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Homeowners’ association fees and property taxes can add up, and homebuyers should consider just how much they can impact the overall cost of a home.
As of 2024, about 3 million households in the U.S. paid more than $500 a month in HOA or condo fees. (1)
In some cases, increases in HOA fees and property taxes could even make a home that was once within your budget suddenly unaffordable.
Imagine the case of Mark, a father of two who has recently gone through a divorce. He had to refinance his mortgage in order to remove his ex-wife from the title to his home. As a result he is now paying a higher interest rate on his mortgage.
What’s worse, his HOA fees are skyrocketing from a manageable $150 a month to $400 a month after the homeowners’ association passed a special assessment. Mark’s property taxes also recently increased, adding another $200 a month to his expenses.
He bought his home for $430,000 and given the increase in expenses, he wants to sell. However, other homes in his development are currently languishing on the market for weeks and weeks.
Here are some steps he might take to get his finances back on track in the face of these new expenses.
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A homeowners’ association (HOA) is made up of volunteer homeowners within a real estate development, typically condominiums, townhomes or single-family homes.
The association sets and enforces rules for the development, and oversees shared spaces and amenities, collecting fees for shared expenses like improvements to the overall property or neighborhood.
According to HomeLight, average monthly HOA fees in the U.S. are $390 — that’s $4,680 a year. If a homeowner doesn’t follow the HOA’s rules, or refuses to pay their fees, the HOA can fine them, and may even be able to place a lien on the property. (2)
In addition to increasing the financial burden of homeownership, HOAs are also becoming more common. According to U.S. Census Bureau data, in 2024, 81% of new single-family homes sold belonged to homeowners’ associations. (3)
An April report from Realtor.com found that property taxes in the U.S. are also going up as home values increase. The report found that the median property tax bill for 2024 was $3,500, an increase of 2.8% from 2023. (4)
However, the report notes that rates vary greatly depending on where you live; some states are seeing property taxes fall even as home values increase, while other states are seeing the opposite — tax increases that aren’t in line with home price growth.
The report found that “23.4% of properties saw their tax bill go up from 2023 to 2024 without their assessment value increasing, suggesting a tax rate hike independent of home valuation.”
The report also notes that many homeowners could save money on their property taxes by contesting their home’s assessed value. According to their analysis, 40.5% of U.S. homeowners could save $100 or more a year by doing so, with the median savings being more than $539 annually. For the median property tax bill of $3,500, that’s a 15.4% reduction.
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For someone looking to sell their home, they will likely face very different scenarios depending on where they live in the country.
Another Realtor.com report on the current state of the real estate market says that nationwide, houses are staying on the market for longer, and prices are flat, which means higher inventory and lower competition. (5)
However, the report notes that in parts of the Northeast and Midwest, low inventory and higher demand mean these are still strong sellers’ markets.
Mark will likely have to sell at a loss if he chooses to part with his home. He may struggle to find a buyer at all, especially given that his HOA is in the midst of a project that could end up costing homeowners even more.
If Mark is unable to sell his house, he could consider whether the rental market in this area is strong. There could be a chance that someone would want to rent the property for a rate that could cover his increased expenses, and he could move to a more affordable area and rent there. However, this would depend on the HOA rules governing rentals.
Since homes in Mark’s area are having trouble selling, he should strongly consider contesting his property tax increase, and seeing if he can get his home value reassessed.
This could save him hundreds of dollars a year, if successful, and allow him to budget for the increased costs for his mortgage and HOA fees.
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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
U.S. Census Bureau (1); HomeLight (2); U.S Census Bureau (3); Realtor.com (4), (5).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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