Homeowner’s associations provide many benefits for their members, and increased property values is one of the most cited reasons for purchasing a home in an HOA. Owning a home is an investment of time, money, and energy. Most homeowners expect a return on that investment, particularly in increasing property values over time. The real estate market largely controls the trajectory of property values, but HOAs can still impact the value of their homes.
Why does HOA membership maintain property values?
Being part of an HOA increases the likelihood that properties will maintain or increase their values over time, and research supports this notion. In a review study of the effect HOA membership has on property value, researchers found that community associations generally have a “positive impact on housing values.” These studies are even able to identify what kind of covenants and restrictions are more likely associated with higher property values—and which correlate to lower property values.
Here’s why. No matter how well a single home is maintained, it is subject to the conditions around it. Single homes may lose value from changes in neighboring properties. Houses that become dilapidated or remain empty will reduce the value of a home. New construction of commercial or industrial buildings or highways may increase traffic and reduce accessibility to your home. Removal of trees and nearby green spaces may reduce the aesthetic or curb appeal. No matter how diligently you work to maintain your own property, you will always be subject to the impact of surrounding properties.
Being part of an HOA provides significant protections. A homeowner’s association is designed to create a neighborhood that adheres to particular standards aimed at maintaining property values. Your neighbor can’t decide to paint his house bright orange or start dumping trash in their front yard. A developer can’t decide to build a water treatment plant in the adjacent lot. The association also protects the aesthetics of the community by maintaining green spaces and cleaning amenities. Homeowners are protected from the (perhaps bad) decisions of others, which also protects them from decreased property values at no fault of their own.
Can an HOA do anything to improve property values?
Absolutely. HOAs have a lot of power to influence the value of their properties. Maintaining common spaces and amenities, conducting regular maintenance, and avoiding aesthetic decisions that would reduce appeal demonstrates more than a responsible use of HOA fees. Homeowners often recognize this effort and may be more open to trust and respect the HOA leadership, resulting in better adherence to community covenants and restrictions.
Here are a few other ideas to improve property values in HOAs.
Pay Attention to Detail
HOA management companies are responsible for executing the mission of the community association, but the management team can do a lot more! In addition to general repairs and cleaning to keep homeowners safe and healthy, employees should pay attention to the details. For example, power washing sidewalks or building fronts can make the community look newer and better maintained. Adjusting lighting throughout the complex can also make a big difference. Add bright lights to areas that may be dangerous at night, but soften lights in community areas. Make sure that parking lots have visible lines and overgrown trees and shrubs are pruned. While each of these things on their own may seem too small to make a difference in property value, the overall impact makes a big difference.
Enforce Rules and Regulations
HOAs tend to get a bad reputation for being too strict with their rules or treating their homeowners poorly when a community guideline is broken. While this kind of behavior happens, the opposite extreme can be just as detrimental. Community covenants and restrictions were designed to improve the value of the community. Failing to enforce these rules reduces their impact, which can reduce the overall value of each property. Be sure to enforce rules fairly and equitably to maintain community trust.
Create a Sense of Community
Perhaps the most important element of belonging to an association is the sense of community. Shared amenities, special events, and clubs that operate within the HOA increase homeowner interaction and promote positive relationships. Individuals that feel ownership in decision-making often improve their bonds in the community. Inviting homeowners to board meetings and inviting homeowner comments will improve the sense of community.
Avoid Too Many Constraints
Sometimes too many covenants and restraints can be a bad thing. Restrictions on color and build can help a community feel connected and maintain a consistent aesthetic. Consider a community where all of the homes are exactly the same. It loses some of that curb appeal. Where there is no variety in color or style, the entire community suffers.
Offer Emergency Plans
One unique benefit that HOAs can offer their homeowners is an emergency plan. In the event of an accident, natural disaster, or potentially dangerous situation, a shared plan will more efficiently protect individuals. This type of preparedness also reduces confusion and chaos in an otherwise chaotic situation. Conducting a risk assessment, preparing emergency plans, and sharing those plans with the community can have significant benefits for homeowners.
These are just some of the ways that HOA boards and management teams can improve property values and increase the prestige of their community.