By Deborah Goonan, Independent American Communities
Don’t let community association industry leaders – the ones that profit from proliferation of common interest communities – mislead you into believing that nearly all consumers are clamoring to live in common interest communities burdened with mandatory owners’ associations.
There is plenty of evidence to suggest otherwise. For one thing, we have seen increased media coverage of the less glamorous aspects of living under Association rule. Not a day goes by without at least one report of dysfunction, financial distress, criminal behavior, or conflict in a homeowners, condo, or cooperative association.
Read any comment thread or listen to televised interviews, and you’re likely to hear quite a few negative comments about Association-Governed Residential Communities.
Of course, the promoters of common interest communties continue to try to convince the public that these are “isolated incidents.”
A lot of people aren’t buying hat argument.
Nevertheless, for the skeptics, here’s a roundup of some objective data that points out the need to adjust the housing market to consumer demand.
Homebuilders’ survey reveals that common ownership and shared amenities are not important or desirable to today’s buyers.
National Association of Home Builders conducted a study in 2013: What do home buyers really want?
The results are summarized in the two charts below.
*(Source: http://eyeonhousing.org/2014/01/home-buyers-really-want/)
As you can see, buyers are most interested in certain modern features of the home itself – features that tend to be more common in new homes. None of the top-rated features are related to the community or the outward demand for Association-Governed Residential Communities.
Now take a look at what buyers say they do not want in a new home.
Hmmm….looking at the “Most Unwanted List,” it appears that buyers definitely do not want typical HOA features such as an elevator (common in multi-story condos), a golf course integrated into the community, high denisty (houses sit close together or share attached walls), gated entry, or mixed use (residential property owners share ownership with commerical property owners).
NAHB survey results seem to suggest that home buyers purchase in spite of the presence of a mandatory owners’ association, not because of it.
Community Associations Institute (CAI) survey reveals contradictory attitudes about HOAs.
Although CAI spokespersons tend to tout that “90% of residents rate their overall community association experience as positive (64%) or neutral (26%),” they also tend to downplay the high percentage of “neutral” ratings, and usually do not highlight contradictory results from the same survey.
For example:
CAI inquired about “Pre-purchase Awareness,” asking
Did the fact that your current home is in a community association make you more or less interested about purchasing or renting the home, or did it have no impact?
The Results: 57% (more than half) said the existence of a mandatory owners’ association had no impact on their buying or renting decision. About one third of survey respondents said they were more interested in having an HOA, but 12% said that made them less interested.
Once again, the answers suggest that the vast majority of consumers do not actively seek out common interest communities with restrictions and owners’ associations, suggesting that they would be very open to alternatives.
The CAI survey also shows that there is increasing skepticism of the benefits of HOA rules and restrictions upon property values, the primary selling point made by the industry.
When CAI asked Association residents in 2014 if they believe rules and restrictions enhance property values, 70% said yes, but 30% said that rules and restrictions either have no impact or actually harm property values. In 2005, 78% said yes, and 22% indicated either no impact or negative effects – a 10% drop in confidence that Associations improve property values.
Yet, in the same survey, only 9% of respondents chose “property values” as the “best aspect” of living in an Association. Top choices were:
- 23% Clean, attractive neighborhood
- 16% Safe neighborhood
- 15% Maintenance-free neighborhood
US Census reveals what consumer advocates have known for more than a decade: most new construction imposes mandatory Association Governance upon its residents.
According to the Census Bureau’s Survey of Construction (SOC):
59% percent of new single family homes were built in communities with mandatory HOAs in 2014, compared to 46% of homes in 2009. That represents a 28% increase in construction of HOA homes in just 5 years. However, those figures include construction of homes for rent.
Looking strictly at homes for sale, 73% were built in HOAs in the US. Broken down by region of the country, the figures are as follows:
- 46% Northeast
- 55% Midwest
- 80% South
- 73% West
Non-HOA, non-condo housing choices are particularly limited in the South and West regions of the US.
Conclusions
Looking at all the data collectively, it’s easy to see the disconnect between consumer demand and housing supply.
So as 2015 comes to an end, I’d like to suggest the ultimate HOA reform proposal – give consumers the choice to avoid Owners’ Associations altogether.
That process can begin with new construction and redevelopment that does not impose either common ownership or developer-written deed restrictions, thus eliminating the perceived necessity for an HOA.
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