$64,000 Question. What raises property values in HOA neighborhood?

[Happs]

There is a debate in my neighborhood as to what exactly raises property values. My contention is that the purpose of an HOA is for local neighborhoods to have control over streets, landscape maintenance, amenities, etc rather than City Hall. The premise being that local residents can manage their neighborhood better than the various divisions of city government. It is not the goal of an HOA to improve property values, since it is very subjective (almost like artwork) as to what exteriorly enhances a property’s value. When HOA’s were initially established and certainly before the residential real estate hysteria prior to the “bust”, one did not hear much about the the real estate industry’s self-serving mantra of “it will increase your property values”.

I would argue that macro and quantifiable conditions such as the economy, number of foreclosures in an area, crime statistics, quality of school district, the CC&R’s and especially an HOA’s balance sheet and monthly dues vs services rendered take precedent over exterior looks when purchasing a house. To that, some people want to see our community 100% fully funded as our latest reserve study indicates we are only 70% funded. They think that a 100% fully funded reserve would increase property values. This would involve raising monthly dues, but that’s one of the first things that appears on an MLS listing and a critical first impression number. No one gets the reserve study when closing, only the financial statement which shows checking and savings account balances, assets/liabilities etc.

Some people think that cosmetic upgrades like new pool furniture, mailboxes, new benches, more luxurious landscaping, etc is money well spent for the purpose of increasing property values. I don’t see the correlation.

Others think that there should be no restrictions on remodeling because it will increase property values for all. I don’t see the correlation in this because people will know if a “comp” has been remodeled or not.

What increases property values and what is a waste of money?

[spdrun]

Personally, I’d pay 10-20% extra for the LACK of an HOA. Especially in California where there’s no need to clear snow, etc.

[njtosd]

To the extent you accept that an HOA is necessary at all, I think you are right. But I’m not sure that they are necessary. We have lived in two homes in SD without HOAs and one that had an HOA (the one with the HOA had a lot of rentals for UCSD, etc.) We never wished for an HOA when one didn’t exist. And the one time we did have to deal with an HOA it was clear that the board was interested in handing out maintenance contracts to friends. So the interest in upgrading things for resale value I think is simply a ruse.

[SD Realtor]

Overall market condition have a much greater effect on a subject property then anything. You can deck your house out as much as you want but if it is not conforming to the neighborhood the sales price will not correlate to the upgrades you perform. Conversely you can have a turd of a home but if the market is raging and homes on your street are all in good condition then your home will sell for much more then it should.

The bottom line is that people should upgrade the home they live in to enjoy the utility they add, not the value they may or may not add because that value is variable determined by market conditions. Personally I have not seen any data that adds or subtracts value simply because an HOA is or is not in the neighborhood.

[spdrun]

njtosd — you’re from NJ, right? Funny how probably 95% of detached homes in NJ aren’t HOA-encumbered, and people survive and thrive just fine in that fair state.

[SK in CV]

[quote=spdrun]njtosd — you’re from NJ, right? Funny how probably 95% of detached homes in NJ aren’t HOA-encumbered, and people survive and thrive just fine in that fair state.[/quote]

It’s both a regional and age thing. Almost all newer (last 20 years) developments in AZ, NV, FL and a handful of other states have HOAs, even if dues are very low (in the few hundreds or less per YEAR in some cases). California they’ve become common but not every single development. Other states even more rare.

[njtosd]

[quote=spdrun]njtosd — you’re from NJ, right? Funny how probably 95% of detached homes in NJ aren’t HOA-encumbered, and people survive and thrive just fine in that fair state.[/quote]

Moved there in 2007 for a job – missed San Diego enough to leave a secure job in NJ to return here in 2011. And yes – most NJ homes predate the HOA trend, but neighborhoods are also less consistent there.

[spdrun]

“Less consistent” meaning less bawwww-RING. HOAs in SFR areas are mostly for the benefit of small-minded goose-steppers who care what color you paint your house.

[all]

[quote=Happs]
I would argue that macro and quantifiable conditions such as the economy, number of foreclosures in an area, crime statistics, quality of school district, the CC&R’s and especially an HOA’s balance sheet and monthly dues vs services rendered take precedent over exterior looks when purchasing a house.[/quote]

You should probably ask the ladies on the board to comment. In our case my wife was interested in schools and crime statistics (sex offenders in particular), the neighborhood look&feel&walkability and the house itself. I had to hit all four – any developing nation looking neighborhoods (e.g. utility poles with overhead power lines along the street) was out of question.

The price, MR and HOA fees were part of ‘can we afford it’, not ‘do we want it’ discussion.

[bearishgurl]

[quote=all][quote=Happs]
I would argue that macro and quantifiable conditions such as the economy, number of foreclosures in an area, crime statistics, quality of school district, the CC&R’s and especially an HOA’s balance sheet and monthly dues vs services rendered take precedent over exterior looks when purchasing a house.[/quote]

You should probably ask the ladies on the board to comment. In our case my wife was interested in schools and crime statistics (sex offenders in particular), the neighborhood look&feel&walkability and the house itself. I had to hit all four – any developing nation looking neighborhoods (e.g. utility poles with overhead power lines along the street) was out of question.

