February 2023 IAC HOA News Digest: Condo, HOA living is getting a lot more expensive
By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com
An article in the Fort Worth Star-Telegram caught my attention today: ”Is your HOA heaven or hell? In Texas, buying a house almost always means joining one.” It’s yet another report proving that public opinion of HOAs is becoming increasingly negative.
By now, it’s old news that, in many metro areas of the U.S., it’s nearly impossible to avoid HOA-governed housing. That includes condominiums, cooperatives, townhouses, and single family homes in planned communities. Bit it’s not just a problem in Texas. Much of the Southern and Western United States has the same problem — a severely limited supply of homes on the market that are NOT ruled by a homeowners association.
The fact that U.S. housing consumers are waking up to this reality is, in my opinion, a positive development. But, even better, some community association managers are also starting to acknowledge the HOA management industry, like the communities they manage, is rife with hard-to-solve problems.
Quoted in the Fort Worth Start-Telegram, Ryan Smith, a property manager in the HOA business, admits the fact that many people don’t really like HOAs.
[Ryan] Smith ought to know. He makes a living as a property manager and he is president of the Northwest Fort Worth Neighborhood Alliance, a cooperative of some 30 HOAs. With 5,965,000 Texans belonging to homeowners associations, “A lot of people, you’ve probably heard, have negative thoughts on HOAs,” Smith said.
Fort Worth Star-Telegram: ”Is your HOA heaven or hell? In Texas, buying a house almost always means joining one. (Sept. 23, 2022)
The quote is notable, in light of the fact that the preeminent HOA management and legal trade group, Community Associations Institute, claims that, in the U.S., according to their latest survey, “89% of residents rate their overall community association experience as very good or good (67%) or neutral (22%).”
Of course, CAI won’t tell us how many people they surveyed. In fact, for the past 3 biennial surveys, CAI’s research foundation has provided absolutley no demographic information about their survey sample.
Who are these ”happy” residents? Are they owner-occupants or real estate investors in the HOA biz, who don’t actually live in their HOA-governed communities? Are they HOA board members or community members at large?
How diverse is the survey sample, and does it accurately represent the population of U.S. residents? How old or new are the communities where the respondents own homes? How many of the HOAs represented by the survey sample suffer from the common ailments of deferred maintenance and low reserve funds to pay for repair and replacement of common elements?
We’ve asked, but CAI remains tight lipped about the people who answered their self-funded consumer satisfaction survey. That lack of transparency, along with substantial circumstantial evidence to the contrary, has a lot of us common sense folks simply dismissing CAI’s survey data as nothing more than a reputation management tool for the HOA industry.
Former community association manager says HOA industry has a ‘deep, dark underbelly’
The level of dissatisfaction with HOAs is especially apparent when current and former community association managers begin to publicly admit that most of their industry colleagues flatly refuse to live in housing under the rule of an HOA regime.
For example, in her reaction to a deadly shooting in Atlanta, which resulted in the death of a condo manger, Vicki MacHale, a former HOA manager writes, on LinkedIn:
There is a deep dark underbelly within the Common Interest Development Industry that must be addressed, or we will continue to see an escalation in violence, depression, addiction, and an overall decline in mental health against and/or amongst our staff.
Did you know the #1 request Realtors receive is to see homes outside of an HOA? That is becoming more unlikely every day, and in some states, next to impossible. I think back to how many times I’ve been involved with discussions where industry leaders sat around and pointed fingers at “crazy” homeowners, board members, competitors, and legislators for the continued degradation of our industry. How they laughed when they proudly proclaimed, “I would NEVER live in a Homeowners Association.” How many times did I bite my tongue, (or didn’t), when those words were uttered? Hundreds?
What if Bill Gates used an Apple Computer, Tesla drove an Audi, or Steve Jobs used an Android? What would that say about their brand and faith in their product? What message would it send to their consumers? Should we be proud that we purport to represent an industry that we ourselves would not want to live within? It’s time we take a long hard look at what we’ve created and stop the gaslighting – gaslighting our staff, our clients, and most importantly, ourselves.
by Vicki MacHale – writer/advocate/HOA consultant
LinkedIn post of August 30, 2022
Exactly! Why are housing consumers in many parts of the U.S. expected to accept and “like” HOAs, when the professionals who manage them avoid them like the plague?
Is the number of HOAs really increasing exponentially?
