Here’s what the rise of homeowners associations means for buyers
Sturti | E+ | Getty Images
When shopping for a home, many buyers may hope to avoid purchasing a property subject to a homeowners association.
But that may be easier said than done.
That’s because HOAs are on the rise in the U.S. Therefore it’s important to understand the ins and outs of these organizations before you buy.
Nearly three-quarters, or 70%, of surveyed homeowners say if they were to buy a new home in the future, they would prefer a community without an HOA, according to recent data from Frontdoor. The home repair and maintenance services company in September polled 1,005 homeowners, 85% of whom are currently part of an HOA.
Why it’s hard to avoid HOAs
Homeowners associations are composed of community residents elected to a board of directors, which govern the neighborhood by a set of rules and regulations. Homeowners pay dues to have common areas like parks, roads, and community pools maintained and repaired.
Such organizations exist for different types of properties, from single-family homes and rowhomes to condominiums and cooperatives.
More from Personal Finance:
What to expect of mortgage rates into early 2025
What Trump’s presidency could mean for the housing market
The typical first-time U.S. homebuyers is 38, an all-time high
The presence of HOAs in the U.S. has ballooned over recent decades. In 1970, there were 10,000 community associations with about 2.1 million residents, per the Foundation.
In 2023, about 65% of new single-family homes were built within HOAs, up from 49% in 2009, according to the U.S. Census.
Today, HOA or common-interest communities represent about 30% of the housing stock in the U.S., and house 75.5 million Americans, according to the Foundation for Community Association Research. The entity is an affiliate organization of Community Associations Institute, a membership group for HOAs and other community organizations.
Common-interest communities are becoming more typical because they provide a financial benefit for local governments, according to Thomas M. Skiba, CEO of the Community Associations Institute, a membership organization of homeowner and condominium associations.
“They don’t have to plow the street anymore [or] do all that maintenance and they still collect the full property tax value,” Skiba told CNBC, referring to local authorities.
HOA membership is more common in some areas. Florida has the highest HOA membership rate of 66.86%, or more than 4 million homes in HOAs, according to a data analysis by This Old House, a home improvement site.
“It is truly a luxury in a lot of cases to buy a home that’s not in a community,” said Steve Horvath, co-founder of HOA United, an advocacy group for homeowners in common-interest communities.
How HOAs add to homeownership costs
The price tag that comes with a common interest community will depend on it’s location and the amenities the association offers.
The mandatory membership can cost homeowners as little as $100 a year to more than $1,000 a month, depending on the…
Read More: Here’s what the rise of homeowners associations means for buyers