Property HOAs fees keep rising
Over the last few years, Americans have felt the inflationary heat. Everything has become more expensive and HOA dues are no exception. This has made home ownership that much more difficult for the average American. In 2023, According to the Foundation For Community Association, there are over 365,000 community associations nationally with a whopping 75.5 million people living in these communities. This applies to almost one-third of America.
To understand why HOA fees would be going up we need to understand how HOA fees are collected for. With a national average of $191, and depending on the scale and size of communities the cost(s) can differ, we used a generic amount below:
| Fee | Description | Average (%) | |:---| ---| --:| | Maintenance | This covers the upkeep of day to day expenses of the shared parts of the community. | 15-20% | | Insurance | This covers the insurance of the community. It provides protection against several potential catastrophes. | 25-30% | | Utilities | Fees could include any shared resources like water, sewer and, trash | 15-20% | | Landscaping | These fees usually are higher with communities with larger trees | 8-10% | | Pest Control | Keeping your community free of pesky infestations | 5-7% | | Amenities | This might be towards a gym and/or parks that are specifically maintained for community members | 5-10% | | Staff & Security | For larger communities, you might have onsite staff that assist around the community. | 0-20% | | Reserves | Just like any successful household, reserves are the "rainy day" funds when surprises arise | 5-10% | | Management Fees | For those represented by offsite management or just the cost of doing business | 4-5% |
<!-- Put a pie chart of overall costs -->Fees are on the rise
Costs are increasing from every angle. California for instance has seen a shot of costs to insurance premiums. Insurance companies have stated increases of up to 40% with no real explanation but wait there's more. The cost of utilities has jumped on average $86.51 on the West Coast. Material costs have increased affecting maintenance, landscaping and various other costs that require constant material spending. Labor has increased as well. Labor surprisingly has made the least impact but every bit adds up. According to the Bureau of Labor Statistics, Before 2022 increases in labor costs were sitting stable at under 3% year-over-year. 2023 we see a large labor increase closer to 5% nationwide. With higher costs reserves have seen increases to match the increased costs of unexpected and unforeseen costs.
Flippers be aware
Prices are going up everywhere. We have heard of increases of up to 40% to face all fronts to cover the cost of higher expenses throughout. Home buyers are looking at avoiding these unforeseen costs which sometimes feel out of their control. When looking for flipper properties consider homes with no HOA dues.
<!-- Put a chart of overall costs in comparison to the last 3 years -->Outweigh the cost
Some specific individuals admire the control and stability of an HOA. As for myself, I am no avid adventurer in gardening or landscaping. I understand the cost of things like pools and amenities like a personal gym aren't worth much to me but are nice to have if the costs of ownership weren't so high. Overall, there are many reasons to look into properties that have HOAs and I believe there are just as many that weigh against it. At the end of the day just remember HOA or not costs are going up. The property owner will eventually have to face the music of the high cost of living and ownership past 2023.