Would you live in a neighborhood with a Home Owners Association (HOA)? Why or why not? HOA neighborhoods usually have a monthly fee that can be as low as $50, but as high as $300+ (in the Sacramento area at least). Why are home owners willing to fork over fees like this every month when most other neighborhoods do not have dues? Usually it’s a matter of living in a more controlled environment, a neighborhood with more conformity, a life with less house maintenance or even affordable housing depending on the HOA. At the same time, some buyers are repulsed by the concept of neighborhoods with monthly dues because they are viewed as a freedom drain because of all the rules.
Here is a list I made of the pros and cons of HOA ownership. Anything you’d add?
Choosing Comps Inside & Outside an HOA: It is always important during the appraisal process to consider whether there is an HOA and how that impacts value. This definitely shows up when choosing comps too because when trying to support a value it is critical to use sales inside the HOA instead of pulling in “comps” from other nearby neighborhoods that really might not be all that competitive. What is happening inside the HOA in terms of value? That is always my first question before choosing sales outside of the community (and assuming the value is the same). It’s definitely okay to use outside sales as comparables in the appraisal report, but it’s always best to start inside the community first.
By the way, you may be interested to learn more about the difference between a PUD and condo (both of which usually have an HOA). If you’re local, be sure to check out the video below (or here) to know how to use plat maps to help tell the difference so you can be prepared to market a property correctly, get a loan or compare the property to other similar ones.
Question: Why do you think people move into HOA communities? I’d love to hear your take.