By Gary A. Miller
The presence of a homeowner association (HOA) can be a surprisingly polarizing aspect of the home search. While some buyers would never buy a home in a neighborhood that did not have an HOA, others feel the complete opposite. Given the strong opinions elicited by HOAs, I thought it would be interesting to analyze recent home sales through this lens.
The following analysis is based on closed property sales in 2021 in southern Orange County, which for this article comprises the ZIP codes 27510, 25714, 27516, 27517, and 27707 within the county boundaries. All data is from the Triangle Multiple Listing Service. Since the data is manually entered by agents, it is considered reliable but not guaranteed.
In 2021 there were a total of 1,234 closed sales in southern Orange County. Of those, 38% (470 homes) were properties that had no mandatory HOA fee. Among these are six homes which have voluntary, optional, or no-fee HOAs. Only one of these homes with no HOA fee was an attached home, with the remaining being detached or manufactured.
It is appropriate to point out that having no HOA is not the same as having no restrictive covenants. Many neighborhoods have covenants, even if there is no HOA for enforcement. Buyers should always consult county records (or have their agent do so) to confirm the existence of related covenants. In addition, several older neighborhoods in Chapel Hill that do not have HOAs are designated Neighborhood Conservation Districts or Historic Districts and have design standards that regulate how properties in the district can be modified.
It is also important to note that HOA fees go beyond covenant enforcement; they often provide access to neighborhood amenities such as pools and clubhouses or provide items for the common good, such as streetlights, community water sources, and common area maintenance.
The remaining 764 homes (62%) that closed in 2021 have at least one HOA fee. Of those, 369 are attached homes or condos. Given the shared physical structure typically associated with these homes, it is logical that the shared governance/maintenance of an HOA and some shared facilities would be present.
The table below shows the sale price differences by home type and the presence of HOA fees.
|Average sale price among detached homes with no HOA fees||Average sale price among detached homes with HOA fees||Average sale price among attached homes and condos with HOA fees|
NOTE: To simplify the table, the one attached home with no HOA fee is excluded
The dues for HOAs are levied on varying timelines: some monthly, some quarterly, some semi-annually, and some annually. Additionally, 48 of the properties sold in 2021 have two separate HOA fees. Given all this inconsistency, to make comparisons easier I normalized all fees into one comprehensive annual charge. The distribution of the annualized fees can be seen in the following chart.
|HOA Fee Range||Number of Properties||HOA Fee Range||Number of Properties||HOA Fee Range||Number of Properties|
The average annual HOA fee charge among all 2021 sales in southern Orange County was $1,765 per year. Within this average, there is a notable range of annual charges. The lowest is $15 per year for a detached property in the Stoney Creek neighborhood, and the highest is $14,231 per year for a condo in Meadowmont.
The 30 most expensive annualized HOA fees were all related to condos, and the top 55 percent were among attached and condo properties. The average HOA fee among just the attached homes and condos is $3,038. Among the detached homes, the annualized HOA average came in much lower at $563, with the most expensive being $1,632 in Tennis Court Estates.
The HOA fees associated with a given home can have a notable impact on your monthly payment. As you shop for your next home, be aware of this variable in relation to your budget. Additionally, be sure to document the services provided by the HOA as you make purchase decisions, since there is considerable variation. Your agent should document all this information for you before you make an offer.
Gary A. Miller is co-owner of Red Bloom Realty. He has lived and worked in Chapel Hill off and on since 1994 and is an avid musician, kayaker, traveler, and former educator.