AUSTIN – (By Dale King, Realty News Report) – While Americans grapple with a host of housing affordability challenges in their search for reasonably priced housing, another financial strain comes from the rise in Home Owners Association (HOA) fees.
A survey just issued by Realtor.com. says more homes on the market last year required an HOA payment — and those fees were more costly than the ones assessed the year before.
“With a down payment and closing costs up front, and then principal, interest, taxes and insurance every month after that, purchasing a home is already a financially daunting task before adding rising HOA dues,” said Danielle Hale, chief economist at Realtor.com.
Of the monthly HOA payments assigned to listings on Realtor.com in 2024, 40.5 percent charged more than a zero HOA fee, up from 39.2 percent the year before. The median mandatory HOA payment was $125 per month, up from $110.
“Homes like condos, townhouses and new construction single-family homes in neighborhoods with ample amenities are more likely to have an HOA fee,” said Hale.
Realtor.com says more homes now being built and becoming available for sale have HOA obligations, and these dues are becoming increasingly expensive.
Houston among top 10 HOA-likely metros
The Realtor.com survey listed Houston among the top 10 cities where buyers were most likely to be assessed HOA dues. More than three-fourths of homes listed in the Houston metro area — 76.8 percent — were subject to these fees in 2024, compared to 40.5 percent of all for-sale listings across the U.S. The survey defines the Houston metro area as Houston, The Woodlands and Sugar Land.
The report took a wide looked at the share of listings subject to HOA fees in the nation’s metro areas. Edwards, Colo., had the highest share of homes impacted by such fees — nearly 90 percent. The median monthly dues assessment in that Colorado town is $525, one of the highest in the nation.
Houston’s median HOA fee, about $67 a month, was significantly lower than the national median. This partly reflects the region’s housing supply, says the report, which includes more single-family homes than condos.
Realtor.com said areas most likely to be hit with an HOA fee are those with a high concentration of new construction or a large number of condo units, especially in desirable beach and ski markets.
HOA fees generally cover the costs for an association’s common areas, including landscaping, roads and gyms as well as security and some insurance coverage — expenses that can be more affordable when purchased in bulk rather than by individual homeowners.
HOA fees often needed for property upkeep
Homeowner fees are often a necessary addition to the cost of home upkeep, said Hale. “For many properties, HOA benefits often include a certain amount of maintenance and even utilities that homeowners without an HOA will need to include in their budget,” she noted.
Memberships, if there are any, often require fees and adherence to guidelines. Benefits include improved property values, enhanced amenities and a well-maintained neighborhood aesthetic.
“When considering a home with an HOA,” Hale advised, “buyers should work to understand what benefits it provides and how the HOA fees factor into their overall budget.”
Where are buyers most likely to pay an HOA fee?
HOA payments are much more widespread among condo, rowhome, and townhome listings (referred to collectively as condos) than single-family homes, says the survey. 83.8 percent of condos for sale in 2024 had HOA dues attached while just 33.6 percent of single-family homes did.
Smaller markets with fewer newly built homes and condos, mostly in further inland markets, are less likely to tap property owners with an HOA charge.
New construction
Newly constructed homes are much more likely than existing residences to be subject to HOA dues. Among houses for sale on Realtor.com in 2024, 69.9 percent of new builds had a monthly HOA obligation compared with 38.2 percent of existing homes. Both shares have been growing, however, with existing homes outpacing new construction.
Newly built homes are becoming smaller and more affordable while prices for existing homes continue to rise, so part of the difference between their HOA dues can be attributed to the relative values and sizes of the dwellings.
Coincidentally, the cost of HOA membership is higher and also growing faster among existing home listings. The median monthly HOA fee for currently built residences was $148 in 2024, up 14.7 percent from the year before while among new homes, it was $71, up 6 percent.
Condos vs. single-family homes
HOA dues are notably higher for condos ($375/month) than single-family homes ($58/month), with the caution that condo fees are grouped with HOA fees in the survey’s data if they are separate expenses.
Regardless of line-item semantics, both sets of dues have seen substantial growth in just the past 12 months. Condo HOA fees are up 9.3 percent year over year and single-family home HOA fees are up 7.4 percent year over year.
Across the board, prospective homebuyers are likely to be subject to HOA dues, and those charges are likely to be higher than they were a year ago.
Feb. 20, 2025 Realty News Report Copyright 2025
Photo: CALpix
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