How The Increase In Homeowners Associations Affects Homebuyers
An incredible 70% of homeowners who were surveyed claimed that they would rather buy a future new home in a neighborhood without a homeowners' association, per a recent poll from Frontdoor. Despite this strong sentiment among homebuyers, the numbers of HOA's have skyrocketed in the past 50 years. While in 1970 only 10,000 community associations containing 2.1 million residents existed, the HOA number rose to 49% of all new single family homes by 2009 and reached 65% of all such new houses in 2023, per data from the Foundation for Community Association Research.
HOA membership is more typical in some parts of the country. Florida boasts the distinction of the highest HOA rate of nearly 67% with over 4 million houses found within homeowners' associations, per data from This Old House. This massive increase in homeowners associations is affecting homebuyers in significant ways by driving up their monthly costs of homeownership and by providing community amenities and upkeep benefits. The fees have become part of the cost to live the American dream.
The costs and restrictions of HOAs are significant
There is a significant price to be paid for living in a common interest community. This naturally varies based on the city and state location of the HOA and the actual amenities such an association provides. These membership fees are mandatory. HOA fees start from as low as $100 per year and range to over $1,000 every month. The highest HOA fees average is in Alabama at $458 per month, followed by Connecticut, Massachusetts, New York, and New Jersey. Meanwhile the five states with the lowest HOA average are South Carolina at $310 per month, followed by South Dakota, Florida, Idaho, and Nevada, per data compiled by This Old House.
Another downside to these costs is that they generally go up through the years and seldom go down. A Frontdoor survey revealed that 51% of HOA members encountered a fee increase, while 65% claimed that such cost increases occurred often. These rising fees must be paid even if there is a housing market crash.
Sometimes significant restrictions come along with many homeowners' associations too. These can include certain appearance standards of the property and of vehicles kept on site. CEO Jim Tobin of the National Association of Home Builders explained to CNBC that "Sometimes HOAs can be really intrusive, like what colors you can choose from to paint the exterior of your house."
Benefits to the HOA neighborhoods include amenities and upkeep
Despite the drawbacks to HOA costs and restrictions, there are some tangible benefits to these community associations. For their monthly mandatory membership dues, homeowners enjoy such common areas as parks, community pools, tennis and basketball courts, and roads. The homeowners association is responsible for maintaining and even repairing these areas. Many HOAs also include lawn care maintenance and some even provide tree trimming services.
Thanks in no small part to these amenities and services the Homeowners' Associations provide, a majority of Americans report satisfaction with their HOA. Around 60% of HOA homeowners surveyed indicated that they enjoyed a positive experience with the communities, per Frontdoor research. The favorable opinions are fortunate since these HOAs now house over 75.5 million Americans and cover around 30% of the entire American housing stock, per the Foundation for Community Association Research. For those who find the HOA fees increasingly costly, there are easy ways to make extra cash.