Posted By BrianB on 12/04/2006 3:43 PM
Ron, i am curious... after looking at that website, i wonder once again: does anyone have an factual data about the value of an HOA? Is there any statistics that show that property values rise faster in an HOA neighborhood versus a non-HOA neighborhood? Or that they stay higher, for comparable properties?
I think the problem is any study could not account for all the variables. For example, most new suburbs construction now has a HOA so 'comparable' non-HOA properties may be difficult to find. HOA developments now typically have amenities that non-HOA properties can't normally have: clubhouses, pools, tennis courts, private parks, etc. The other issue is enforcement. If a HOA doesn't enforce it's rules then it will look like a community with no rules. It's subjective, but I know in my town two communties with strict rules and super active HOAs have had astronomical demand and price growth compared to other HOA communties that now look run down after only 5-10 years. That's right, I said other 'HOA' communities...HOAs that don't enforce or don't have strict rules to begin with. It's not HOA vs. non-HOA; it's that people buy on 'looks' and these active HOA communities with strict rules look great. Manicured lawns, well kept homes, no 'tacky' decorations outside, etc. Curb appeal sells and in my little example, the neighborhoods that look great have a 20%-30%/sq. ft price premium. Again, it's only one example in one price range in one town; your mileage may vary. However, if there was no HOA and these places still looked the same and had the same fees for private amenities then the price premium would still be there. It's not the HOA; it's that 'nice' sells and it's hard to get a consistently 'nice' community without rules.
On the other hand, some non-HOA properties that have higher value are:
- Quaint neighborhoods in a historic district that have stricter rules than any HOA
- Country properties with large lots and less restrictions
However, I'd take this bet any day:
Build two 100 home subdivisions side by side in the suburbs with the same type homes and lot sizes at the same price. Give both no ammenities but one has a HOA with strict cosmetic rules (that make sense) and actually enforces them. The other has no rules at all. Come back in 5-10 years and compare values. The HOA that actually enforces a 'good' set of rules will have higher home values. In those 5-10 years people in the non-HOA will have painted ugly colors, done tacky yard art, put up rusty metal sheds, ugly fencing choices, etc. Not everyone has marketable tastes and this does affect many buyer's willingness to live next to them, which affects prices. Again, it's not HOA vs. non-HOA; HOA is just a means to accomplish rule enforcement. Historic districts can accomplish the same goal with no HOA. Some small communities accomplish the same goal with their own government-enforced rules.
In very hot seller's markets like AZ or CA maybe the difference will be less. In a buyer's market no one has to buy the unpleasant looking neighborhood.
There was another discussion on this at the following address:
http://www.hoatalk.com/Forum/tabid/55/view/topic/forumid/1/postid/2788/Default.aspx
One comment there is:
" I am a Realtor and HOA VP in Illinois. I can say in our area, homes in HOA's do appeciate faster/maintain value more than homes that are not.
A few of the more simple reasons why in my neighborhood:
You won't have a neighbor who stores their 29 foot boat and trailer in their driveway.
Your neighbor cannot paint their home purple.
Your entrance landscaping and pond will look nice. If it does not, the city will take care of it for you and send a big bill.
No fences falling down, giant above ground pools, sodium lights, etc.
In some areas near us with no HOA...these things exist. And even if it is just the perception of the 'quality' of the neighborhood, it matters."