Do you live in a neighborhood with a homeowners association? If so, you’re probably in one of two camps: It benefits the community and its residents or causes more of a headache for homeowners. The goal of any HOA is, or at least should be, to improve the quality of life and home values for those living in the neighborhood. However, you’ve probably heard about several instances where an HOA may have overstepped their boundaries or didn’t fulfill their promises. So today let’s answer the question: Are HOAs worth it?
Records of the first HOAs date back to 1940, and potentially further, but they weren’t very prevalent until the 1960s when the Federal Housing Administration began to push for more large-scale residential developments. Fast forward to today, and there are about 10,000 homeowners associations in Colorado alone. From apartment complexes to suburban neighborhoods, it’s very common to have an HOA due tacked on to your monthly bill. And most of the time, that’s the root of most complaints from homeowners: they don’t think the cost justifies what their HOA provides. However, this could simply boil down to homeowners themselves… perhaps you moved into a neighborhood with walking trails, a dog park and a pool, but you’re not much of a walker, you don’t have a dog, and you hate swimming. Meanwhile, your neighbor Sally walks every morning, takes Sparky to get worn out at the dog park, and relaxes by the pool as her children have the time of their lives. So does it all just come down to personal preference? The short answer is no - let’s dig a little deeper into the pros, cons, and potential nightmares of dealing with HOAs…
To honor the spooky season, let’s begin with an example of an HOA nightmare that happened in Denver. In 2021, Michael St. James, who volunteered as their HOA board president, realized there was about $30,000 missing from the association's bank account. Since it was close to Christmas, most of the other board members had taken off the rest of the year, and bankers were about to go on vacation as well. Like many HOAs, this association had a management company behind the scenes, and St. James came to find out that the management company had approved a roughly $30,000 transaction to some ‘fraudster’. With an amount that large, the community’s rules state that the HOA board would need to approve, but the management company apparently never asked. St. James tried everything he could from filing a police report, contacting the district attorney, and filing a complaint with Colorado Department of Regulatory Agencies. At the end of the day, the investigation went nowhere, as “HOA managers are no longer subject to any government oversight in Colorado.”
Again, this is truly a nightmare when it comes to dealing with HOAs, and not a typical scenario. But as we try to answer, “Are HOAs worth it?” this points to perhaps the most important fact to keep in mind: you need to do your research. Homeowners associations can be a major perk to living in certain neighborhoods. However, it’s crucial to do your research before moving in to ensure that the HOA doesn’t have a questionable history, and is a good fit for your needs and lifestyle.
Let’s take a look at some of the major pros and cons to be aware of as you begin your search. As we touched on earlier, the goal of the HOA should be to improve the quality of life for you, the homeowner, while also maintaining and improving property values in the neighborhood. Your association can really help when it comes to curb appeal, ensuring the streets and homes look their best. Whether that’s landscaping throughout the community, cleaning up sidewalks and trash, or enforcing rules around what neighbors can have in their front yards, the HOA can be a game-changer for making your house look beautiful and well-maintained in the eyes of prospective buyers. Living in an HOA community can also offer great value-adds in the form of a community pool, basketball or tennis courts, walking trails, and more. They take care of all the upkeep, while you get to utilize and enjoy the amenities. Another potential benefit of living in this type of community can be mediation with neighbors. In some cases, if a dispute arises, the HOA will step in and make sure all community members are abiding by the rules of the association. Overall, a great homeowners association can make a neighborhood a much cleaner and more enjoyable place to live.
Of course, there’s two sides to every coin. While the benefits can be a great perk, it all comes at a cost. Since the HOA is responsible for community improvements and upkeep, they charge an association fee to all homeowners. These fees are typically fair, but a few hundred extra dollars a month can make a huge difference in overall affordability, especially in a high interest rate market like we see today. It’s important to distinguish your needs from your wants, so that you can make the right decision before paying HOA fees you may not fully benefit from. Something else to keep in mind - special assessments. These can pop up at any time if the Association makes costly repairs to common elements like walkways, stairwells or parking lots, and can add yet another monthly expense on top of the regular HOA dues. Furthermore, you have to abide by the rules - if you want to have a big tree in your front yard, you may be disappointed to find that the community rules don’t allow it.
So, are HOAs worth it? In many cases, yes, but ultimately it all comes down to personal preference and lifestyle, coupled with due diligence to ensure you’re able to live how you want, while also avoiding a potential nightmare like the story above. If you choose to live in a neighborhood with no HOA, you’ll enjoy not having an extra monthly bill, but you also take the risk of having a neighbor with overgrown landscaping and a broken down car parked in the front yard. Meanwhile, if you do choose to live in an HOA community, you’ll likely have a lot of great benefits - they just come at a price. Don’t overlook the importance of gaining some background knowledge on the HOA before you move in - it could save you a lot of time, hassle and money in the long run.