The price, MR and HOA fees were part of ‘can we afford it’, not ‘do we want it’ discussion.[/quote]

all, you last statement speaks volumes. This is why you … and many of your brethren … are heavily encumbered … by choice.

You could have gotten the same property in some of SD’s finest hoods w/o the extra hundreds of dollars a month in encumbrances but you chose instead to direct this money every month to something other than the actual principal and interest on the purchase price of your home.

I am female with children (only one minor child left) and can assure you that I never met a creosote-laden utility pole that I didn’t like (or post a garage-sale notice on) ;=]

Many of SD’s finest areas still have utility poles, including Pt Loma and La Jolla, for example. Both of these areas are far more desirable and thus the properties within them are more valuable than those within the PUSD. Sempra/SDG&E still has at least 18 years of undergrounding to complete before the poles and overhead lines will all be gone.

You are most welcome to pay $300-$1000 per month in HOA/MR to live in an area w/o utility poles. However, there are MANY subdivisions in SD county which are less than 35 years old which were undergrounded before development. And some areas older than that have already been undergrounded.

Don’t whine to the rest of us here when your property taxes go thru the roof in the coming years in order to amortize your very expensive school bonds.

[all]

Happs, based on the sample of 2, if your target population are near-retirement public workers then don’t worry about the appearance and focus on reducing HOA fees by $1 or $2. If you are after GenX’s making $200K+/year make sure that the grass is trimmed, the fence is painted and there are no sex offenders in the neighborhood.

[livinincali]

If your only goal is to drive home values up just make an HOA rule that nobody can sell their house for less than the last guy paid. That wouldn’t cost you anything. Yeah you might not be able to sell but you get cling to the fact that your home is still worth at least the 3 year old comp. Even better yet if somebody has to sell just subsidize the buyer with HOA funds so it looks like your house is actually worth more.

[bearishgurl]

[quote]…In our case my wife was interested in schools and crime statistics (sex offenders in particular)…[/quote]

all, I don’t care what you saw on the Megan’s Law website when you decided to purchase your house.

The presence or absence of a “registered sex-offender” in your immediate area is out of your control.

Like the general population, registered sex-offenders frequently move. One or more could move into your area (or maybe already have) since you bought your home. Under CA law, a newly paroled individual is returned to their county of origin (very often the same county they were arrested in) and usually to a relative who can take them in until they can get re-established. In addition, even a parolee termed a sexually-violent predator is entitled by law when paroled to be sent back to their home county, either with roommates or relatives and often with an ankle bracelet transmitting their constant whereabouts.

Sorry, all, but this is not something any of us has any control over, and, in any case, the presence of a “garden variety” sex registrant, especially an aged one, is really not a good reason to shun a perfectly acceptable property. Believe it or not, many of these registrants never served prison time and many also come from moneyed families residing in Pt Loma, La Jolla and Del Mar, where they will reside after their convictions. Just so you know, in CA urban counties, NO AREA IS IMMUNE from the past, present or future presence of a registered sex offender in residence.

[all]

Anything is possible, but you are more likely to get your ass kicked by Mike Tyson than by Stephen Hawking.

Edit
[quote]
all, I don’t care what you saw on the Megan’s Law website when you decided to purchase your house.
[/quote]

How much don’t you care?

[bearishgurl]

[quote=Happs]. . . What increases property values and what is a waste of money?[/quote]

Happs, there are many, many SFR subdivisions in established areas of SD county which have longtime (solvent) HOAs.

Often, the average “dues” are $300-$500 annually which pay for maintenance the common area, however many acres it is. MANY of the homes within them have been remodeled, re-roofed, re-concreted and repainted, all with successful HOA approval.

In the absence of MR, I don’t think a SFR HOA (if the annual dues are less than $500) is a deterrent to a prospective buyer. I think many prospective buyers appreciate that they won’t be looking at RVs and boats parked out front and purple houses if they were to live there.

In a prospective buyers’ eyes, I think the overall look and feel of the subdivision wins out over the HOA balance sheet, if the HOA has been reasonably prudent over the years and doesn’t have any liability other than the common areas.

I don’t see a new buyer placing any value on the HOA purchasing those new community items, unless they are so rusty that they cannot be sanded/repainted. Not if it means the annual dues will go up over $500.

I really believe $500 is the “magic number” for annual dues for those HOA’s with SFR owners who take care of their own landscaping and have their own mailboxes with no other amenities other than possibly hiking trails in the open space. If your HOA is more than 20 years old, I don’t think prospective SFR buyers in a well-established HOA would care enough about a community pool or clubhouse to want to pay higher dues for them.

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