In the United States, Homeowner Associations (HOAs) are on the rise. A report has found that the biggest complaint among homeowners currently is the cost of dues for common-interest community owners.
HOAs are made up of community residents who are elected as board members to manage the community through a set of rules and regulations. Homeowners pay fees to maintain and repair public facilities such as parks, roads, and community pools.
According to the U.S. Census Bureau, in 2023 approximately 65% of new single-family homes were built within HOAs, up from 49% in 2009. The costs of these facilities can vary significantly depending on the region.
Based on the latest data from Frontdoor, nearly three-quarters (70%) of homeowners surveyed indicated that if they were to purchase a new home in the future, they would prefer a community without an HOA. However, this may be easier said than done.
HOA organizations can exist for different types of properties, ranging from single-family homes, townhouses, and condos to cooperative housing.
Thomas M. Skiba, CEO of the Community Associations Institute, stated that common-interest communities are becoming more prevalent as they provide economic benefits to local governments.
“Local governments no longer need to clean streets or perform all maintenance, but they can still collect property taxes in full,” Skiba told CNBC when discussing local authorities.
According to data analysis from home improvement website This Old House, Florida has the highest HOA membership rate at 66.86%, with over 4 million households joining HOAs.
“In many cases, buying a property that is not part of a community is indeed a luxury,” said Steve Horvath, co-founder of HOA United.
The prices of common-interest communities will depend on their location and the amenities provided by the association.
According to the U.S. National Bank in Texas, fees can range from as low as $100 annually to over $1,000 monthly, depending on the community.
These costs often increase over time and rarely decrease. In Frontdoor’s survey, 51% of current HOA members reported an increase in their fees, with 65% stating that prices frequently rise.
Many Americans are satisfied with their HOAs. Frontdoor stated that approximately 60% of surveyed homeowners had a positive experience with their communities.
However, some homeowners are dissatisfied. Frontdoor found that about one-third of people had experiences that made them consider moving. Among those wanting to leave their communities, 63% complained about costs, and 53% felt there was inconsistent rule enforcement.
Experts recommend considering the following points during the home-buying process:
– Request copies of all HOA documents from the real estate agent, such as contracts, bylaws, fee schedules, rules, and regulations. Also inquire about meeting records, whether it’s the annual shareholders’ meeting records from the past December or board meeting minutes, as they can provide insight into how the HOA operates.
– Inquire about monthly or annual fees, the HOA budget, and the historical growth of fees over the years.
– Ask if there are any unpaid assessment fees on the property being purchased, as these outstanding balances should be the seller’s responsibility.
– Review any pending lawsuits, disputes, or existing judgments within the community.
– Check if the community has set aside sufficient reserves for large expenses to ensure maintenance and renovations, or if these funds are subsidized by the real estate developer.
– If possible, inquire about attending board meetings or the annual members’ meeting.