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How does an HOA impact your investment?

For most Americans, the most important investment is a home. How do we maintain the value or increase the value of this asset? The presence of a Home Owners Association (HOA) can dramatically increase the value of homes in the neighborhood.

In 2019, there were over 347,000 HOAcovenanted communities in the United States, comprised of 26.6 million housing units, and approximately 70 million residents living in these units. In 2018, the estimated real estate value of homes in HOA communities was over $6 trillion.

Purpose of a Home Owners Association

The primary purpose of a homeowners association is to ensure that an individual or group cannot negatively impact the market value of homes in the neighborhood. The rules and regulations established by a HOA are designed to protect the value of each property. As a result, rules become a necessity. While many people may be turned off by rule sand regulations, it is one of the primary reasons that HOA remain popular.

Impact Without a Home Owners Association

Neighborhoods with plenty of curb appeal tend to maintain property values better. While it is obvious that well-kept homes, yards, and common areas help neighborhoods stay desirable, it is hard work keeping neighborhoods in pristine condition. Without rules, homeowners would be able to act without consequences. As a result, one or a few homeowners would have the ability to negatively impact the majority.

HOA rules and Covenants

Homeowners associations hold the community to a higher standard, thereby improving the experience for everyone. It is your responsibility, as an owner, to be aware of all of the Association’s rules and covenants, and to abide by them. Your association’s declaration of covenants is part of the public records, and you are deemed to be aware of them, whether or not you have ever read them.

If you make the investment in a home or a condominium, you want to be sure that your property value does not plummet. HOA rules and covenant exist in part to ensure that home and condo owners maintain their property. Because neighboring properties help define the value of your home, it is essential to abide by the rule. Put plainly, it is to everyone’s benefit.

Additional Thought

Neighborhoods are not all created equal. Just because you like a house or apartment’s style does not mean that you will like how the neighborhood looks. A nice neighborhood with well manicured yard does wonders for your property value and comfort. Pride in ownership is obvious when the residents, whether renters or owners, maintain their homes and care about their neighborhood. A pleasant community appearance adds to home values, helps attract business investment, and just improves the neighborhood reputation. A neighborhood can go from being an interesting place with lots of energy to a place nobody wants to be in very quickly.

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