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Article Courtesy of The
Financial
Published June 27, 2021
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While living in an HOA has its perks, there have also been rising cases of
dissatisfaction with the level of control HOAs assume. More recently, the
Colorado House passed a bill removing HOAs' rights to regulate political signs
and flags.
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Yet, when looking for
a new home, you cannot deny the appeal and popularity of
HOAs. In a 2019 study, it was found that almost 60 percent
of newly constructed single-family homes and 80 percent of
houses in subdivisions belonged to a Homeowners Association
(HOA). Their rise in prominence and popularity has been
sustained for decades now - as have the reports of
disapproval. With the conversation getting louder and
federal authorities moving to implement ground rules against
HOA abuse/monopolies, many homeowners are left questioning
their choice of an HOA home - and whether the perks are
worth the downfalls.
Pro: HOAs Protect Home Prices
A big bonus for choosing an HOA is that it can increase the
price of your home if you're thinking of selling in the
future. In a study by George Mason University, it was shown
that an HOA can boost property values by 5 to 6 percent when
compared to the price of a house that does not belong to
one. This is attributed to the HOA’s ability to create and
maintain desirable neighborhoods - i.e. curb appeal. |
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The reduced burden of homeownership that it brings also comes with a pretty
hefty price tag. In a Freedom Debt Relief report, 30 percent of homeowners
were stressed about homeownership. Taking over the responsibility of
maintaining the exterior of homes can relieve that pressure - something
homeowners value.
Con: With The Added Benefits Comes Less Freedom As A Homeowner
The level of control that your HOA's Board of Directors has will vary
according to your state and individual HOA. In some cases, you may find that
strikes the perfect balance between taking control of the maintenance and
allowing you to retain control of your home. However, there have also been
reports of HOA abuse and overbearing HOA violations.
While most HOA fees start at $25, a Central Florida couple recently has been
engaged in a two year-long battle with their HOA, which has threatened to
foreclose their home due to unpaid annual dues - even though they had paid a
month before legal action was taken. The couple ended up receiving a
settlement, but the case is just one of many where HOAs have been criticized
for abusing their power. On the other hand, HOA management in Charlotte NC
has seen the state consistently ranked amongst those with the best value HOA
in the country, coming after California and Texas. Included in their fees
are budgeting and bookkeeping, communication with owners, and emergency
repairs and maintenance. Therefore, finding a good HOA is essential to
defining your experience with the HOA lifestyle.
Con: Getting Into A Bad HOA Can Actually Cost You More Than Annual Fees
A downside of living in an HOA is that it comes with additional costs,
namely annual HOA dues. HOA fees have been on the rise since 2005, according
to reports from Trulia. Back in 2005, the average HOA fee was $250. By 2015,
that had increased to $331. Fast forward to today, and homeowners are paying
as much as $570 in states like New York. They are also not static, and will
keep rising with HOA regulations and inflation.
Living in an HOA can also come with hidden costs that contribute more than
an additional 10 percent to your home-buying bill. The terms and conditions
laid out in your CC&R may also spell additional expenses for you. Many HOAs'
CC&R stipulate regulations on-street parking, consistency of exterior
appearance, and bans on rental of your home. This can not only limit your
ability to gain an income from your home, but might mean separate parking
fees and a higher exterior maintenance budget to adhere to HOA regulations.
So is an HOA worth it? Most current residents say yes, but advise new
homeowners to be prepared for all that comes with it. Whether it is worth it
for you will depend on what you value most in your homeownership dream.
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