Almost every homeowners association in the country feels the highs and lows of the housing market. Drawing on our years of experience consulting and managing HOAs, here are a few common misconceptions about what contributes to the rise and fall of HOA property values.
Monthly Assessments Are Too High
False. Actually, monthly assessments have nothing to do with property values, and high monthly assessments will not turn off potential buyers, if they’re educated buyers. An associations assessment may be higher or lower than a neighboring homeowners association depending on many factors. Is your association providing more services? Is your property older? What utilities are included in the assessment and do you have more homes?
The more important question is, what value are residents getting for their money? To answer that question, the association mails a detailed budget with line-item documentation to all owners and makes it available to potential buyers. An assessment that is too low should be as much a red flag as one that appears too high.
We Have Too Many Renters
False. Lenders are required to charge higher rates for loans or deny a loan for homes in associations with renter-owner ratios that exceed a certain percentage. But that doesn’t mean renters affect property values. Association boards should see renters as owners-in-training who aren’t ready to purchase their homes yet. In fact, renters have all the same rights to enjoy homeowner association amenities as owners, except voting or holding office. Welcome renters, encourage them to participate in association activities and maybe they will eventually buy a home in your community.
Community Living Is Carefree
True and false. Most association living is maintenance free, leaving maintenance decisions to a board of directors, but not entirely carefree. Residents need to care about their community and recognize that common-interest living involves service and commitment. Good maintenance increases curb appeal which helps sales and may help property values. However, without committed residents to be the eyes and ears of the community, maintenance and curb appeal are quick to suffer. Encourage members to call the board of directors or property management if they see maintenance items that should addressed.
Uniformity Is Necessary to Protect Property Values
False. The board’s objective is to maintain standards rather than ensure uniformity. Yes, some uniformity in architecture and aesthetics is good, but a board should consider that there is room for individual expression, as long as aesthetic standards are met. The specific regulations can vary greatly depending on your governing documents, so be sure to review them closely.
HOA property values are based largely on comparative values of homes throughout a community. There will always be fluctuations in the market, however you can help ensure that HOA property values are at peak levels by assessing adequate fees to maintain those common areas now and for years to come. Invest in a good reserve study and plan for long-term value.
At The Hignell Companies we have been helping HOA and Condominium boards to manage their properties effectively for over 30 years. We provide full Board Advisory and Accounting services to nearly 40 associations, ranging in size from 25 units to 2300 units. Our range of services can meet the needs that you have for accountability and service, and we ensure that everything we do is measured by our commitment to "Creating Caring Communities."