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Our condo HOA monthly fee is $950. It was $700 when we purchased in September 2018. All of the increase was higher costs associated with upkeep and maintenance, not improvements or added services.
Now it’s likely the increase in July will be 7.4% to $1,020. ($840 a year).
Annually the increases averages 4.82% since 2018. For reference the annual rate of inflation since September 2018 was about 3.65%, but that is not directly applicable to running a complex of nine buildings where repairs are needed on everything from elevators to fountain pumps.
The complaining and criticism have already begun. Imagine 108 senior households agreeing on spending money – the tennis court needs repair (I don’t play tennis) – building one needed elevator repairs (I live in building 3). Why do we need a full time property manager? etc., etc. We are also prone to wanting things done when and how we want them done and often critical when they are not.
Above all is the desire to maintain property values, but that may not be the priority for some who did not plan or consider increasing fees. To be sure, HOA fees offset building and outside expenses of owning a home and they pay for added amenities like a pool, tennis courts, etc. However, owners still have property taxes (around $14,000 a year) homeowner insurance, HVAC maintenance, repairs and replacement, interior painting.
Nobody who lives in this community paid less than $500,000 for their condo even going back to 2011 when it opened. I know because we looked at the models back then and concluded we couldn’t afford to buy. The last unit sold for over $900,000 (there are different sizes).
It will be interesting to see who wins this HOA debate. Will it be the short term, $840 more annual expense view or the longer term maintain all necessary and desirable services and values view?
I would not suspect that a $840 a year added expense would be significant for families living here, but that may not be accurate, it may depend on the income versus net worth dilemma.
One thing for sure, the cost of living always goes up. Why are people, especially retirees, often surprised.
It is not only the ever increasing HOA fees, but also special assessments that cause residents to revolt. We had a recent HOA fee increase to cover reserves for roof replacement, which will be needed in 20 – 30 yrs. Residents opposed it, saying ” We won’t live that long to see the roof replaced, why should we pay now?”.
Ah, good point, but of course contributing to the long term viability of the community is part of the deal. That is something people need to realize.
It’s like saying we shouldn’t pay property taxes because we no longer have children in schools. Or why should I pay SS taxes as I may never collect. When I buy insurance I hope I never collect a penny.
This comment is related but slightly off topic. It turns out that you can buy a loss assessments” rider to your HO-6 policy. For a modest fee (< $50 per year for $50K of coverage), you are coverage for special assessments that arise from a “covered claim” such as hail damage. Assessments for regular repair and maintenance are not covered.
In our HOA, we have encouraged everyone to get this rider because our insurance deductible is more than the cost of replacing the roof. (Every insurance firm quoted a separate deductible for damage due to wind/water!) Not a perfect solution but the loss assessment rider will ease the pain when (not if) a major storm / tornado hits and takes out a few of our buildings.
I agree. I think people get the concept of the HOA before they buy a unit, but they don’t stop to think of the additional expenses that they did not have as homeowners. They probably didn’t have an elevator, maybe no pool and clubhouse, and they didn’t have to pay an administrator. Roof replacement is a huge expense to HOAs, and the costs have gone up much faster than overall inflation. So if they haven’t done a roof in a while, there will be some sticker shock. Some probably deferred or just plain ignored maintenance, so now they expect to do the same.
People need to do a little homework before jumping into an HOA. I bet there are books available to help educate buyers. You know, just like there are books to help people with personal finance.
Right on. What you may save from not owning a home is easily offset. The tradeoffs may not be equal. I know I didn’t think of it, but then our main motivation was one floor living.
Maintenance costs increase for everybody. It really doesn’t matter whether you own in a community with an HOA, a CCRC or stand alone house. Nobody wants to pay more, but the alternatives aren’t appealing.
Of course you are right and that was basically my point.
I purchased a condo in 2005 and lived there since. The condo fees were $450 at the time and are now $1200/month. This calculates to 5% annual compound interest.
Some points to note:
The good news is the monthly fees cover building insurance, maintenance of the pool, gym, landscape, cleaning, utility bills for all common areas, trash/recycling, a building manager and two maintenance guys. Our association is well run and well funded.
The set up here is perfect for aging in place. Supermarket (pantry) across the street, I can see the hospital from my window, and downtown is walkable distance.
Better still I have not raked a leaf or shoveled snow in 20 years!
I love condo living but the costs seem to be outstripping official inflation rates. That being said the costs of owning and maintaining a sIngle family home isn’t cheap either?
Sounds like a good location. Even though we are 7/10 of a mile from where we lived for 45 years in a town of 15,000 we can’t get to anything without driving, except ironically the gas station.
Your #1–exact same thing with our condo buildings. The developer set the dues low (subsidized them) to help sell them. And it was our first reserve study that brought this to light.
Yep…home ownership comes with its own unique set of costs. In the last 18 months alone I’ve had to replace 8 Velux window units, and a 12′ x 8′ triple-glazed pane that blew its seals and misted up between the glass panels. The flashing where the wood burner flue penetrates the sunroom roof started leaking and needed redoing, and some coping stones on the roof apex worked loose over winter and had to be re-mortared back into place. The expenses just never stop.
My condo experience was rough. Just 2 months after we movede in the HOA sued the developer for significant building defects. The HOA for the 205 units ultimately settled for about $2.5M.
After using the settlement for most of the defect repairs, the HOA fees went up by 45%. Was that realistic? If anything, it was not enough. Turns out the engineering study never included repaving the roads. So the wave of people selling was incredible.
The larger developments can mitigate the increases across a large number of units. But if you have less than 100 units, hold on for the ride.
We sued the builder and several sub contractors too. Got a settlement, but not significant. Our building, the first built is now15 years old.
We also had a major settlement with the builder for construction defects. We had the repairs done and still have a large slush fund for future work that will be needed.
As I mentioned in DrLefty’s home moving piece, we’re casually browsing the property market at the moment, but we’ve decided to steer clear of developments with HOA fees — mainly because of the lack of control over potential increases. That said, if we did end up buying somewhere with an HOA, I’d want the fees to be realistic and properly justified, with a fully funded reserve rather than kept artificially low just to keep residents happy. The same goes for the contingency reserve — fully funded, not sitting at the bare minimum.
My father-in-law’s experience with his Spanish property is a perfect illustration of why. The HOA board had spent years caving to the loudest complainers and keeping fees unrealistically low for an easy life. When a major issue with the pool eventually needed fixing, there was nothing in the pot — and every owner got hit with a one-time special assessment to cover it. Entirely avoidable, had anyone been willing to do the right thing from the start.
Exactly right–you want to avoid that big, unplanned assessment hit. Increases in dues are annoying but at least you can plan and budget for those.
Our HOA fees increase a flat 10%.
I meant to mention this in my post about selling our condo, but there was an article in the WSJ about 10 days ago about surging condo fees around the country and how they’re hurting condo resales. That’s why we feel very lucky to have sold ours easily at a modest profit (around 10% over seven years, though that doesn’t count sales costs).
We talk about this a lot on our HOA board and do what we can to cut costs. For example, we hired cheaper window washers this year after deciding we don’t need them to climb onto balconies and clean the sliders—we can clean our own sliders. We also recruited volunteers to put up and take down elevator pads for moves and large deliveries, saving the HOA having to pay for that. But for elevators or garage gates going out of service, you pay what you pay. Especially in a community with lots of seniors, those things need to keep working.