HOA Property Value Myth #2
Al Bennett
· ·1h ·
All-star contributor
Executive Summary: The HOA Property-Value Myth Just Took a Major Hit
For years, the Homeowners Association (HOA) industry has told lawmakers and homeowners that HOAs “protect property values.” This new Journal of Housing Research article by Thomas Lorenz and Brian Rugg asks the question that every homeowner, buyer, board member, legislator, and real-estate professional should ask:
Do HOA homes actually perform better as long-term investments than non-HOA homes?
Their answer, based on a large study of Colorado single-family home sales from 2006 through 2024, is attention getting: HOA homes did not outperform. They underperformed.
The authors analyzed approximately 163,000 residential transactions and found that HOA properties produced lower annual returns than comparable non-HOA properties. Homes in amenity-based HOAs had annual returns about 1.07 percentage points lower than non-HOA homes. Homes in restriction-based HOAs had annual returns about 0.802 percentage points lower than non-HOA homes. HOA fees also rose about 1.10 percentage points faster than inflation each year.
The most striking finding: over a typical ownership period, the appreciation gap could translate into an estimated $143,000 potential equity loss for HOA homeowners compared with non-HOA homeowners.
This does not mean every HOA reduces every home’s value. It means the blanket HOA-industry slogan “HOAs protect property values” is not supported as a universal truth. A more honest statement is this:
A well-funded, transparent, accountable, limited-purpose association may help marketability. But an underfunded, restrictive, aging, over-managed, or poorly governed HOA can become a financial drag on the very homeowners it claims to protect.
This article deserves serious attention because it reframes the HOA debate from “rules protect values” to “restrictions, rising fees, aging amenities, and private governance can reduce long-term homeowner wealth.”
Homeowners should read it. Buyers should read it before purchasing in an HOA. Board members should read it before repeating industry talking points. Lawmakers should read it before allowing more mandatory private-governance communities to be imposed on future homeowners.