New data from the U.S. Census Bureau reveals that the number of new homes in a community governed by a Homeowners’ Association (HOA) outpace the number without.

In 2018, there were 840,000 new single-family homes completed, and 64% of those – about 535,000 – were part of a homeowners association (HOA).

It’s not just based on buyer demand, however – local governments like them too. University of California, Irvine economics professor Matthew Freedman says one reason for the increase in HOAs is they help reduce financial pressure on local governments.

“The local government requires the developers to set up an HOA to maintain roads and parks,” in particular in low-density communities that might not be generating significant long-term tax revenue, says Freedman. He says the Clean Water Act requires communities to manage water runoff by building and maintaining costly catchments, for example.

HOAs also help control development and limit what homeowners can do externally, he adds.

“On average, buyers pay at least 4%, or $13,500, extra for a house that is subject to an HOA,” Freedman and co-author Wyatt Clarke wrote in a recent paper.

Source: Inman (07/19/19) Dalrymple II, Jim

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