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When purchasing a home, many buyers may want to avoid restricted properties homeowners association.
But this is easier said than done.
This is because HOAs are on the rise in America, so it’s important to understand The whole story Learn about these organizations before you buy.
Nearly three-quarters, or 70%, of homeowners surveyed said that if they were to purchase a new home in the future, they would prefer a community without an HOA. according to The latest data from Frontdoor. The home repair and maintenance services company surveyed 1,005 homeowners in September, 85% of whom are currently part of an HOA.
Why it’s hard to avoid HOAs
A homeowners association is made up of community residents who are elected to a board of directors, which governs the community through a set of rules and regulations. Homeowners pay dues to maintain and repair common areas such as parks, roads and community pools.
These organizations exist for different types of properties, from single-family homes and townhomes to condominiums and cooperatives.
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The number of HOAs in the United States has increased in recent decades. In 1970, there were 10,000 community associations and approximately 2.1 million residents. Every foundation.
According to the U.S. Census, by 2023, about 65% of new single-family homes will be built within an HOA, up from 49% in 2009.
Today, HOAs, or common interest communities, account for approximately 30% of the U.S. housing stock, providing homes for 75.5 million Americans, according to Community Association Research Foundation. This entity is an affiliate of the Community Associations Institute, a membership group for HOAs and other community organizations.
Thomas M. Skiba, CEO of the Community Associations Institute, a membership organization for homeowners and condominium associations, said common interest communities are becoming more typical because they provide economic benefits to local governments .
“They no longer have to clean the streets (or) do all the maintenance, and they can still collect full property taxes,” Skiba Tell CNBC, referring to local authorities.
HOA membership is more common in some areas. Florida has the highest HOA membership rate at 66.86%, which means there are more than 4 million households in HOAs. according to Data analysis from home decor website This Old House.
“In many cases, buying a home that’s not in a community is really a luxury,” said Steve Horvath, co-founder of HOA United, an advocacy group for homeowners in common interest communities.
How HOAs increase the cost of homeownership
The price tag for a common interest community will depend on its location and the amenities offered by the association.
Homeowners pay mandatory annual membership fees ranging from as low as $100 to more than $1,000 per month, depending on the community, according to American National Bank of Texas.
These costs tend to increase over time, and rarely drops. In a Frontdoor survey, 51% of existing HOA members said their HOA fees increased, and 65% said price increases occur regularly.
How to review an HOA before buying
Many Americans are satisfied with their HOA. About 60% of homeowners surveyed said they had a positive experience with their community. according to Get to the front door.
But others experience grievances. Frontdoor found that about a third of people have had some experience that made them want to move. Of those who wanted to leave the community, 63% complained about fees, while 53% complained about inconsistent enforcement of rules.
Jim Tobin, CEO of the National Association of Home Builders, said “HOAs can be really annoying sometimes,” such as what colors you can choose to paint the exterior of your house.
If you’re currently in the market for a home and aren’t sure if an HOA community is right for you, here are a few things to consider during the buying process:
- Ask your real estate agent or the home seller’s agent for copies of all HOA documents, such as deeds, bylaws, fee schedules, rules and regulations, experts say. Horvath says to also ask for meeting minutes, whether they are AGM minutes or board meeting minutes from the past 12 months. He said such documents are very telling about how an HOA operates.
- Ask about monthly or annual fees, the HOA’s budget and a history of increases in assessments over the years, according to Skiba.
- Ask your real estate agent or seller’s agent if there are any unpaid appraisals on the home you want to buy, Horvath says. Such outstanding balances shall be settled by Seller as part of the sale.
- Review any pending lawsuits, disputes or existing judgments within the community, Horvath said.
- Check the community’s reserve funds to ensure repairs and renovations. Check to see if the community has set aside enough money for large expenses or if those expenses are funded by the property, Skiba said.
- If possible, ask if you can attend a board meeting or AGM.
