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

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Submitted by Happs on March 28, 2013 - 3:01pm

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?

Submitted by spdrun on March 28, 2013 - 3:30pm.

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.

Submitted by njtosd on March 28, 2013 - 4:18pm.

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.

Submitted by SD Realtor on March 28, 2013 - 10:12pm.

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.

Submitted by spdrun on March 28, 2013 - 10:23pm.

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.

Submitted by SK in CV on March 28, 2013 - 10:36pm.

spdrun wrote:
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.

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.

Submitted by njtosd on March 28, 2013 - 10:54pm.

spdrun wrote:
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.

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.

Submitted by spdrun on March 28, 2013 - 11:23pm.

"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.

Submitted by all on March 29, 2013 - 8:35am.

Happs wrote:

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.

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.

Submitted by bearishgurl on March 29, 2013 - 9:32am.

all wrote:
Happs wrote:

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.

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.

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.

Submitted by all on March 29, 2013 - 9:53am.

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.

Submitted by livinincali on March 29, 2013 - 10:07am.

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.

Submitted by bearishgurl on March 29, 2013 - 10:14am.

Quote:
...In our case my wife was interested in schools and crime statistics (sex offenders in particular)...

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.

Submitted by all on March 29, 2013 - 10:26am.

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.

How much don't you care?

Submitted by bearishgurl on March 29, 2013 - 10:37am.

Happs wrote:
. . . What increases property values and what is a waste of money?

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.

Submitted by bearishgurl on March 29, 2013 - 11:27am.

all wrote:
Quote:
all, I don't care what you saw on the Megan's Law website when you decided to purchase your house.
How much don't you care?

I don't care, because what is shown on the ML website to the public is essentially useless data. The REAL circumstances of the crime can be found only in the complaint and/or information and the change of plea or verdict stored in the records or archives of the state court in which they were convicted.

The vast majority of these individuals were required to register under CA law due to being turned in by a family member for an isolated incident and who later pled guilty or were found guilty of CA Penal Code section 288 on a family member who usually resided within the home.

Secondly, a person could have been required to register simply because they were over 19 years old and their (consensual) sex partner was 16 at the time of their arrest and the parents of the 16 yo decided to press charges, causing the 19 yo to be convicted of a felony (a 3-yr difference in age).

Thirdly, a LARGE portion of these PC 290 registrants are now more than 70 years old and a portion of them are in failing health.

And, fourthly, CA PC 290 registrants are required to re-register every time they move, but many who are staying temporarily with a friend or relative don't ... and are no longer required to report to a parole or probation officer. And there may be a delay in both re-registering on the part of the registrant AND reporting from the state registration database to the ML website. So there may actually be registrants from another address living in a given area who do not yet show up on the site.

Young parents shopping for houses are reading wa-a-a-ay too much into the skimpy public info provided on these cases when it is likely that no threat to their children exists if they were to buy a particular property. If they don't do their homework on these cases, they are, by their ignorance, effectively discounting a perfectly good family home for an invalid reason during a prolonged period of poor inventory to choose from.

And that, of course, is their choice. If they don't yet have a home for their families, they can continue to rent.

I'm not condoning these behaviors but only saying that without further research, a person relying on the ML website really doesn't have any idea if a prospective "neighbor" or even an individual residing one or more miles away (from the listing they are interested in making an offer on) will actually be a threat to their children. The presence of a sex registrant needs to be further researched if the idea of one living nearby really bothers a potential buyer.

Submitted by CA renter on March 29, 2013 - 2:36pm.

all wrote:
Happs wrote:

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.

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.

^^^this^^^

Like it or not, most houses are chosen by women, and it's pretty well known that right after location (overall geography and also general socio-economic level of the majority of nearby residents), curb appeal is one of the main factors in how much a house will sell for. You can have tiny, outdated houses with weird layouts, but if the yards are beautifully landscaped, and the general location is highly desirable, these houses will sell for more than larger houses with good layouts on larger lots in "less desirable" areas.

Crime is a HUGE factor in determining housing prices. It is closely related to the general educational and professional status of nearby residents, and people will pay a very large premium to live in safer, cleaner neighborhoods with more highly-educated residents. It's what people are talking about when they mention "location, location, location," and it's almost as important as geographical features like views, proximity to oceans/lakes, etc. (which, because of their desirability, will tend to be priced higher, so will draw mostly wealthier, better-educated buyers).

Unfortunately, most people are emotional buyers, especially when it comes to housing, so the appearance of the general neighborhood, yard, and exterior of the house will trump the more "logical" things like HOA finances (as long as it's solvent). A clean, safe, well-kept neighborhood connotes higher-class/better-educated residents, and this is what most families will pay a premium for.

Submitted by bearishgurl on March 29, 2013 - 4:16pm.

CA renter wrote:
all wrote:
Happs wrote:
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.

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.

^^^this^^^

Like it or not, most houses are chosen by women, and it's pretty well known that right after location (overall geography and also general socio-economic level of the majority of nearby residents), curb appeal is one of the main factors in how much a house will sell for. You can have tiny, outdated houses with weird layouts, but if the yards are beautifully landscaped, and the general location is highly desirable, these houses will sell for more than larger houses with good layouts on larger lots in "less desirable" areas.

