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Today’s entry: I waited to buy a home earlier this year because I was worried about my job and thought prices would come down. Instead, it’s the exact opposite! My question is about HOA’s. I’ve noticed prices for similar homes can vary considerably based on HOA dues. This makes sense due to the cost of living but my question is about future resale. Is there any research on the impact of HOA dues on home price appreciation?
Bottom Line: HOA or no HOA, that is the question for many would-be home buyers. Right along the narrative has been HOA’s are generally positive for home values as they’re able to create minimum community standards. That’s likely the case in many communities but it’s certainly not universally true. Especially in South Florida where HOA dues commonly rival mortgage payments in size and let not talk about the potential for special assessments. The best recent research on the topic was conducted by Yale University researcher Leon Robertson. He studied properties in Arizona, Florida, and Missouri. The peer-reviewed study accounted for all factors which impact property values over the course of 2017 and 2018 and adjusted for inflation during the two-year window. The study then provided an APR for each property type based on location. This was the first accredited study using this methodology. Most previous research had simply taken the average sales price for homes within HOA’s and compared them to sales of homes without HOA’s. That methodology fails to accurately account for the location as there’s a larger percentage of non-HOA homes in rural areas with lower average property prices and a higher concentration of HOA’s in densely populated areas where location premiums are the norm.
So, what did the study find? Homes not governed by HOA’s appreciated at a significantly higher rate than homes in HOA governed communities. This was true in the states studied. The summation of the research found that on balance, homebuyers cannot or do not want to pay HOA dues. Also, HOA’s are more likely to be viewed negatively than favorably and consumers who value individual rights intentionally avoid HOA’s.
Now again, that’s not everyone, these summations are the averages of the findings in the study. Clearly, not all HOA’s are created equal. That being said, as a former HOA vice-president who attempted to reign in my community’s HOA, I especially identify with the third takeaway. Based on the research there are clear takeaways for your situation. If your priority in buying today is maximizing home price appreciation later, on balance it’s likely better to buy a property that’s not governed by an HOA.
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