As suburbia's inhabitants and homes have multiplied, so too has the convention of having an HOA at the helm of its operations. A homeowners association (HOA) is a organization of homeowners who administer the rules and uphold the covenants, conditions, and restrictions (CC&R) of subdivisions, developments, and condominiums.
In 1960, only 500 were in existence. Today that number has grown to include 40 million households—53% of all owner occupied households in the U.S. 70% of these HOAs are volunteer run, with board members elected by their fellow resident homeowners who live within their community.
With so many HOAs running the show, it's hard not to find yourself living in one. An HOA provides homeowners with amenities like landscaping, clubhouses, pools, and parks and play areas for children and families. The cost of dues vary widely, but typically range from $200–$400, and you generally get what you pay for. The higher the HOA dues the more amenities homeowners in the community will be provided.
With all of the perks and pluses that can come with HOA living, it also has what some people might consider a downside. HOAs almost always limit and put stipulations on what you can and cannot do to your home and property. Although, if you've ever had a nightmare neighbor whose yard looks like it doubles as a junk heap and the house itself looks like the movie set of a post-apocalyptic film, then you're probably happy to have some ground rules. You might not be able to paint the door purple or put up a fence without permission, but it will help stop other people's bad taste and hoarding ways from impeding the enjoyment of your property.
Every year, the bulk of the dues are used to fund the upkeep of the community and any neighborhood events, like block parties, that occur. The remainder of the dues get put into a reserve for major expenses that come up, such as street resurfacing, sewer repair or installation, roof replacement in a condo complex, ect. In theory, there should be enough money to cover the costs of any surprise expenses, but in reality, repairs can cost more than budgeted for. Also, there are some homeowners who don't pay their dues and aren't contributing their fair share to the maintenance of the HOA.
When funds come up short, a special assessment needs to be levied upon the homeowners within the HOA to make up the difference. This can cause stress and be a burden on those with a fixed income. However, raising dues is something that is generally voted on, giving homeowners a say. Also, repairs and maintenance isn't left to slide and become a bigger problem like it can in non-HOA situations. Making sure repairs are made through your HOA along with all of the other members insures that problems won't fester and cost you more money further down the line.
It's important to address these concerns when you're shopping for a house. No two HOAs are the same just like no two communities are the same. Be sure to review the CC&R of the community you are interested in. If you find it too restrictive or the HOA poorly run, then perhaps you should find a home in a different neighborhood. You don't want to find yourself living in an HOA nightmare.
If you're currently looking for ways to make your own HOA better, service.com has an HOA rebate program that gives 1% back to your neighborhood on every dollar spent through service.com.