Are high HOA fees scaring homeowners away?
An aerial view of a gated community.
Homeowner associations — commonly known as HOAs — are community associations that bind individuals to certain rules and restrictions. They can consist of individual houses in a neighborhood, condos, townhouses, and co-ops, with rules and responsibilities varying based on property type and location. But one common question surrounding these associations is: Are they worth it?
While homes in HOAs are generally valued at least 4% higher than other homes, associated HOA fees can be substantial. In fact, data from the Foundation for Community Association Research shows that the average monthly HOA fee in the U.S. is $390, or about $4,700 annually.
Both the prevalence of HOAs and how their fees vary by state. Because of that, Today’s Homeowner took a closer look at geographic trends in HOAs.
- Over the past decade, the percentage of homes participating in an HOA has stayed constant, at roughly 22%.
- HOAs are significantly less popular in the Midwest and South. All 10 states with the fewest HOAs relative to homes are located in those two regions.
- HOAs are most popular in Florida, Colorado, and California, with more than a third of homes being part of one. Average monthly HOA fees top $400 in six states: Missouri, Arizona, Oregon, Colorado, Maryland, and Tennessee.
- The prevalence of HOAs negatively correlates with the average annual HOA fee relative to the median home value, suggesting that fees are a detractor for membership.
National Statistics on HOAs
An area chart shows that about one-fifth of U.S. homes are part of an HOA.
Recent data from the Foundation for Community Association Research shows that the number of HOA communities rose by nearly 13% over the past decade, from 317,200 to 358,000.
The number of homes part of an association grew at a slightly slower rate, but still by a significant margin. From 2011 to 2021, the number of homes part of an HOA increased by 9.06%, with recent figures showing that 27.7 million U.S. homeowners participate in a homeowner’s association.
Despite this, HOAs are not rising in relative popularity. HOA growth mirrors the growth of U.S. housing units. From 2011 to 2021, Census Bureau data shows that occupied housing units increased by 10.92%. Therefore, the percentage of homes participating in an HOA stayed constant over the past decade, hovering around 22%.
States Where HOAs Are Most and Least Common
A list of the states with the highest percentages of homes participating in HOAs.
The percentage of homes participating in an HOA varies widely by geographic location. Homeowner associations are most popular in the Sunshine State, where nearly one in two homeowners are part of an association. Colorado follows closely behind, with almost 39% of homes associated with a community association.
In an additional 11 states, more than one in five homeowners are part of an HOA. These states are diverse geographically, spanning all four Census regions: the Northeast, South, Midwest, and West.
Meanwhile, many states with fewer HOAs are in the Midwest and South. In fact, four of the states where less than 5% of homes are part of community associations are all concentrated in the South.
Additionally, home values in those states tend to be lower. The median home value is less $200,000 across but two of the 10 states with the fewest HOAs. The two exceptions are South Dakota and Nebraska, with median home values of $219,900 and $204,900, respectively.
How Do HOA Fees Compare?
A list of states where the average HOA fees are highest.
The study calculated the average HOA fee in each state using two data points from the Foundation for Community Association Research (the total amount paid towards HOAs and the number of homes in associations).
The average monthly HOA is nearly $200 higher in Missouri ($469) than in Wisconsin ($277). But for most states (43, in total), the average monthly fee ranges from $300 to $400.
Comparing HOA fees to median home values, it’s possible to better understand where HOA fees are disproportionately high.
The average annual HOA fee exceeds 3% of the median home value in two states: West Virginia and Mississippi. In West Virginia, the average annual HOA fee is $4,700 compared to a median home value of $143,200. Meanwhile, in Mississippi, the average annual HOA fee is $4,750, and the median home value stands at $145,600.
Interestingly, these are two of the states with the lowest prevalence of HOAs, with only 4.2% and 2.5% of homes participating in community associations, respectively. This trend holds true across states with a significant negative correlation between the percentage of homes in HOAs and relative fees.
While distinguishing between the two factors is difficult, the data suggests that fees (especially relative fees based on the cost of living) are an important factor for individuals deciding to live in or join a community association.
Data on the prevalence of HOAs comes from the Foundation for Community Association Research and is as of 2021. To calculate the average HOA fees, the study considered:
- Total amount paid toward community association fees.
- Number of homes in HOAs.
Researchers divided the total amount paid towards community association fees by the number of homes in HOAs to determine the average annual (and monthly) fee per home.