes have been part of the modern real estate market, they have been a relatively staid and sleepy part. Traditionally, corporate developers built and sold single-family homes, and banks financed the developers’ land acquisitions and home construction projects. Individual buyers then bought and occupied the homes, took the title, and assumed all of the rights and responsibilities of ownership. Individual sellers then sold their homes to individual buyers who usually took the title in the same manner as their predecessors. Due to a variety of forces, the situation is different today. Single-family homes are now increasingly viewed as short-term, investor-owned capital assets rather than long-term, occupant-owned dwellings. Added to this, investors are now packaging thousands of single-family homes, enabling the creation of asset-backed securities, which the investors then either retain, sell, or use as collateral for financing other transactions. This Article describes these developments as the “institutional capitalization” of single-family homes and considers what impact it will likely have on property concepts and policies reflecting ownership and investment models of previous eras.
After this Article briefly introduces the broad shift in the nature of the single-family home market and explaining its importance, Part II briefly reviews the perceived benefits and burdens of single-family residential living as reflected in American land use law and policy. Part III shows how the norms of single-family residential living are embodied in two areas of land use law: municipal zoning and private residential restrictive covenants. With respect to zoning, Part III connects the growth of single-family residential living to judicial decisions and legislative choices that extolled the perceived virtues of the single-family home. Turning to private restrictive covenants, this Article explains how a doctrinal shift in their enforceability played a significant role in the ascendancy of single-family residential living, particularly after World War II. Part IV moves to how ownership and investment patterns associated with single-family homes have changed significantly over the last decade. The most important consequence is that single-family homes are increasingly viewed as short-term, income-producing capital rather than as long-term, occupant-owned property interests. Part V contends this shift will likely put significant pressure on the logic and operation of zoning and private residential restrictive covenants. Part VI reflects on the broader implications of the preceding analysis.
* Professor of Law, The University of San Diego School of Law. I would like to thank the University of San Diego School of Law Summer Research Grant Program for research support. I would also like to thank Donald Wiggins, Dianne Mead, and Joni Gang for conversations and comments. Joseph Heisley, Kelsey Tidgewell, Anthony Walker, and Emily Serleth provided excellent research assistance. Special thanks to the librarians of the Legal Research Center, particularly Sasha Nunez for expert research support.