Tell Me Again How Awful HOA’s Are?

[jamil]

That would be ideal, however, you would have to own that mile in each direction. Because, eventually, there will be a neighbor (or ten) filling in that mile. Then it's time to move again.

Yeah, of course someone might build on it. Or some developer might buy up all the adjacent land and build a subdivision.

I looked at some land years ago that was adjacent to Clark State Forest. The Topology and having the state forest behind it meant that the likelihood of any subdivisions coming in would be pretty much zero. But I passed on it because it was just too far from work. If I'd have known then what the future held I'd have gone ahead with it. Hindsight.

 

[JBLee]

And there's nothing they should be able to do about it. It's his property he can do with it what he wants. It is not his duty to make his neighbors money.

Unless he is physically disrupting the lives of his neighbors they should mind there own business.

He is physically disrupting his neighbors lives if he is affecting their ability to market their homes at current and comparable levels.

 

[Jaybird1980]

He is physically disrupting his neighbors lives if he is affecting their ability to market their homes at current and comparable levels.

No he is not.

 

[actaeon277]

It's just a group of people getting together and agreeing to rules.


Ummm.
If only there were a word for that...town, city, county, etc.

But at least with the town, city, county, etc... there has to be "due process", and other branches can weigh in.

Such as.. if your town says "NO GUNS".
Well, the solution is not perfect, but there are courts to fight that. And a Bill of Rights.

But you move into your wonderful HOA.
For 5 years it's great.
But a couple people move out, and some anti gunners move in.
Then a few more die, or move out, and it gets bought up by a corporation.
Most of those corporations are anti-gun.
So, they move to ban guns in the HOA. All known gun people are suspect of getting more, so they must submit to once a month random inspections.
The corporation doesn't quite have enough votes, but they offer to pay peoples fees for a couple years.
The vote goes through and....

Fight it?
How?

 

[Nickbau5]

Everyone who is subject to an HOA who doesn't like the HOA should run for a position on the board. It should be your life mission to neuter the HOA as much as possible for as long as you live in that neighborhood. Be an anti-Karen.

When my parents were fighting for a pool, my mother looked into joining, but then found out she would be financially liable for anything to do with the HOA, and she couldn't afford to fight it.

 

[Ingomike]

Uh, yes, they can too make a profit on a home for which there is a mortgage. If the home’s appreciation rate is above the interest rate, yeah. You can profit.

It’s rare. But. There are some markets where homes appreciate at shocking rates and what the homeowner has paid in principle, interest, taxes, and insurance is less than the appreciated value. My in-laws ran into that situation in Denver. They only owned the home for 3 years though. They lucked out because it was during a time with low rates and then that neighborhood got hot. They were offered way over listing for it.

Making a profit can happen, but that's not the standard.
Someone purchasing a house, shouldn't expect to fall into a scenario as this.

It can work the other way around also.
Pay big money, and the market tanks.

You are forgetting that you got to live there, way cheaper than rent. The actual calculations are more involved. Your payment is your rent that pays for the investment. It is not the investments fault you can’t pay cash for your investment. The retro’s the return no matter that you had to borrow the money to buy the investment.

 

[Nickbau5]

So people are duped into buying property with an HOA? My experience has shown the opposite of what you described. Most neighborhoods HOA get more lax over the years…

When my parents bought their house, they were told the HOA had disbanded but it was still included in the deed transfer. After 2 years a new HOA bought the old one out and started enacting new rules that my parents never agreed to. HOAs are terrible and full of snakes with the faces of Karens

 

[***Ironhead***]

So 51% Karens?

my percentage was higher at 65%.lol

 

[Hatin Since 87]

That is what I would like as well. BUT, if I have to live twenty feet from the next house, I want an agreement as to how we will live.

Then live somewhere with an HOA. Don’t try to tell people who don’t wanna live where there’s an HOA why you think they should.


You posted you live in a community with an HOA, so why are you so concerned about if I do or not?

 

[Hatin Since 87]

He is physically disrupting his neighbors lives if he is affecting their ability to market their homes at current and comparable levels.

Then they should’ve purchased a home that has an HOA to ensure their neighbors will be held to the standards they want.

 

[Ingomike]

Then live somewhere with an HOA. Don’t try to tell people who don’t wanna live where there’s an HOA why you think they should.


You posted you live in a community with an HOA, so why are you so concerned about if I do or not?

I don’t care, but the story in the OP was interesting and I shared it with others. Isn’t that what we do here?

 

[jkaetz]

No one is required to buy in a new development. Granted, if you want to live in a zero-lot-line, new construction, developer-run neighborhood, you will most likely find Covenants and Restrictions and an HOA to enforce them.

Homes in Indiana with no HOA.
https://www.realtor.com/realestateandhomes-search/Indiana/age-10/with_nohoa/hoa-no,known

Not a perfect list, as it includes "No HOA Dues", and has no way to filter for "No CC&R" and no way to select "only in a new development". I selected less than 10 years old to approximate "new development".

Not a lot of homes on that list, but the market is pretty crazy at the moment.

I don't doubt that they exist, but as I noted, a significant reduction in available options.

 

[Hatin Since 87]

I don’t care, but the story in the OP was interesting and I shared it with others. Isn’t that what we do here?

