Homeowners Associations: A Blessing and a Curse | Industry Articles
We have all heard the many stories, usually told with great dissatisfaction, about how terrible homeowners associations are and can be. These stories aren’t completely without reason, as HOAs can be very frustrating with their bylaws, statutes, and requirements. However, HOAs can also ensure that your neighborhood stays beautiful, safe, and even offer discounts on utilities and security services. Lets break down both sides, but first, what actually is an HOA?
An HOA is a governing body for a subdivision or planned community, typically either a group of homes/townhomes constructed as part of the same plat, or a condominium complex. Currently, about 25% of United States residents live in a HOA. These homes are distributed among over 350,000 different associations throughout the country. The states with the most HOAs are Florida, California, Texas, and Illinois. When you break it down by region, HOAs oversee over 75% of homes in the South compared to about 30% in the Northeast. So, what’s the point?
Cons
HOAs can be frustrating, that much is certain. Typically, the most common complaint is that someone has control over what you do to your own home. Not to mention, you pay for that privilege and the average dues aren’t cheap, coming in at just under $3,000 per year. In addition to maintenance and upkeep, this money pays for HOA employees and general operational expenses. These dues cannot be ignored, as you can’t opt out of most HOAs, and if you refuse to pay your dues or any fines imposed, you can face liens or even foreclosure. These fines are most commonly imposed due to exterior infractions, like an unkempt yard, leaving trash or household items in the yard, even a dirty driveway or broken-down vehicle. They can also, however, seem trivial, like paint color approval, garden limitations, and grass height requirements. Without a doubt, it’s easy to see why a HOA can cause a headache, but they also bring numerous benefits as well.
Pros
First and foremost, HOAs have been proven to be a valuable service. Researchers Wyatt Clarke and Matthew Freedman, with UC Irvine, published a study in 2019 analyzing over 34 million housing transactions. Among their findings, Clarke and Freedman noted that each dollar in HOA dues brought about $1.19 in benefits. Most of these benefits come in the form of lawn and sidewalk maintenance, trash service, snow removal, and in condominium complexes, even HVAC and plumbing work. Clarke and Freedman also found that being a part of an HOA increases the sales price of your home by an average of 4%, nearly $12,000 when compared to the average national median sale price. Finally, the association can offer the invaluable service of conflict resolution. If you hate confronting your neighbors about issues ranging from loud music to incessantly barking dogs, just dial up your HOA and let them take it from there.
It goes without saying that HOAs cut both ways. They are a valuable service, but the terms of use are not to be trifled with. Make sure you read up on the guidelines that your potential HOA has when you are considering buying a home. Most states require a full disclosure of the terms that the buyer must agree to prior to finalizing the sale. Make the choice that is right for you and your family, and keep that lawn edged!