Some CAI member HOA attorneys like to gloat about the fact that HOAs dominate housing supply in Texas and other real estate markets. Attorney Gregory Cagle claims, in the Star-Telegram, that, due to public policy at the local level, the number of HOAs will continue to grow.
The number of HOAs in the state is only expected to grow from here. By 2040, the homeowners association housing model is expected to become the most common form of housing. “It’s nearly impossible for practical reasons, under today’s laws, for any real estate development to be created that doesn’t have a homeowners association, which is why ultimately the number of associations grows exponentially every single year,” said Gregory Cagle, author of Texas Homeowners Association Law.
Fort Worth Star-Telegram: ”Is your HOA heaven or hell? In Texas, buying a house almost always means joining one. (Sept. 23, 2022)
Total HOA industry BS. Are we really going to accept “we’ve always done it that way, and always will, because the law says so” as an excuse to continue creating even more HOA-governed common interest housing development, in spite of the fact that so many people despise them?
I think not. Laws can be changed. And laws will change, when enough homeowners and HOA residents get fed up enough to stand up for their rights, when housing consumers demand a higher supply of non-HOA housing options. Recent media coverage indicates that HOA residents, and even some HOA-industry professionals are now reaching their breaking points.
As for the actual data on HOA-governed home sales, 2021 data from the U.S. Census Survey of Construction shows that the ratio of new construction HOA vs. non-HOA home sales remains flat at most price points (within the statistical margin of error), except for homes priced at half a million dollars or more. Only the most wealthy home buyers in the most expensive housing markets are seeing a significant increase in the proportion of new home sales in HOA-governed communities.
Kind of blows up the bogus HOA-industry claim that HOAs homes are more affordable to purchase.
See the actual data for new construction of single family homes in the charts below.
As for multifamily housing construction, in 2021, 94% of buildings with 2 or more units were built for rent, not for sale as condos. Only 6% of multifamily construction consisted of condos in both 2019 and in 2021, and only 4% in 2020. See this table for the data. That’s definitely not exponential growth.
Overall, HOA property owners have higher housing costs than residents of non-HOA property
Some CAI members continue their relentless pro-HOA social media campaign, like this recent Twitter post, proclaiming that HOAs exist because homeowners don’t want to pay higher property taxes.
You can see my response, which states the obvious. Privatizing public services costs more, because private industry expects consumer-taxpayers to provide additional revenue to guarantee their healthy profit margin.
For half a century, HOA home buyers and homeowners have been exploited as tax revenue cash cows for local governments. And public awareness of double taxation is creating more backlash against HOAs and the local governments that handed out construction permits requiring them.
Why do people dislike HOAs? A Texas attorney explains.
J. Patrick Sutton, an Austin-based real estate attorney who specializes in HOA law, says HOAs are given far more authority than they used to be, making it essential for homeowners to know the limits of their HOA. What the board can do is spelled out in the restrictive covenants for your subdivision. If it isn’t, the board doesn’t have that power. He recommends consulting a lawyer in the process of purchasing a home in an HOA community, as they can read those restrictions and advise you before you buy. “In some of the cases I’ve handled, I’ve had board members say ‘We’re the board and we can do whatever we want.’” Sutton said. “That’s false, because HOAs are authorized by restrictive covenants. Those restrictive covenants that are on file in the county are the constitution for every subdivision. Those are what define what a board can do. Many of the fights I’ve had over the years are about when restrictive covenants are silent. Does that mean a board just gets to do whatever it wants? And the answer’s no. Silence means that there is no restriction.”
Fort Worth Star-Telegram: ”Is your HOA heaven or hell? In Texas, buying a house almost always means joining one. (Sept. 23, 2022)
Yep. HOAs overstepping their boundaries and abusing their power. That’s definitely a primary complaint about HOAs from homeowners I have talked to across the country. Not just in Texas.
Another common complaint I hear is that HOAs aren’t worth the extra expense of HOA fees, especially when HOAs defer or neglect maintenance, or refuse to intervene when a neighbor creates an actual nuisance or threat to public safety.
Many HOAs focus on enforcement of architectural standards, or pushing through common property renovation projects to suit their own personal preferences. Why? Perhaps because it’s easier to start debates over paint colors and design choices than it is to implement a sensible, expensive maintenance and repair plan.
No wonder so many folks wish they could avoid HOA hell — or at least hold their HOAs and local governments accountable to consumers and taxpayers.
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