Do HOAs increase property values? This is a question many people, especially homebuyers, ask. Before buying a home, you want to consider all of these factors. More often than not, your potential return on investment (ROI) is a top priority. You want to buy a home that will eventually have a higher value when you decide to sell it in the future.
Do HOAs Increase Property Values?
Homeowners associations have grown in popularity since the 1970s. Every year, more and more HOAs are popping up throughout the United States. Considering the benefits these communities bring, it is easy to see why they are increasing in number.
One of the most highlighted benefits of an HOA is its impact on property values. In your search for the perfect home, your real estate agent may have also mentioned it. But, do HOAs increase property values?
Does an HOA Increase the Value of Your Home?
For many people, property value is a chief consideration before buying a home. They want their investment to be worth more years from now, and they want to be able to sell the home for much more than they initially paid for it.
Several factors can influence the value of a home. One of these is the existence of a homeowners association. Does an HOA help increase house prices? Does it affect appraisal?
In a word, yes. Studies show that an HOA does have a positive impact on home value. According to the Community Associations Institute (CAI), an HOA can raise property values by 2% to 17%. Of course, the mere presence of the HOA isn’t enough. The HOA must work to preserve the neighborhood.
Another study in the Journal of Urban Economics found that houses within HOA communities are at least 4% or $13,500 higher than similar ones outside of associations. There is a clear correlation between home values and their location within HOAs.
How Does an HOA Increase Property Values?
Data shows that HOAs do have a positive influence on both HOA property values and individual home values. But how exactly do associations do this? What factors contribute to high property values within an HOA community?
1. Enhancing and Preserving Appearance
Homeowners associations are known to invest in beautification projects. These associations are in charge of cleanliness and appearance, ensuring communities remain neat and pleasing to the eye.
Additionally, HOAs enforce architectural standards and landscaping guidelines for homeowners. Homeowners must adhere to these rules to ensure consistency and curb appeal.
Examples of such standards and guidelines include color palettes for home exteriors, fencing requirements, tree pruning requirements, and rules concerning exterior changes to your home. If homeowners wish to change something, they usually must seek approval from the HOA first.
While this may seem inhibiting to some, the existence of architectural rules helps maintain uniformity throughout the community. Associations have a certain aesthetic, and these rules ensure that homeowners adhere to those standards.
2. Property Maintenance
Homeowners associations are responsible for maintaining common areas, including lobbies, entryways, stairwells, elevators, parking lots, and the like. The HOA is also responsible for any amenities and facilities.
Meanwhile, homeowners have maintenance obligations, too. The HOA’s governing documents typically require owners to keep their own properties clean and well-maintained. Homeowners also usually adhere to specific rules concerning trash and snow removal.
3. Access to Amenities
Homeowners associations are known to have amenities and facilities that members and their guests can use. These can vary from one community to another. However, they usually include swimming pools, clubhouses, gyms or fitness centers, parks, and golf courses.
The HOA is responsible for maintaining these facilities. On the other hand, homeowners gain access to these spaces with their membership. The presence of these amenities and the exclusivity they offer add to the appeal of the community and the values of homes within it.
4. Enforcing Rules and Regulations
Homeowners associations enforce a variety of rules and regulations. These include rules about noise, pets, home businesses or commercial use, short-term rentals, and even parking. Most nuisances are covered in the HOA’s governing documents. This ensures a peaceful environment for all residents.
Holiday decorations are also only permitted at certain times of the year. When a particular date passes, and a homeowner still has their decorations up, the HOA may fine them. You won’t have to see Christmas decorations in mid-February because your neighbors “forgot” to take them down.
5. Encouraging Socialization
Living in an HOA community also encourages socialization. Homeowners associations typically host social events and gatherings to help build a strong sense of community and camaraderie. In these associations, neighbors know their neighbors, which helps minimize conflict.
6. Resolving Disputes
Speaking of conflict, an HOA will sometimes encounter neighbor-to-neighbor disputes. When neighbors have spats, the HOA can step in to enforce its internal dispute resolution process. This promotes harmony within the community and keeps homeowner satisfaction high.
7. Emergency Services
During times of emergency, a homeowners association can come in handy. An HOA usually has an emergency preparedness plan that dictates how to evacuate residents and respond to specific disasters. This plan also typically includes a course of action in the aftermath.
Furthermore, most associations have contractors on retainer to handle emergencies, offering services such as debris removal and repairs.
An HOA’s reserve funds can also be very helpful in the event of unexpected costs or major repairs. These funds offer long-term financial protection, ensure the security of assets, and allow owners to avoid significant dues increases or special assessments.
Do HOAs Increase Property Values? Answered!
Homeowners associations do have a positive effect on property values. When an HOA is well-managed and properly maintained, it can enhance curb appeal and raise the value of homes. Unfortunately, it is far too easy for an HOA to have the opposite effect if it has an incompetent board or management team.
Let Condo Manager be the answer to your troubles. With our state-of-the-art software, your HOA board or management company can ensure seamless operations with just a few clicks. Call us today at (800) 626-1267 or contact us online to request a demo!
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