The Pros and Cons of Buying a House in an HOA

A homeowner’s association (HOA) is an organization that’s designed to maximize home values and quality of life for people who own property within a designated area. The HOA is usually funded with periodic assessments, paid by homeowners, and once the organization is established, the properties in an area are enrolled by default.

Some people instinctively hate HOAs, and some people love being protected by them. But the reality is, HOAs typically come with both advantages and disadvantages, and you’ll need to consider both before purchasing a house involved with one.

Every HOA Is Different

The first thing you need to understand is that every HOA is different. Some HOAs are extremely hands off and minimalistic; there aren’t many amenities to keep up, there aren’t many services to provide, and fees are very low. You might pay as little as a few hundred dollars a year to remain in good standing. Other associations are much more prohibitive and expensive, with long lists of rules that every homeowner is required to follow and exorbitant costs for lucrative amenities and services.

It’s impossible to say whether an HOA is, by itself, good or bad because of this dynamic. Some HOAs are great, some are oppressive, and some are in between. It’s on you to do research for your specific HOA before choosing whether to buy a house in the area.

The Advantages of Buying in an HOA

These are some of the standard benefits of buying a house in an HOA:

Common areas and amenities. Some of these organizations offer common areas and amenities to people within the neighborhood. Your neighborhood may have ponds, sidewalks, and even parks where homeowners can walk around, meet each other, and enjoy the scenery of the neighborhood.

Community services. You might also be entitled to certain community services. The HOA may be responsible for snow removal, sidewalk cleaning, general maintenance and upkeep, and other actions designed to keep the neighborhood protected and beautiful.

Protection of property values. One of the biggest responsibilities of an HOA is preserving the values of the properties within the community. There may be certain requirements for how houses and lawns can look, and rules for activities that are and aren’t permitted within the community. Some HOAs are very strict with these rules, while others are much more relaxed; either way, if a homeowner makes a complaint about another homeowner who isn’t following the rules, the HOA may intervene to resolve the situation.

Potential for conflict resolution. Homeowners sometimes appreciate the HOA as an option for conflict resolution. If you get into a disagreement with a neighbor about a specific rule of the neighborhood, and you can’t reach a resolution on your own, the HOA can intervene with a decisive ruling.

Influence and change. Your local HOA is probably a small organization, which means there’s potential for you to get on the Board or otherwise influence the decisions of that organization. If you’re willing to spend extra time and effort, you could make a difference in your neighborhood.

The Disadvantages of Buying in an HOA

These are some of the greatest disadvantages you’ll need to consider before buying a house in an HOA:

Rules and restrictions. Most people know that an HOA typically comes with lists of rules and restrictions. As simple examples, you may be prohibited from having livestock on your property, you may be required to practice yard maintenance in a specific way, or you may be required to adhere to a noise ordinance. Every HOA is different.

Dues and fees (with potential increases). You’ll likely have to pay for the privilege of being associated with an HOA. Depending on the organization, you may pay a fee on an annual, quarterly, or monthly basis.

Surprise special assessments. If the HOA faces higher costs than expected, or if it must deal with unexpected developments, it may issue a special assessment on homeowners. This can unexpectedly increase your home costs.

Potential for foreclosures. If you fall behind on dues, the HOA could foreclose on your house.

Prevention of renting. If you want to become a rental property investor, understand that in most HOAs, renting your home out is prohibited.

Some people are naturally drawn to HOAs more than others. If you like the idea of your property value being protected, if you have no interest in renting your property, and if you don’t mind paying some extra fees in exchange for extra amenities, an HOA could be perfect for you. If you hate the idea of being restricted and you want to live as cheaply as possible, or if you don’t really care about what your neighbors are doing, you may want to avoid an HOA. 

Either way, it’s important to do your research before making any major housing decisions.

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