PALM BEACH, Fla. – The fragile sense of community in homeowner Bryan Melzard's neighborhood – the impromptu chats on the sidewalk, shared gripes about overzealous condo commandos – is fading.

More renters are moving into his Greenacres, Fla., development of about 100 homes, filling investor-owned properties bought at foreclosure fire-sale prices with cash on hand and dreams of big returns. The conversion has meant regular U-haul sightings on the 30th of each month and anonymous neighbors with fewer scruples about loud music.

"There are a lot of nice people here, I will say that, but I don't know them," said Melzard, 34. "It very much seems to me like an apartment-type of complex now."

As corporate America sops up the remnants of the real estate crash, it's not only more difficult for the traditional buyer with financing to find a home. It also has planted a niggling concern about how it could change the fabric of the American community.

Wall Street hedge funds and multibillion dollar companies, such as the Connecticut-based Starwood Property Trust, the Blackstone Group in New York and Canada's Tricon Capital, got into the single-family home business about a year ago. The idea is to buy and rent until prices increase enough to make selling profitable.

Investors can improve neighborhoods by fixing up vacant or damaged properties and providing lower-cost housing to people who are recovering from a foreclosure.

But a responsible landlord is not guaranteed, and while no one is bashing renters, experts say it is human nature to care more for where you live when you own.

"Renters can change the culture of a neighborhood," said Alan Mallach, a senior fellow at the Brookings Institution who studies housing.

The idea of a long-term home means more attention is paid to its upkeep and more consideration is given to neighbors. Increased stability creates a bond to protect a common interest, such as if an unwanted store or strip club is proposed nearby.

"When you have a large body of homeowners, that neighborhood organizes in a millisecond around that kind of issue," Mallach said. "If you have mainly renters, an awful lot will say, 'Well, I'm out of here.' "

And there's a more subjective issue with rentals. In a curb-appeal study of homes, Mallach found that owner-occupied houses were better maintained and more visually appealing with unique details such as a decorative fence, manicured lawn, colorful plantings or a painted mailbox.

"The rented homes weren't necessarily terrible," he said, "but they just tended to be blah."

Homeownership rates have steadily declined since peaking nationally at 69.2 percent during the real estate boom of 2004. By the end of last year, they had dropped to 65.4 percent nationwide, according to a January report from the Commerce Department.

Jupiter, Fla., homebuyer Steve Paige got so frustrated about losing bids on houses to investors that he started cold-calling homeowner associations to find properties coming up for sale before they were listed on the market.

After nearly a six-month search, Paige heard about a man who was readying to sell his deceased mother's estate. He pounced and expects to close on the home in May.

"It's out of control when local people can't find a place to live," said Paige, who didn't want to live in a high-rental community. "Everything is turning to rentals, and I just think there should be a good mix in a neighborhood."

Some homeowner associations have rules about how many rental units are allowed in a community. The Pine Ridge development in Greenacres restricts rentals to 20 percent of the units, a regulation used more often in recent years, said Timothy Nye, a Realtor and licensed community association manager for Pine Ridge.

The community also forbids renting during the first year of ownership, but that's been only a small deterrent to investor purchases. Eager to cash in on the $40,000 to $50,000 price tag of some units, investors are willing to buy and leave the unit empty for a year, Nye said. That means they are also taking the risk of the 20 percent threshold being met already, which is currently the case.

Nye said they do make exceptions to the 20 percent rule if a homeowner is in dire straits and needs to rent to pay the association dues.

But it can be a slippery slope. Too many renters, Nye said, can lead to higher costs to the association, which may have to put in extra effort to maintain the property.

"Some renters have been forced out of their homes, they're discouraged, they have less of a tendency to take care of their surroundings," he said.

While Mallach's not overly concerned now about the effect on communities of increasing rentals, it's still too new of a phenomenon to know what the ultimate impact will be. He suggests cities keep an eye on rental saturation.

Some municipalities already have a mechanism to do that. West Palm Beach, Boynton Beach and Lake Worth, all in Florida, require landlords to get rental licenses or permits. The Village of Wellington, Fla., requires a license only for multi-family rentals. No permits are required in unincorporated areas of the county.

In West Palm Beach, new rental applications increased from 296 in 2011 to 399 last year, with a hefty number coming from international and out-of-state buyers, said Sandy Wuraftic, the city's license permit supervisor.

But not everyone follows the rules.

"We have one person who owns 150 homes and hasn't registered any of them," Wuraftic said. "We'll eventually catch up to him."

Bryan Melzard said the condo commandos in his community have lost their enforcement enthusiasm with the increase in renters. He believes the softening may be because the association is just thankful for getting healthy dues again from previously delinquent units.

"It can be kind of a free-for-all," Melzard said. "There's no such thing as a neighborhood anymore."

With a 5-month-old baby, he and his wife are moving to central Florida to be closer to relatives.

The couple already has a buyer for their home, an investor from California.


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