In a real estate market shadowed by the enigmatic presence of Homeowners’ Associations (HOAs), this article unveils the lesser-known complexities of buying into communities governed by these entities. From the power struggles within HOA boards to the unexpected dues that can bleed homeowners dry, we dive deep into the dual-edged nature of HOA governance. Discover how these associations can both safeguard and jeopardize property values, and explore the real cost of community amenities on your financial freedom and personal autonomy.
Three main takeaways:
- The Power Dynamics and Conflicts Within HOAs.
- Financial Burdens and Hidden Costs of HOA Membership.
- The Impact of HOAs on Property Values and Personal Freedoms.
Is joining an HOA-governed community a safeguard for your investment, or a gamble on your financial and personal freedom? Join us as we peel back the layers of HOA governance—what will you uncover?
IS THE HOA WORTH THE HASSLE?
Where the dream of homeownership seems increasingly out of reach for many, a recent Buzzfeed article captured 25 critical issues that today’s homebuyers are grappling with, from the complexities of navigating restrictive community rules, significant financial obligations, and potential legal entanglements to the broader implications on property values and personal autonomy…
This blog series aims to take a deep dive into each of these 25 Buzzfeed issues. We’ll explore every facet of the current market conditions. Each post in the series will tackle one specific concern, providing insights, expert analysis, and practical advice to help you navigate the complexities of buying a home in today’s economic environment.
Whether you are a first-time buyer, a seasoned investor, or simply curious about the state of real estate, this series will provide perspective to help you make informed decisions.
With some of these widespread concerns laid out, let’s dive directly into one of the Buzzfeeed voices:
“Because of HOAs. Screw HOAs. Knowing they exist in many neighborhoods and that you can’t just opt out of them plays a huge factor. They have the ability to be absolute assholes for no reason other than tripping on the first amount of power those bored jerks have ever had.”
–Anonymous, 30, California
In my unabridged opinion, HOAs exist to either exclude people or to make money.
According to a Last Week Tonight episode (video posted below), John Oliver said that in June of 2022, “the board of the Providence HOA in Denton County, Texas, which oversees a community made up of 2200 homes, passed a rule that would ban renting a house to anyone using a publicly financed or subsidized housing program, such as Section 8. And the impacts of that were immediate. […] That rule new rule threatened to displace more than 150 families renting in the neighborhood with black families making up 93% of the households.”
Financial Implications of HOA Policies
A CBS4 news piece out of Colorado, reported that the Green Vally Ranch HOA, a nonprofit organization (most HOAs are nonprofit, but some, especially manufactured parks are for profit) held a total of $2,255,680 in assets, and were able to begin foreclosure proceedings on homes for reasons as simple as broken blinds or overgrown weeds.
Axios explains that California has the most HOAs in the nation at 50,700 with Florida a close second at 49,800. To break that Californian-number down: out of the 14.4 million California homes, 4.68 million are part of an HOA community. 32.5 percent of California residents live in an HOA. No wonder the Buzzfeeder is upset.
Personal Stories and the Impact of HOAs
Some of my more recent real estate clients I helped escape a Florida HOA. Every time I spoke with them over the phone, I was scared for them. Their Florida property values kept dropping, the HOA which billed itself as a resort-like community, fined a homeowner for the smallest infractions, charge very unrealistic fees, and when the homeowner couldn’t afford the fees, begin foreclosure proceedings just like what happened in Green Valley Ranch. Except here, because of the mobile home environment, the owner’s brother would come in as savior and offer to purchase the house on the cheap, keeping the homeowner out of foreclosure, but they still lost the house. On top of that, the HOA monthly dues were well over $2000 a month.
The Purpose of HOAs
We are lucky in New Hampshire; we have somewhere between two and four thousand HOAs.
