Homeowner associations (HOAs) are commonplace in many neighborhoods across the United States. According to a report from the Journal of Urban Economics, nearly 60% of recently built single-family houses and 80% of houses in new subdivisions, are part of an HOA community. Living in a neighborhood with an HOA has both its advantages and disadvantages that a savvy homebuyer must know about.
The good news is that an HOA provides a sense of convenience, peace, and order. However, there are some potential downsides to an HOA that you should be aware of as well.
Below, we’ll discuss the pros and cons of living in an HOA community.
A homeowner association (HOA) is a self-governing organization in a common-interest community or development that is bound by a contract between committee members and the community members, entrusting all parties with the maintenance of the neighborhood. In an HOA, all property owners are required to adhere to the rules determined by the association that governs them.
Additionally, members or homeowners must pay monthly or quarterly dues to maintain the community. These dues can range from $100 to over $1,000 a month.
With that in mind, let’s dig into the good and the bad of HOAs — so you can know what to expect if your desired home is in an HOA.
The benefits of living in an HOA may include everything from having access to activities and recreational facilities to socializing with neighbors to law care and roof repair and much, much more.
Here’s a list of the benefits:
The main advantage of an HOA is the maintenance of property values and quality of life in a given area. HOA can be a significant factor for potential homebuyers who want to live in a safe, clean neighborhood that doesn’t have noise problems and unsightly eyesores like unnecessary structures or junk cars.
When an HOA is formed, members agree to abide by a set of rules and regulations. When those rules are broken, penalties are imposed. For example, if you don’t pick up after your dog’s litter, you can be fined or even evicted from the neighborhood. If a neighbor builds a structure on their property that violates the HOA’s rules, they can be forced to remove it. Therefore, these sets of rules and regulations help keep the community clean, aesthetically pleasing, and in order.
If you take a look at any HOA neighborhood, you’ll be struck by a sense of cleanliness. From precision-mowed lawns and polished gutters to the conspicuous absence of garbage cans, these neighborhoods are polished, well-maintained, and seem to ooze quiet confidence that they’re more than prepared to welcome new families.
Much like a full-amenity apartment building, communities with HOAs will often have various amenities available for homeowners. You may be able to find HOA communities with gyms, pools, community centers, parks, playgrounds, beach access, or other amenities like a gated community. Not all HOAs are the same, so make sure you’re aware of what they offer when looking for a home.
Living in a community with an HOA may be perfect for those looking for a maintenance-free lifestyle. Depending on your community, your monthly fees could cover things that might be inconvenient to do on your own, such as landscaping, painting, and even home repairs. This is helpful for busy professionals or those who aren’t going to be able to tend to their landscaping or repair needs.
Homeowners within an HOA community enjoy a higher value for their homes. A study conducted at George Mason University found that, on average, houses located in HOA communities sold for about 5% to 6% more than those not in a community. The reason behind this is the aesthetically pleasing landscape, well-maintained homes, amenities, and the peace and order imposed by the association’s laws.
Despite the various benefits of an HOA, it’s also necessary to be properly informed about the negative aspects. Expenses, limitations, and poor management can drive away interested homebuyers in properties that are part of an HOA. Here are some of the cons.
One of the main snags of HOAs is their costly fees. Homeowners are required to pay HOA fees in addition to taxes and mortgage fees. As mentioned earlier, it’s around a few hundred dollars to over a thousand based on the community. The dues may be used to support the association’s operations and amenities, which may include landscaping and maintenance or a community pool — as well as administrative costs and providing security patrols.
For some, these costs are manageable, but homeowners who don’t use these facilities or don’t see the value of the services provided might see these dues as costly, unnecessary, and burdensome. Thus, the best recommendation is to consider whether or not the amenities offered by the HOA are valuable to you.
Meanwhile, be aware that if an HOA has fallen into financial hardship due to poor management, you could have fees increased without warning. Make sure you know exactly what you are getting yourself into financially by checking the financial history of your HOA before deciding to purchase a home in the community.
As a homeowner, you must follow the regulations of your neighborhood association. If you don’t, you can be fined or sued. In some states, the HOA may even be able to put a lien on your home. If you refuse to pay, the case can be brought to court and your property will be foreclosed in order to collect on the dues.
Restrictive rules and community guidelines can be difficult to navigate. However, they exist to protect the investments of the entire community. These rules are in place for a reason, and we advise that you read your contract before you make a purchase. You must know that your ability to change the structure of your home is significantly limited. If you want to make changes to your home, you must first reach out to the Board of Directors for written approval or risk being fined heavily. Of course, if you really believe you can make positive changes to the HOA, you can always seek election to the board of directors and become part of the committee yourself. At the very least, you may want to consider attending HOA meetings to make your opinions known to the board.
The bottom line is that HOAs help build safe, attractive neighborhoods and protect property values. Despite these benefits, there are also disadvantages that you need to consider before closing an HOA property. We hope the resources above have helped you make an informed decision for your next purchase.
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