I agree with the emphasized portion of CAR's statement. However, I don't think women alone (or men) or any half of a buying couple should "choose" a house to buy, unilaterally. If something were to go wrong with the particular house or neighborhood down the road, they would likely be blamed by their partner as, "You got us into this. I went along with this purchase because you wanted it. Now look what we're up against."

A joint RE purchase decision is HUGE and should be completely mutual, IMHO, and if it is not, the couple should not purchase it.

CA renter wrote:
Crime is a HUGE factor in determining housing prices. It is closely related to the general educational and professional status of nearby residents, and people will pay a very large premium to live in safer, cleaner neighborhoods with more highly-educated residents. It's what people are talking about when they mention "location, location, location," and it's almost as important as geographical features like views, proximity to oceans/lakes, etc. (which, because of their desirability, will tend to be priced higher, so will draw mostly wealthier, better-educated buyers).

Again, the presence or absence of one or more PC 290 registrants living within an urban square mile in CA has little to no affect the crime rate of that area. These individual's cases are already adjudicated and in some cases, they have already served their time. The vast majority are trying to quietly make a living and pay back any restitution they owe and mind their own business. Perhaps if there were 12 or more registrants in that same square mile and 1-2 living within 1-2 blocks of where a "listing of interest lies," it would be prudent for a prospective buyer to check the record for the closest one's "story" before making an offer (if there is time to do so) or for the buyer to write in a time-sensitive contingency on their offer that they will satisfy themselves as to the safety of their children given the presence of sex offender registrant(s) residing in the area. (In any case, it seems as if most sellers would just counter this out or reject the offer outright.)

I think we all need to remember here that "wealth" and "better-educated" do not always go hand in hand. What many of these young families are unwittingly? choosing is an inferior location, sometimes grossly inferior, in order to obtain newer construction. In CA, newer construction doesn't make an area more "valuable." Location does. For the same price, these same buyers could have had an older, possibly smaller home in a far more desirable location (sans MR and possibly HOA) but instead they typically shun the older, more valuable location in favor of the newer, inferior location.

CA renter wrote:
A clean, safe, well-kept neighborhood connotes higher-class/better-educated residents, and this is what most families will pay a premium for.

Primarily because of Props 13, 58 and 193, and, to a lesser extent, the existence of a large entertainment industry, I don't feel "education of owners" has anything to do with how "valuable" a residential property is in an established area of coastal CA counties. Many hundreds of thousands of the most valuable properties situated in the most sought after, well-established coastal enclaves in coastal CA counties are owned by longtime owners, heirs and assorted "celebrities" who may or may not possess an Associate's or Bachelor's Degree or even a high school diploma or GED! Surprise, surprise! If you don't believe me, you can take a walking poll on SD's finest streets and see who answers the door, observe how old some of them are and see what they tell you re: their "educational attainment." Their "lack of formal education" doesn't mean, however, that they are somehow "classless," don't know how to keep up their lots or garden and don't know how to maintain their properties. In fact, the opposite is usually true. Since they're not a commuting "worker bee" for 9+ hrs per day, they have a lot more free time to pay attention to their "curb appeal."

Indeed, the RE "caste system" in CA has no regard for "educational attainment." Here, the ownership and control of the most valuable properties and the *most* income properties in the most sought-after locales is primarily based upon family residential longevity and staying power over decades ... namely, tenacity, due to good money mgmt over the years. It's as simple as that.

If young families today wish to "pay a premium" for "perceived neighborhood educational attainment," they are free to do so but they should just be aware that a subdivision they buy into which is full of "presumably successful" worker bees tends to be a virtual ghost town eight hours per day, five days per week. THIS is what gives property criminals their greatest opportunities.

I'm not trying to put down people who profess to be highly educated but am stating that educational attainment, in and of itself, should be viewed in its proper perspective. Educational attainment of present and future neighbors is another condition that no buyer or resident has any control over.

Submitted by sdduuuude on March 29, 2013 - 5:27pm.

An HOA intent on trying to do more than it should be doing under the guise of "raising property values" would definitely reduce the property value.

Submitted by earlyretirement on March 31, 2013 - 11:59am.

I've NEVER liked HOA until I moved to San Diego to where we live now. I guess part of it is I didn't have kids before and also I always felt the HOA didn't do much or that I didn't have much included in my HOA fees.

But I have changed my mind on it now. So I guess it all depends what is included in the HOA fees and how good of a job they do. Where I live the HOA fees include 24/7 security guards at the front gates, maintenance of the entire development which is always pristine, Cable TV and high speed Internet (I get 20 MB download speeds), and trash pick up included in the HOA fees.

The monthly fees are $440 which I consider not bad at all for all that is included in it. Other properties I own are a few hundred bucks a month and not much is included in it.

I actually like that owners can't paint their houses pink or some funky colors, people can't park some car leaking oil in the street, there are minimum levels of maintenance people have to do on their lots, etc.

I feel these things really help with value of the properties when the development is so nicely maintained. I really changed my opinion on HOA after moving to San Diego.

It's a monthly fee that I don't mind paying each month now. I wish I could say the same thing for other properties that I own where I feel it's a rip off.

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