The economists at Trulia recently ranked the top-ten housing markets with the highest HOA fees in 2015. As you might imagine, New York City had the highest fees out of the 100 largest metro areas in the country. Several California cities showed up on the list as well.
When weighing the pros and cons of renting versus buying, homeowner association (HOA) fees must be taken into account. In some places, these fees are nominal — maybe $300 to $400 per year. In other, higher-priced real estate markets (like New York City and Honolulu, Hawaii), HOA fees can be high enough to turn people away from homeownership entirely. In such markets, homeowners pay hundreds of dollars per month to cover their association dues.
10 Metros With the Highest HOA Fees in 2015
So, which cities currently have the highest HOA fees? That’s what the team at Trulia wanted to know. They looked at the 100 largest metropolitan areas in the U.S. and ranked them based on the median monthly association fee.
The metro areas with the highest HOA dues are shown below.
- New York City — $575 per month
- Honolulu, HI — $438 per month
- Fort Myers, FL — $356 per month
- Riverside, CA — $315 per month
- Miami-Ft. Lauderdale, FL — $310 per month
- San Francisco, CA — $300 per month
- San Diego, CA — $296 per month
- San Jose, CA — $290 per month
- Boston, MA — $285 per month
- Los Angeles, CA — $285 per month
There aren’t really any surprises here. This list is basically a “who’s-who” of the nation’s most expensive real estate markets. But higher HOA fees can be more of a deterrent in some markets than others. It all depends on how they stack up against rental costs.
Weighing the Cost of Homeownership
In pricier real estate markets, like the ones included on the list above, high HOA fees weigh heavily in the decision to rent or buy. When combined with relatively high home prices, this extra cost can put homeownership out of reach for many people.
But it plays out differently in different cities. In some markets, expensive HOA fees are offset by high rental prices. So, just because an area has pricey homeowner association dues, that doesn’t mean it’s better to rent than to buy.
For instance, Trulia’s economists found that buying a home in the New York City metro area is 4% cheaper than renting when fees are considered. Without the fees, buying a home in NYC wold be 27% cheaper than renting. In Honolulu, Hawaii, on the other hand, people who rent a home have a 1% price advantage even when HOA fees are considered. So the impact of homeowner dues varies by market.
Where Does the Money Go?
What’s the point of a homeowners association, and where does the money go each month? An HOA is basically a corporation that provides services to, and imposes rules upon, a neighborhood or community. In most cases, these corporations are formed by the developer who builds the neighborhood.
The specific rules and restrictions imposed by an HOA can vary widely. Collectively, these rules are referred to as the Covenants, Conditions, and Restrictions (CC&Rs for short).
The overriding goal of a homeowners association usually has to do with preserving the common scheme of the community. For instance, CC&Rs typically prevent the kinds of home improvements that would make one house “stand out” from the rest.
Additionally, HOAs are often designed to reduce maintenance responsibilities and costs for homeowners. They frequently include landscaping of common areas, for instance, or the maintenance and upkeep of amenities such as play areas and swimming pools.
These maintenance and amenity costs are passed along to homeowners in the form of HOA fees. They are usually itemized and broken down within the association documents that owners receive upon purchasing a home.
Bottom line: HOA fees vary widely from state to state, and even from one city to another within the same state. They can range from nominal to downright expensive. If you’re thinking of buying a home in a neighborhood or community with a homeowners association in place, get a copy of the CC&Rs and other pertinent documents. Find out how much the HOA fees are and where the money goes. Read all of the rules and restrictions to be sure you can live with them.