Let me first state that I’m defending no HOA, as all HOAs are different, run by different boards, the quirky personalities that comprise those boards, and often outside management companies hired by the HOAs, with varying degrees of competence. Rather, I’m defending HOA dues, as compared to costs of owning and maintaining a single-family home.
The number one objection I receive to purchasing condos from buyers is the monthly HOA payments, as if magically these figures will be saved by owning a single-family home instead. This outlook can be incomplete and misguided. Because I sell here in the Bay Area, I’ll be comparing costs in the Bay. Mileage may vary in far-flung areas.
Note first that HOA dues tend to cover at minimum water/sewer and garbage service. These costs vary greatly by individual locale, as San Francisco water bills are considerably lower than East Bay water bills, and garbage contracts vary by municipality. Let’s look at Oakland: The single-family residence (SFR) garbage bill is $160/quarter and rising. The SFR water bill is around $90/mo and rising. That’s $143 immediately in an SFR without including maintenance costs. Some HOA dues include internet and/or cable. Some include hot water or heat. Most condo dwellers aren’t installing security alarms. An SFR alarm system could cost $30/mo in monitoring, and there are setup and maintenance fees.
Secondly, who cares for your yard and driveway and maintains the grounds of your SFR? What’s your gardener/landscape budget?
And finally, let’s talk about repair costs. Most SFR roofs in this area will cost around $20,000 for replacement. This varies greatly depending on size, pitch, and other factors. But let’s say your roofing costs are going to be $12,000 to $35,000 over the course of 30 years. What about sewer and drainage? I’m about to have roughly $25,000 done in sewer and drainage work on a multiunit I own and used to live in. I spent $22,000 on an earthquake retrofit at the same property, and that didn’t even address the 100-plus-year-old foundation, whose replacement would have been $40,000 at the time. HOA dues collect and pool many resources together for such jobs, so the blow is much smaller per individual condo resident.
Speaking of me, I recently put the unit I was living in at that property into depreciation on my taxes, as prior I could only depreciate the rental portions I was not occupying. This gave me the chance to review my receipts and (re)discover how much I’d spent on this property over the years. Once the work completes this year, it will be $200,000 in the course of 10 years, or $20,000 annually. Now, much of this work -such as kitchen and bath remodels and refreshes- would not have been covered by HOA dues, but a significant amount would. There’s also the countless problems with neighbor trees and vegetation that ostensibly an SFR owner should not have to get into, but they do. Although neighbors are to share costs of fences and each resident is to care for their own trees, it doesn’t work this way realistically. You know the partner who doesn’t see dirt, so you always clean? That’s the neighbor who thinks the rotting, blown-down fence doesn’t need replacing.
To return to my numbers, I’ve spent a significant amount of money on repairs, maintenance, water, garbage, and more in both SRFs and small residential multiunits. Condo HOA dues would have been cheaper, and I’d have had more free time from letting others handle bidding and overseeing work.
What is the money and time worth to you? Only you can decide which is best for your situation, but don’t think of HOA dues as thrown-away money.
Do think about this as you object to HOA dues and think you’ll spend more on a condo. Truthfully, you’ll probably spend more on a single-family. However, the control and satisfaction may be worth it to you. In condos you can’t control when interiors and exteriors are repainted. You can’t control when the major HVAC upgrade happens. But you can with your own house.
If your condo HOA objections are about money, you can likely allay those fears by taking a look at my receipts or speaking to your SFR-owning friends about their costs.