The pros and cons of living in an HOA

Wednesday January 08, 2025

Understanding the benefits and challenges of HOAs

Homeowners associations (HOAs) are an essential part of residential life in the U.S. More than 26% of Americans live in HOA-governed communities. These organizations oversee neighborhood maintenance, help establish rules and regulations, and manage amenities to create a structured environment that appeals to many homeowners. But while HOAs can offer benefits like increased property values and access to shared amenities, they can also come with restrictions and fees that may not suit every lifestyle.

In this article, we’ll examine the pros and cons of living in an HOA-governed community to help you determine whether this lifestyle aligns with your preferences and long-term goals.
 

What is an HOA?

pros and cons of living in an hoaAn HOA is an organization that manages residential developments. HOAs are normally governed by a board of directors made up of elected residents from the community. These volunteers make decisions on behalf of their community, guided by a set of governing documents like bylaws and covenants.

The primary roles of an HOA include:
  • Maintaining common areas: HOAs help maintain shared spaces like parks, pools, and sidewalks.
     
  • Enforcing community guidelines: HOAs set standards for property upkeep, exterior designs, and noise levels to preserve the community’s appearance and property values.
     
  • Collecting fees: Residents pay monthly or annual fees to fund the HOA’s operations, maintenance, and community improvements.
HOAs also facilitate long-term planning for the community by conducting reserve studies to provide sufficient funds for future repairs and replacements. These reserve studies help prevent unexpected financial strains on residents.

To help you make informed decisions about operations and budget strategies, we invite you to download our BENCHMARK: High-rise guide. With data compiled from communities in our managed portfolio of 3,800 high-rise buildings across North America, BENCHMARK can help community association boards, developers, property managers, and owners of high-rise properties.
 

Pros of living in an HOA

HOA communities can offer a range of benefits to improve resident life:
  • Low maintenance living: HOAs often take responsibility for routine maintenance work that individual homeowners would otherwise need to manage themselves, like lawn care and landscaping, pest control, snow removal, and repairs to shared buildings, roads, and sidewalks. By centralizing these services, HOAs can often negotiate lower costs with vendors, passing the savings on to residents. These tasks can sometimes feel overwhelming for board members to handle alone, but with the help of a professional property management company like FirstService Residential, you can depend on our network of trusted vendor partners to support your community’s needs.
     
  • Access to amenities: Many HOA communities offer access to amenities like swimming pools, gyms, and playgrounds. These amenities would be costly to maintain for individual homeowners, but the shared-cost model of an HOA helps to make them more affordable and accessible.
     
  • Enhanced property value: By establishing community standards and overseeing maintenance, a well-managed HOA can play a crucial role in maintaining property values. Homes in HOA-regulated communities often sell for 4% more than comparable homes outside of an HOA. Since HOA communities are known for maintaining high standards and property values, this can make your property more attractive to buyers if you decide to sell your home.
     
  • Conflict resolution: HOAs can act as mediators in disputes between residents, handling issues such as noise complaints, property boundaries, and trash disposal. This structured approach can save homeowners from potentially uncomfortable confrontations and allows for disputes to be resolved fairly and consistently.
     
  • Community events and social opportunities: Many HOAs organize events to foster a sense of community. From block parties and holiday celebrations to neighborhood garage sales, these gatherings help neighbors connect and create a sense of belonging.

Cons of living in an HOA

While HOAs provide many benefits, they may not suit every homeowner:
  • Fees: HOA fees are a mandatory expense for homeowners, typically averaging a few hundred dollars per month.

    However, these fees cover shared services like landscaping, maintenance, and amenities, which reduce the burden on individual homeowners and contribute to preserving property values by keeping the community well-maintained.
     
  • Rules and restrictions: Homeowners are usually expected to comply with rules covering paint colors, landscaping, pet guidelines, and holiday décor.

    Although these guidelines may seem restrictive to certain residents, their goal is to support property values and overall neighborhood consistency. This structured framework also simplifies general maintenance and overall aesthetic appeal.
     
  • Risk of penalties: Failure to comply with HOA rules or pay dues can result in penalties, such as fines or restricted access to amenities.

    This system serves to protect the interests of all homeowners by addressing issues that could have a negative impact on others, and encouraging participation from everyone in the community.
     
  • Higher initial home prices: Homes within HOA-governed communities often come with higher price tags upfront because of added amenities, services, and community appeal.

    While these costs may deter some buyers, their higher prices often reflect the quality of amenities and services offered. Plus, non-HOA communities may lack the long-term value and shared resources that an HOA can provide to its residents.

Questions to ask an HOA before you make your decision

Before purchasing a home in an HOA community, prospective buyers should ask questions like:
  1. How much are the HOA dues right now, and how often have they been adjusted?
     
  2. Are there funds set aside to cover large-scale repairs or emergency situations?
     
  3. How does the board communicate decisions and financial information to residents?
     
  4. Are the bylaws and governing documents available for prospective buyers to review?
Attending an HOA meeting can provide valuable insights into how decisions are made and whether the board is responsive to residents’ concerns. Speaking with future neighbors is another great way to learn about the community’s culture and any potential red flags.
 

Weighing the pros and cons: Is an HOA right for you?

Before making your decision, it’s essential to weigh the pros and cons carefully. Understanding how the HOA operates and whether its guidelines align with your lifestyle can empower you to make an informed decision about your future home. Whether you seek convenience and community engagement or prefer more autonomy and flexibility, knowing what to expect from an HOA is key to finding the right fit for your living situation.

To learn how a professional management company can provide additional support to your community, contact a member of our team at FirstService Residential.
 
Wednesday January 08, 2025