What Is an HOA and Do I Need One?
By Chris Petry
Let’s answer the big question first. What is an HOA? An HOA, or Homeowner’s Association, is an added governmental body that levies additional housing and property rules and standards within a community. I know what you’re thinking: what gives them the right? Well, you do. See, when you purchase a home in the community, you agree to accept the terms and conditions of the homeowner organization and pay fees. The upside is that those fees are applied toward the community in which you live, updating communal spaces and maintaining property values for all residents.
If you’ve ever lived under an HOA or known someone who has, you’ve probably heard some of the laughable reasons people have gotten “in trouble” with their enforcement officers. An old employer of mine was scorned on his birthday because his family had one of those creative sign companies place a foam core “Happy 70th Birthday” in his front yard. On another occasion, a friend of mine was cited because the frog statue in his garden reportedly scared children who happened to pass by. The one thing neither of these gentlemen had to worry about though? Maintaining their lawn or sidewalks. Lawns are cut and snow is shoveled, courtesy of the HOA. There are definite pros and cons to owning a home in an HOA community and it’s incumbent on every potential resident to review them and act accordingly.
Just how common are HOAs? According to The National Association of REALTORS, HOAs are only increasing with 30% or around 75.5 million homeowners currently belonging to an HOA community. Reception from current HOA residents is pretty mixed, with over 57% reporting some degree of dissatisfaction. Furthermore, a recent study from Rocket Mortgage found that one in 10 said they’ve even considered selling to get out of their HOA community. Ouch.
NAR reports the average monthly HOA fee is around $259. For comparison, the average monthly mortgage payment, as of January, was $2,205. By my calculations, that would mean that after HOA fees, the average homeowner in an HOA community is paying around $2,464 a month. One of the biggest gripes? Those fees do increase with inflation. So, while you might have a fixed 15- or 30-year mortgage, your HOA contributions are likely to increase overtime. It again becomes a question of whether or not you feel the value provided by your HOA membership makes up for the upfront cost.
Now, to be objective and fair, let’s take another look at some of the amenities HOA homeowners enjoy in return for their membership fees. These stats all come from NAR, so be sure to head over there for further reading.
Of course, each HOA community is different so do compare these items with what’s provided in HOA communities near you. In conclusion, some people love what HOA communities provide in return for their monthly investment. Some people prefer a less-restrictive community where they may have to be more hands-on with their upkeep and safety practices. Do you need an HOA? No. Do you want one? Maybe.
