Buying a house comes with lots of choices. Among them is the choice to purchase in a community with a legally recognized homeowner’s association (HOA). HOAs have their pros and cons. Some people love them, other people hate them. The one thing every buyer needs to be aware of is this: HOA’s are legal entities with enforcement authority.
Data from 2019 suggests that upwards of 60% of all single-family homes built in recent years are HOA homes. Furthermore, 80% of new subdivision houses are part of HOA communities. You are more likely to find such communities in the South and Southeast, as well as in up-and-coming regions like Salt Lake City, Utah and Austin, Texas.
Speaking of Salt Lake City, local real estate brokerage CityHome Collective recommends their clients do their best to understand the implications of moving into an HOA community before starting the home search. Clients who absolutely could not live with an HOA immediately reduce the inventory they have to look at.
HOA Community Pros
Let us start with the pros of HOA communities. Right off the top, they tend to include community areas and amenities paid for by way of association dues. One community might have a swimming pool and tennis courts. Another might have a golf course. Community areas and amenities are available to all association members and their families.
Other pros include:
- Maintenance – HOAs maintain public spaces and amenities. Some of them also handle exterior maintenance and landscaping on behalf of homeowners. Not having to cut your grass is a nice perk.
- More Space – HOA homes tend to be bigger. On average, they offer 20% more floor space. On the downside, lots tend to be smaller. This means that homes are closer together.
- Resale Value – HOA homes tend to increase in value more than their non-HOA counterparts. The difference can be 4% or more.
It should be no surprise that HOA neighborhoods tend to be more affluent neighborhoods. Properties are kept in pristine condition, adding to their curb appeal and overall value.
HOA Community Cons
Every silver-lined cloud has the potential to be stormy. Anyone who owns an HOA home knows just how true this is. Understand that HOA communities are contractually restricted communities. In other words, property owners are restricted in what they can do with their properties by legally enforceable contracts.
This legal reality presents multiple cons:
- Less Freedom – HOA homes are subject to less freedom. Owners have to get permission before making exterior modifications. They have to meet certain standards of maintenance and upkeep.
- Strict Rules – Some HOAs make it a point to develop very strict rules. For example, they may stipulate that certain types of holiday decorations are not allowed. They might also determine how many cars can be parked in your driveway.
- HOA Politics – Many HOAs that start out with good intentions eventually descend into politics. And where politics exists, so does political infighting. Highly politicized HOAs can make a community unbearable.
- Monthly Fees – HOAs must collect monthly fees to operate. Fees can range from a few hundred dollars per month to more than $1,000.
One last thing: buying in an HOA community requires signing a contract. If you violate the contract in any way at all, the HOA could put a lien on your property and eventually foreclose for failing to rectify the problem.
A lot of people love HOA communities. Still, they are not for everyone. Do not purchase an HOA house unless you fully understand what you are buying, and you are willing to abide by the rules.