57% Of HOA Residents Don’t Like Having An HOA
Jessica Edmondson6-minute read
August 19, 2023
- Fewer than half (47%) of HOA residents surveyed believe their neighborhood is better with an HOA.
- Fewer than 2 in 3 (64%) HOA residents surveyed feel their HOA honestly handles its finances.
- One in 10 HOA residents surveyed is considering selling their home for HOA-related reasons.
HOAs: Beneficial Or A Bane?
The price of everything has risen significantly over the past year. After nearly half a century of low global inflation, the U.S. inflation rate jumped from around 1.4% in 2020 to 7% in 2021 and continues to rise, pulling the price of many consumer items up with it. One of the benefits of buying a home with a 30-year fixed mortgage is that the mortgage payment remains the same despite the property’s increasing value. But not all aspects of homeownership are as stable as a mortgage.
Homeowners associations (HOAs) are not locked in the way mortgage payments are. HOA associations have increased dues by as much as 300% in certain parts of the country over the past year. In return, homeowners expect to get community benefits, like landscaping and outdoor recreation, but are these perks worth the cost of HOA dues?
A recent study conducted by Rocket Mortgage® surveyed over 1,000 American homeowners who have an HOA. The study took a look at how common HOAs are around the nation, how homeowners feel about their HOA and what they’re paying in HOA dues. It then delves into the value provided by these HOAs to see if homeowners feel the amenities are worth the price.
Homeowners Aren’t All Happy In HOAs
Today, nearly 60% of new single-family homes and 80% of houses in subdivisions are part of an HOA. Since HOA fees can be hundreds of dollars each month, the clear question to ask is whether HOAs are worth the cost. The best way to get a perspective on living with an HOA is from homeowners themselves.
More than 4 in 10 homeowners like having an HOA, with 47% saying their HOA makes their neighborhood better, according to the Rocket Mortgage study. Nearly half of them said they'd likely buy in a neighborhood governed by an HOA again.
Interestingly, HOA board members are only somewhat more likely to prefer having an HOA. Only 37% of HOA board members dislike having an HOA, compared to 57% of HOA homeowners overall. More than 3 in 10 of those surveyed feel their HOA has too much power. While 10% go so far as to consider selling their home for reasons related to their HOA. Clearly, people’s opinions on HOAs vary across the country, but how do they look state-by-state?
HOAs Dominate In Florida
HOAs exist across the nation. Many planned communities with lots of amenities, such as community clubhouses or pools, need HOAs to cover the cost of maintaining these communal spaces. For this reason, there are likely to be more HOAs in states with a large number of planned communities.
HOAs are most common in Florida, which is unsurprising given the high number of planned communities in the state, including the largest gated over-55 community in the nation – The Villages. An estimated 45% of Florida residents live in an HOA community. Colorado was a close second with an estimated 41% of residents having an HOA. Outside of the Sunshine and Centennial States, HOAs were considerably less common with 31% of residents in Arizona and Washington living in a community governed by an HOA.
On a per capita basis, Florida again took the crown for the most HOAs with an estimated 2.27 HOAs per 1,000 residents. This is 47 more HOAs per 1,000 residents living with HOAs in Florida than the next-highest HOA per capita state on the list, Colorado at 1.8 HOAs per 1,000 residents. To put this into perspective, it means there are 7.3 million more people living in HOA communities in Florida than Colorado.
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HOA Homeowners Say Dues Are Reasonable
HOA fees are usually paid directly to the association, not included in a mortgage, so they present an additional cost. Homeowners living in a place like The Villages in Florida, with its three separate downtowns and more than 3,000 activities and clubs, may expect to pay an above-average amenity fee, but what exactly is “average” when it comes to HOA fees?
Across the nation, the average HOA monthly dues are $259, according to data from the Foundation for Community Association Research. Dues are higher in condominiums than single-family homes and tend to decrease as home values increase. For instance, homes valued at less than $200,000 have average monthly dues of $277, compared to $247 per month for homes valued at $500,000 or more. This means that HOA monthly dues are equivalent to about 17% of the average mortgage.
Overall, most homeowners living in an HOA neighborhood feel their dues are reasonable. Only 20% of them think their dues were unreasonable, while nearly 70% say the fee is reasonable. Fewer than half of homeowners with an HOA cite improper handling of their dues; with 63% saying they feel finances are handled honestly. HOA board members have a fairer view of dues handling, with 83% content with their association's handling of HOA fees.
The challenge for many homeowners is they don't have much say in the financial side of their HOA. Only 28% of homeowners feel involved in the financial decision-making. It's important for homeowners to feel that they're getting value for the money they contribute. But what are the most valuable HOA perks?
The Perks Of An HOA
HOAs can provide many benefits, from neighborhood parks to maintenance and pest control. Some HOAs may offer community events and game rooms, while others might focus on outdoor activities, like dog parks and swimming pools.
Of the 10 most common amenities provided by HOAs around the country, landscaping is the most common and the only amenity provided by more than half of the HOAs survey respondents lived in. Sidewalk maintenance was the second most common amenity, followed by play areas for children, community swimming pools and outdoor recreation spaces. It's less common to find an HOA that provides security, a fitness center or pest control. Only 14% of HOAs offered entertainment and game rooms.
The most commonly used amenity by far is wireless internet, which nearly three-quarters of homeowners say they use. Outdoor recreation spaces, although only provided by 37% of HOAs, are the second most commonly used amenity, followed by swimming pools, which 38% of HOAs provided and 54% of homeowners in an HOA used. Homeowners vastly prefer to use outdoor recreation spaces over pet-friendly outdoor spaces. Entertainment and game rooms and pest control are also among the least frequently used amenities.
The good news is that 59% of homeowners feel these amenities are comparable to the fees they pay, and nearly half feel their HOA does a good job representing the desires of the neighborhood.
Finding The Right HOA
With inflation on the rise, homeowners can take some comfort in locked-in rates that come with fixed mortgages. They don't have to worry about rising rents, but HOAs are not included in a mortgage and can rise with inflation. Many HOA dues have risen along with inflation, making some homeowners question if the value they’re getting is worth the cost.
Rocket Mortgage’s survey indicates that HOAs are still largely viewed as worth their price. Homeowners appreciate the community Wi-Fi, outdoor recreation spaces and more often provided by these associations. Nearly 70% of homeowners consider their HOA dues reasonable given the benefits they receive.
HOAs are an important consideration when looking for a home. Rocket Mortgage aims to simplify the home buying and selling experience by offering a seamless way for homeowners to search for homes, connect with an agent and get a mortgage – in partnership with sister company Rocket Homes. This makes the real estate process as smooth as possible for everyone involved.
Methodology And Limitations
Rocket Mortgage surveyed 1,001 Americans with an HOA. Among those respondents, 522 were men, 474 were women and five were nonconforming. The margin of error for this study is ±3% with a 95% confidence interval. These findings rely on self-reported data, and potential issues with self-reported data include, but are not limited to, selective memory, hindsight bias and telescoping.
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