The Pros and Cons of Homeowners Associations (HOAs)

If you’re searching for the ideal property to buy or invest in, you may find yourself looking at a home that falls under an HOA. An HOA is a type of organization that enforces certain rules and guidelines for the community or subdivision in question. Because of the services an HOA performs in maintaining the surrounding community, every homeowner in the community will be tasked with paying a fee, which is added to the monthly mortgage payment. The following guide goes into details about the many pros and cons associated with homeowners associations.

What Is a Homeowners Association?

An HOA is a type of governing structure that’s positioned in a specific subdivision or planned community. In many ways, an HOA is similar to a property manager or landlord. When you pay a fee to the HOA, they will maintain the appearance and atmosphere of the community. Today, around 25% of the country’s population lives under a community association of some sort. While there are plenty of advantages that homeowners derive from purchasing a home in an HOA, there are also some issues that could negatively affect any homeowner.


Your Home May Be Worth More

While the strong real estate market is currently causing home values to increase by a considerable amount, having a home in an HOA can also contribute to increases in home value. In fact, single-family homes under an HOA sell for around 4-5% more than homes that were outside of an HOA. Keep in mind that the increase in value will start to decline once the property begins to show its age.

The main reason for the increase in value is the set of HOA guidelines that are in place. These guidelines add a certain amount of conformity to how the community looks. For instance, all homes must be within a certain square footage range. It is also common for a restriction to be placed on the types of homes that can be built in the community. Many HOAs enforce rules that state that abandoned vehicles cannot be kept in driveways. All these guidelines work together to create a sense of luxury that isn’t present in non-HOA neighborhoods.

Your Neighborhood Will Look Great

As mentioned above, your neighborhood will invariably look great because of the guidelines that most HOAs have in place. These guidelines mean that every home must be well-maintained. If you purchase a home in an HOA, you will likely be tasked with adhering to guidelines about parking larger vehicles on your street, mowing your lawn regularly, and only using specific paint colors on the exterior of your home. While these guidelines do not allow for much individuality in a home, they do help to ensure consistency throughout the entire neighborhood.

You Should Gain Access to Extensive Amenities

Your HOA should manage a considerable amount of upkeep and maintenance around the property. This can include doing landscaping, mowing the lawn, trimming bushes, and performing pest control. It’s also possible for an HOA to repair major household systems, paint and clean building exteriors, remove snow, pick up trash, and clean any common interiors.


High Fees Add to Monthly Payments

If you buy a home in an HOA, you will be required to make monthly payments, which are membership dues that cover all the work the HOA does to keep the community in pristine condition. These fees can be costly and tend to range from $100-$300 per month. More than 15% of homeowners in an HOA pay over $500 per month. When you owe high monthly HOA fees, the amount of home you can afford will likely decrease.

HOA Guidelines Can Be Strict

HOA guidelines are extremely strict and limit your ability to personalize your home. These limits can include:

  • Total number of pets
  • Types of windows
  • Height of grass
  • Fencing dimensions
  • Type of sprinkler system or fertilizer you use

Higher Risk of Foreclosure or Lien

Before you buy a home in an HOA, you should first make sure that you can afford to pay the fees alongside your standard mortgage payment. Keep in mind that the HOA can fine you if you violate their guidelines. Failing to pay these fines could cause the HOA to place a lien on your home and eventually begin the foreclosure process.


Now that you know the pros and cons of an HOA, you can compare them to determine if an HOA is right for you and your home-buying situation.