HOAs are popular in Arizona. Of all the homes in the state, one-third belong to a homeowner's association. Buyers want to live in an HOA for a sense of community, access to amenities, and property maintenance.
However, these benefits come at a price. HOA dues in Arizona are nearly $450 per month. This is the second-highest rate in the nation.
It is important to understand that increasing HOA assessments may lead to higher dues. With home values rising in Arizona, you are likely to see HOA fees increase in parallel.
Read on to learn how your HOA home value impacts fees. Explore how fees are impacted by special assessments and unanticipated costs.
What Is an HOA Assessment?
Every year, the HOA board plans its annual budget. They account for the rising cost of landscaping services, pool treatment, and other expenses impacted by inflation. Annual budget increases are then passed on to HOA members.
Unfortunately, sometimes things do not go as planned for the HOA board. The community incurs unexpected costs and needs to raise additional funds.
This is referred to as a HOA special assessment. Here, the HOA raises funds to pay for the unanticipated expenses. This leaves homeowners with higher-than-expected fees for the year.
How Do Rising HOA Home Values Impact Fees?
Another driver of HOA fees is rising home values. While Phoenix is seeing modest declines, home prices are much higher than they were ten years ago. The median home price in Phoenix is nearly $540,000.
Insurance line items are one area in which rising HOA home values increase costs. Service contractors who work in the HOA need to carry more insurance to cover potential property damage. Carrying more coverage costs more money, which the contractor ultimately passes off to the HOA.
Service costs tend to rise in parallel with the Phoenix real estate market. Contractors may charge higher rates for more expensive homes.
Taxes are another area impacted by rising home values. While property owners pay their tax bills, there are other structures in the community. The common area, meeting hall, and other buildings pay taxes and fees too.
These structures are appreciated as well. The HOA board spreads out tax liabilities to community members.
Where Can I Find Out Information on Rising HOA Fees?
The Declaration of Covenants, Conditions, Restrictions, and Easements (CC&Rs) is one document to review. This document may place limitations on increases in HOA fees.
Otherwise, your best bet is to attend the annual budget meeting held by the HOA board. Here, the association manager presents the budget. He or she briefs the community on where costs are increasing and what additional work is needed.
Many HOA homeowners go to these meetings to let their voices be heard. Some HOAs hold community votes on new projects and other annual expenses.
Your Guide to Navigating Higher HOA Fees
You now have an understanding of how and why HOA fees tend to increase. There are many reasons from inflation to rising home values.
An association manager can help control HOA fees and craft an annual budget. If you want to learn more about HOA home values and how they impact fees, contact us at PMI Sam Tan to speak with an experienced pro.