Yep, but if that was the only intention why debate people’s opinions about not wanting to be part of an HOA? The thread title proves it was to provoke an argument amongst those who are against HOA’s

 

[BehindBlueI's]

We find that houses in HOAs have prices that are on average at least 4%, or $13,500, greater than observably similar houses outside of HOAs.

The rise and effects of homeowners associations

In the U.S., nearly 60% of recently built single-family houses, and 80% of houses in new subdivisions, are part of a homeowners association (HOA). We …

www.sciencedirect.com

Another reason I bought outside an HOA. Cheaper to buy the same house. No monthly payments for the collective. Lower value equates to lower taxes. Lower mortgage payments lets me invest in other things. I get that many people never actually save or invest and their house is also their biggest 'investment'. That's sad for them. I'm quite happy with my house but even if we ignore that my 'investment' has returns that are eaten at pretty consistently by the need to insure it, pay taxes on it, and maintain it real estate has not kept up with dividend paying stocks. I can borrow money to buy a house, I can't borrow money to retire. Less mortgage means more dividends means more cash flow means better retirement. My house is not my biggest asset, currently, and hopefully never will be again.

I completely agree with you in that it's your right to join an HOA if you choose to do so. Same as it's your right to join a cult or listen to boy bands or go to strip clubs on Tuesday afternoons for the all you can eat spaghetti buffet. Not decisions I would make (well, maybe for the right cult) but nothing to me if others want to. I just think your pitch it's a better way to live isn't resonating. Just like nobody makes you join an HOA, nobody makes you live 10' from your neighbor and pay more money to do it.

 

[Hatin Since 87]

or go to strip clubs on Tuesday afternoons for the all you can eat spaghetti buffet.

What strip club is this? Asking for a friend

 

[Jaybird1980]

What strip club is this? Asking for a friend

Cult members only.



I mean that's what I've heard....

 

[DoggyDaddy]

What strip club is this? Asking for a friend

It was actually just an Olive Garden. Things got a little out of hand.

 

[BehindBlueI's]

It was actually just an Olive Garden. Things got a little out of hand.

Comment of the day.

 

[BehindBlueI's]

He is physically disrupting his neighbors lives if he is affecting their ability to market their homes at current and comparable levels.

Not what 'physically' means.

 

[BehindBlueI's]

I honestly think much of this discussion, particularly IngoMike's early pushback/disbelief on those who said they wouldn't care if they lived next to LPH (Little Pink Houses), is the mindset that your primary residence is an 'investment'. This is a marketing driven device to convince you to overspend on your house. With that mindset it's ok to be 'house rich/cash poor' because on paper your net worth is higher. Then you're encouraged to borrow against your paper value as an equity loan when being cash poor bites you in the ass. As such, you have to be on constant guard against market fluctuations for value and people who have no intention of selling today put way too much emphasis on today pricing.

Your primary residence is not an investment. It is an asset, but that's not the same thing, and if you get the liquidity out of that investment you are now 'homeless' until you replace it. Will you actually make money on your primary residence? Maybe, but not nearly as much as you are conditioned to believe. The marketing wants you to look at purchase price vs selling price and wants you to forget all the interest you paid, PMI you paid, taxes you paid, and definitely wants you to forget the opportunity costs.

Let's say you bought the perfectly average US house in 1990 for $150k with a 30 year mortgage and paid it off, then sold it to move to Tahiti in your golden years in 2020 the day after you paid it off. Your perfectly average US house was worth nearly $400k that day. You've been conditioned to think you just made $250k on your 'investment'.

Interest rates were about 10% for mortgages in 1990, but have dropped over the years. Let's simplify and say you paid an average of 6% via refinanacing a few times. Let's further assume you put down 10% cash and only paid PMI for the first 5.5 years. Let's oversimplify and just assume a 1% property tax rate on initial value for the life of the loan.

You paid $156k in interest.
$45k in property tax
$5k in PMI

Down to $44k profit

What did your home owner's insurance run? Say $600 annually on average?

Down to $26k profit.

Hope you didn't have an HOA and pay $100 a month on average to that, or now you're $9k in the hole. And that's with $0 in maintenance over 30 years. Maybe you made it back on tax savings on mortgage deductions, this is an oversimplification, but you get the point I think. That $250k gain is an illusion. You had a place to live, though.

Just for comparison, let's say you took that same 10% down and put it in an S&P500 index fund and added $200 a month in a tax deferred account. That should be easy to do in Average US Town because average rent is significantly lower than average mortgage payment for the vast majority of time. You get a 7.9% return on that money, assuming you reinvest dividends. Now you cash out for your Tahiti move.

Total profit: $359k pre-tax. Huge difference in terms of maximizing wealth.

That's an investment. Obviously everbody's situation will be different as nobody is going to have the perfectly average scenario, but it should be an illustrative of why 'your house is your biggest investment' is terrible advice that profits the real estate industry more than the home owner. I intentionally way 'underbought' on my house vs what the banks said I could afford because I know the difference and bought a house to live in, not as a status symbol or the notion it was an investment. I'm on track to retire a millionaire before most people are on track to retire period, and that's on a pretty mundane household income. Don't be house rich/cash poor.