Homeowners association (HOA) dues in condo buildings are higher than they’ve been in years. And we have two things to thank for that trend—working from home and building insurance.
Covid was the culprit that first sent HOA dues on an upward trajectory, as I noted back in 2022. Condo dwellers began working from home, which basically increased costs across the board. For example, water use soared with residents being inside 24/7. Larger buildings saw unprecedented levels of food and package deliveries that jacked up trash and recycling costs, and all the extra labor to sanitize common areas did their part to increase expenses. HOA budgets have hit record highs over the past few years as the cost of maintaining amenities like pools, gyms, common areas and elevators has only gone up.
The insurance industry has also done its part to boost HOA dues. Insurers have routinely increased premiums over the past few years for condo associations. Some insurers have decided not to renew policies for older, smaller buildings related to knob-and-tube wiring, electrical panels manufactured by certain companies, old roofing and a high rental-to-owner occupier ratio. HOAs are being forced to turn to the “last resort” FAIR plan with its liability companion policy. These latter policies provide substandard coverage for more money than traditional insurers will charge.
Half of the 764 condos currently on the market carry monthly HOA dues of $800 or more. Only 167 condos have dues of $500 or less per month, with 264 units touting HOA dues of $1,000 or more. Along with higher interest rates, the HOA dues in many buildings push buyers over the affordability edge.
Buyers gearing up to get loan preapproval need to figure out their HOA dues threshold. Work with your mortgage lender to run numbers and come up with a comfortable HOA dues range. Your real estate agent can then help filter out properties with dues that exceed that range. Your condo search will be a lot smoother with that strategy in place.