Mortgage payments are only part of the equation. HOA dues are a critical piece to the home-buying puzzle if you plan on buying a house in an HOA community. The monthly fees can have a significant impact on your budget and lifestyle.
How do they compare? Are they really worth it, and if so, how much?
Break it down.
What do HOA fees cover?
At first glance, HOA fees might seem like an extra burden. It’s important to understand what you get in return. These fees are used to maintain the shared areas of a community and adhere to certain standards.
What they usually include
- Landscape and lawn maintenance
- Maintaining community amenities such as pools, gyms and parks
- Security services
- Garbage removal
- Snow removal or road maintenance
- Pest Control
- Common Area Insurance
In some cases, HOAs cover water and gas as well.
This guide on HOA fees explains in detail how they are calculated, and what the costs typically include.
HOA fees: The financial impact
The following is a list of The Wall Street Journal HOA fees and condo charges are rising faster than the inflation rate. Condo fees nationwide have increased by 6%. In Florida, the increase has been as high as 15 percent. Recently sold Manhattan co-ops experienced a fee increase of 27%, while condo fees rose by 41% in just four years.
In 2024, HOA dues will be paid by 9% of homeowners, up from just 6% in the year 2020. The national average is $125 a month but there are extreme differences. As reported by, some homeowners have to pay up to $2,000 per month, which can leave them feeling a financial burden. The Sun .
HOA rules that affect daily living
Rules can have just as much impact on your life. The HOA enforces community standards which can have a significant impact on your daily life.
Some common restrictions are:
- No street parking is an example of a parking restriction
- There are restrictions on the number, size, and breed of pets.
- Exterior decor rules, such as paint colors or decorations for holidays
- Guidelines for landscaping or fencing
Some people find that these rules maintain neighborhood harmony. Some feel like they are living in a microscope. Consider whether or not you would be okay with your mailbox being approved by a board.
Urban Institute states that HOAs have a significant influence on neighborhood demographics. This power can even contribute to historic patterns of segregation.
What it Means to Home Buyers
Don’t be fooled by an inflated listing price when you are house hunting. The HOA fee can cost a home that appears affordable hundreds of dollars more per month.
Houston is a good example. The Houston Chronicle Reports show that 76.8% homes were listed with an HOA, which is far above the average national rate of 40.5%. Houston’s $67 median HOA fee may seem modest but the national averages are quite different.
- Monthly HOA fee for a single-family residence: $58
- Condo HOA fees: $375/month
This is a crucial factor to include in your budget for the month, particularly if you are financing. You should remember that lenders will not include HOA dues in the mortgage calculations, but your bank account certainly will.
Whi le researching local property markets is always a good starting point, make sure to dig deeper into neighborhood-specific HOA fees and rules. Due diligence can save both time and money.
What’s the Bigger Picture? Budget and Lifestyle
HOA fees will not disappear. It’s a fact: HOA fees aren’t going anywhere. Urban Institute The number of Americans living in HOAs is increasing. HOAs now govern 60% of all new homes.
What does it mean to you?
Pros:
- Consistent neighborhood appearance
- You can reduce your own maintenance costs by sharing the cost of shared maintenance.
- Enjoy amenities such as pools, gyms, and meeting spaces
Cons:
- Personal freedom reduced
- Increases in fees that are not predictable
- Non-compliance can lead to fines and legal actions
The U.S. Census Bureau reports that in 2018, 20.9% (or a total of 1.1 million) mortgaged homeowners felt “burdened by their housing costs”. This is a decrease from 28,8% in 2008. However, this still shows the struggle many homeowners face to pay for their home.
HOA membership is on the rise, and more people will have to balance the need for a safe, clean neighborhood with the monthly fees, lifestyle restrictions, etc.
Are HOAs Right for Me?
All it comes down to is this: what are your non negotiables.
An HOA may be the best option for you if you are looking to maintain your space, have a cohesive neighborhood, or share amenities. If you value the ability to hang twinkle light year round or park your RV in the drive, then an HOA might be the right choice for you.
Check out this checklist:
- Are you able to accommodate the rising costs?
- Do you feel comfortable with strict rules?
- Are you going to use all the services you pay for?
- Do you plan to buy long-term, or sell your property soon?
HOAs don’t have a good or a bad inherently. Homeownership is a puzzle of financials and lifestyles. HOAs are just another piece. It’s important to understand what you are signing up for.
If you are unsure, always ask questions and read all the fine print. You can also talk to your neighbors.