Folks have lingering doubts about an HOA’s role in property values due to circulating misinformation. A common misconception is that you will profit from higher property values if you live in an HOA community. While an HOA can positively affect the value of properties in a community, it is not a guarantee. For example, a community with swimming pools, a fitness center, and a bustling clubhouse could be more appealing to buyers. However, if the HOA is inefficient or doesn’t take care of these amenities, the community’s property values will decrease significantly. The truth is the rise or fall of property valuation has more to do with individual homes in a community than with the HOA.
Four Most Common HOA Property Value Myths
Myth 1: Architectural & Aesthetic Uniformity is Necessary to Maintain Property Value
While the most controversial issue in HOAs is home uniformity, the role of the HOA is to maintain standards that keep the entire community aesthetically pleasing rather than demanding absolute uniformity. Will the value of your home decline if someone paints their exterior in colors inconsistent with the majority of the homes in the neighborhood? No. Is it essential to the value of your property for every home to have the same type of shingles on their roof? Also, No. The architectural details and exterior color scheme of each house should work together to contribute to the overall beauty of the entire neighborhood throughout the community.
Fact 1: Property values are based on comparative physical features such as square footage, number of rooms, condition, and age of similar homes within the community.
Myth 2: High Dues Affect High Property Values
HOA dues have nothing to do with property values, but shouldn’t HOA members get value for their money? A well-managed HOA will have a detailed budget with line-item documentation readily available to all homeowners and potential buyers. High HOA dues won’t turn off potential buyers if they know how the dues contribute to the community. Most homeowners agree that great amenities are worth higher HOA dues.
Fact 2: HOA dues are not directly related to property value.
Myth 3: Too Many Renters Lower Property Value
There is a stigma against renters in a neighborhood, but renters don’t lower the value of homes nearby. While lenders are required to modify rates for home loans in communities with renter-owner ratios that exceed a certain percentage, that doesn’t affect property values. Neighborhood communities that welcome renters usually find that these “temporary” residents are there to stay and will most likely buy into the neighborhood when they get the opportunity.
Fact 3: The number of rented houses in a neighborhood has very little measurable influence on home values in an HOA community if the tenants take care of their property.
Myth 4: HOA Living is Carefree
While some HOA communities may seem maintenance-free, all HOA communities require upkeep and care from the residents. Many residents choose not to participate in HOA meetings and decision-making procedures actively. Yet, they still take pride in maintaining their property so the entire community can take advantage of clean facilities and enjoy safe events that the HOA offers.
Fact 4: It takes the entire community to recognize and appreciate that living in the common interest involves service, commitment, and mutual respect.
Architectural consistency, HOA fees, the number of renters, and community property maintenance play less of a role in property value than most people think. The local real estate market and general upkeep of individual homes within the community have a higher impact on a property’s worth. There can be benefits in choosing to live in a neighborhood with an HOA if it suits your personality and lifestyle.
If you have questions about your HOA or how to manage the day-to-day duties of an HOA, contact Prism Realty Management. Give us a call at 512-676-5842 — we’d be happy to talk to you about who we are, the services we offer, and our process.