An HOA, by the way, for those not in the know, is an organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties and residents within its jurisdiction. Homeowners in these communities typically become automatic members of the HOA and are required to pay association dues or fees. In return, the HOA is responsible for maintaining common areas, enforcing community standards, and often providing certain amenities such as pools, parks, and landscaping.
The concept of the modern HOA began in the United States in the mid-20th century, growing in prominence with the rise of suburban developments. The first planned community HOAs were established to manage and uphold the quality and uniformity of newly built neighborhoods. Over time, they became more common, especially from the 1960s onwards, as developers recognized that HOAs could handle the maintenance of common areas and enforce consistent property standards, thereby sustaining property values and ensuring that neighborhoods would remain desirable long after the original development phase.
In concept, HOAs are a really good idea. An HOA in Barrington, New Hampshire for example helps pay for snow plowing and weekly trash pick-up, and if you live in Barrington you know they have no trash pick-up, you have to do that on your own. In the Cricket Brook condominium HOA in Dover, New Hampshire, when I helped move someone into that complex, the HOA was busy replacing sidewalks.
There are benefits to living in an HOA.
Enhanced Property Values: HOAs help maintain and potentially increase property values through consistent community standards and well-kept common areas.
Community Amenities: Many HOAs offer amenities such as pools, fitness centers, parks, and playgrounds that might not otherwise be affordable or available to individual homeowners.
Landscaping and Maintenance: HOAs often take responsibility for landscaping and maintaining common areas, reducing individual homeowner workload.
Community Engagement: HOAs often organize social events, enhancing community spirit and fostering relationships among neighbors.
Dispute Resolution: HOAs provide governance structures to handle disputes between neighbors over property issues.
Aesthetic Uniformity: Rules about exterior home appearances and maintenance can keep the neighborhood looking neat and cohesive.
But, living in an HOA community can also come with several potential pitfalls.
Restrictive Rules: HOAs are known for their strict rules regarding the appearance and upkeep of properties. These can include limitations on paint colors, landscaping, types of vehicles parked in driveways, and even holiday decorations. For some homeowners, these rules can feel overly restrictive and infringe on personal preferences.
Financial Obligations: Members of an HOA are required to pay monthly or annual dues, which can be significant. Additionally, if the HOA faces unexpected expenses or inadequate reserve funds, homeowners might be hit with special assessments, which can be financially burdensome.
Conflict and Power Dynamics: HOAs are run by elected boards, and conflicts can arise between homeowners and board members, especially if homeowners feel the board is mismanaging the association or acting in their own interests rather than the interests of the community.
Legal Issues: HOAs have the power to place liens on properties and even foreclose on homeowners for unpaid dues or fines. This legal authority can lead to significant consequences for homeowners who find themselves in conflict with the HOA’s demands.
Loss of Autonomy: Homeowners in an HOA often sacrifice a degree of autonomy in how they can use and enjoy their property. This can lead to feelings of loss of control, which can be particularly frustrating for those used to making independent decisions about their living spaces.
Resale Issues: While a well-run HOA can preserve values, excessive fees or poorly managed associations can deter potential buyers, potentially affecting the resale value of homes within the community.
The thirty-year old anonymous Buzzfeed Californian complaining about HOAs probably just shouldn’t buy a home in an HOA. I think the issue here is that over 30 percent of homes in California are, however, in an HOA. Although that is a high percentage, you are still left with almost 68% of the available homes in California not connected to an HOA. Trying to navigate in your home hunt the difference between HOA and non-HOA could probably be a pretty daunting challenge. To help you out, Zillow has a filter tool that removes any HOA properties from your online search.
I’d also suggest contacting a local Relator in your area who can access specific HOA documentation and someone who actually reads that documentation. That should be one of your first questions when interviewing a Realtor—do you read the documentation? But don’t stop at the documentation. Interview your potential neighbors and ask them directly what it’s like living where they do. Mainly though, if you hate HOAs, don’t buy an HOA.
And oh, before I forget, here’s that John Oliver video I promised:
