During your house-hunting journey, you’ll quickly notice that many neighborhoods are part of a homeowner’s association (HOA), while others are not. As of 2019, nearly 60 percent of single-family homes built within the past 10 years and 80 percent of brand-new subdivisions are part of an HOA. In all, about one in four Americans live in a community association. But is an HOA right for you? Consider the pros and cons of paying HOA fees to decide if you should buy a property in one of these communities.
What is an HOA?
A homeowner’s association is a governing structure for planned housing communities where residents must follow certain covenants, codes, and restrictions (CCRs). An HOA may govern single-family homes, townhouses, and condominium complexes.
Think of an HOA as a property manager for homeowners. This entity maintains community spaces and imposes rules to create a classy neighborhood atmosphere—all in exchange for a monthly fee that every resident must pay.
An HOA board is typically comprised of community members who serve in various capacities, such as president, vice president, secretary, and treasurer. They arrange things like community lawn care and pool maintenance and act as enforcers if any residents break the CCRs.
3 Pros of HOAs
Homeowner’s associations often get a bad rap, but 89 percent of residents living in HOAs in 2020 rated their overall experience as very good, good, or neutral. Here are four reasons why.
More Recreation and Social Opportunities
Some HOAs include access to tennis courts, community gyms, neighborhood pools, shared BBQ spaces, nearby golf courses, playgrounds, and more. Many communities also host social events, such as pool parties, community-wide garage sales, cookouts, and nature walks.
Less Exterior Upkeep
With an HOA running things, individual homeowners don’t have to worry about maintaining common areas. HOA fees often cover things like:
- Lawn mowing, tree trimming, and pest control in community green spaces
- Repairing neighborhood roads and sidewalks
- Repairing roofs, painting walls, and maintaining other components of shared buildings
- Maintaining HVAC, electrical, plumbing, lighting, elevators, and security systems in common areas
- Maintaining swimming pools, community gyms, and other shared spaces
- Arranging (and sometimes paying for) trash pickup and snow removal
Help Resolving Neighbor Conflicts
If you love peace and quiet and dread conflicts with your neighbors, you’ll love knowing the HOA will advocate for you. For instance, imagine your neighbor’s dog barks all night, or the lady who shares your back fence sometimes throws trash into your yard. Rather than having an uncomfortable confrontation, you can call your HOA, describe the problem, and they’ll take it from there.
5 Cons of HOAs
Despite all the benefits, there’s a reason HOAs have a negative reputation. Here are five downsides you should know before moving into a governed neighborhood.
Excessive Rules
Meticulous HOA regulations can garner animosity from homeowners. The most irritating part is that these rules are imposed on a property that you own! You might not mind picking up after your pet or abiding by a list of house colors, but you may find some CCRs overly oppressive. Examples include:
- The dimensions and materials of your fence
- How tall you can grow your grass
- What type of fertilizer or sprinkler system you can use
- The size and components of your garden
- How and when you can display a flag in your yard
- The types of window covering you can use on street-facing windows
- The number of pets you can have (some HOAs restrict pets altogether)
- The dimensions of “For Sale” or “For Rent” signs
- Where you must store your garbage cans
All Those Fees
Also known as dues, HOA fees are mandatory for everyone living in the community. The average HOA fee is $100 to $300 per month, with condominium associations (COAs) generally charging more than single-family homeowner’s associations. About 17 percent of HOA fees are over $500 per month. Some dues even exceed $1,000 per month, particularly in luxury communities offering lavish amenities like 24-hour concierge service.
What do all those HOA fees cover? In addition to community recreation, exterior upkeep, and some utilities, these fees pay for HOA employees and fund an emergency account for unexpected expenses that may arise.
Risk of Lien or Foreclosure
You are required to pay monthly HOA dues and yearly assessments, regardless of whether you use the amenities provided. If you don’t pay the regular fees or any fines for breaking the rules—as you contractually agreed to do when you purchased your home—you risk having a lien placed on your property or even losing your home to foreclosure.
Higher Home Prices
Homes built in planned communities and managed by an HOA typically cost at least 4 percent, or about $13,500, more than similar houses outside of HOAs. The price difference tends to be highest for larger homes and homes in smaller subdivisions, which declines the older the home gets.
Risk of Mismanagement
Like any governing body, an HOA may be managed professionally and efficiently, or it can be abusive, neglectful, and irresponsible with funds. The top reason HOAs face legal trouble is failure to repair, replace, or maintain common elements, like a leaky condominium roof.
Be aware that Oklahoma does not have a governing body to regulate HOAs. If your homeowner’s association is not doing its job, talk to your HOA manager, reelect new board members, hold a mediation, or take legal action
Apply for a Mortgage
Whether you join a homeowner’s association or buy a house in a neighborhood without this governing entity, Financial Concepts Mortgage can help you fund your home purchase. As Oklahoma’s premier mortgage lender, we offer competitive rates and a quick, simple application process. We’re proud to be a locally owned mortgage bank, not a mortgage broker, allowing us to provide in-house loan origination, processing, underwriting, and closing to keep your information private and secure. To discover why we’re the best choice for home loans in Oklahoma City, please contact us at (405) 722-5626 today!