Homeowners’ associations, also known as property owners’ associations, are private associations formed by a real estate developer. Clean, cohesive neighborhoods offering community amenities were once unheard-of in a neighborhood of single-family homes. However, HOAs are on the rise in America because they come with a number of benefits to the community.
Evolution of HOAs in the Nineteenth Century
Homeowners’ associations have been around a lot longer than you might imagine, although not necessarily in the same form that we see them in today. The first planned community was Levittown, a community built in Long Island in the late 1940’s, intending to offer low-interest homes to veterans. Though there was no formal association, but community rules and regulations did exist.
Similar communities continued to pop up throughout the mid-nineteenth century, but growth of HOA communities really took off in the 1960’s as a result of the federal government’s encouragement of more residential developments and the resulting mass exodus to the suburbs. Because of the popularity of these communities and the resulting increased cost of land, real estate developers began increasing the density of homes on each parcel of land. Shared, common recreational space allowed for smaller personal lot sizes, and therefore, allowed for more homes to be built in order to meet the growing demand. Clusters of homes would be built around a common green space, and then associations would be appointed to manage that common space. The association would essentially function as type of local government for the small community, managing things which were previously taken care of by municipal workers.
As more communities became established, the HOA model began to shift and mold according to the wants and needs of residents. Eventually, this morphed into what we know today as the modern HOA industry.
Growth and Revenue of the Homeowners Association Industry
The HOA industry has been steadily growing since the 1960’s, and it shows no sign of slowing. The majority of new-build communities popping up all over America are governed by an HOA. Here are some interesting stats to consider about the enormous growth and potential of the HOA industry:
- An estimated 70 million US residents live under HOA governance in more than 342,000 communities across the country. That is more than 1 in 5 Americans!
- There are more than 5,000 new HOA communities being built yearly.
- As of 2016, approximately $5.5 trillion dollars of real estate was under HOA management. This comprised about 18% of all housing in the United States at the time of the study.
- The HOA industry brings in an estimated annual revenue of over $88 billion.
Because of the rapid growth of housing developments throughout suburban America, it can only be assumed that the revenue within the HOA industry will continue to flourish.
Why Live in an HOA?
Approximately 90% of residents living within HOA governance report that they are on friendly terms with their board, and thus happy with the association in which they live, and 78% of homeowners believe that the association enhances their property values.
Living in an HOA community ensures that properties will be well taken care of, maintain uniformity, and remain a pleasant and safe place in which to reside.
Residents of an HOA community tend to be surrounded by those who are like-minded in regard to what they expect to give and get from their community. Neighborhoods that are governed by an HOA tend to be better maintained; thus, they have higher property values. Community amenities also increase (and, in turn, maintain) property values. Recreational facilities such as pools, sport courts, parks, and playgrounds are just some of the perks of HOA living. Sometimes, utilities may even be provided to members of the associations. For example, sewer or garbage collection may be coordinated or paid for by the HOA. Amenities and perks vary, but each association offers positive value to the homeowners within the community.
HOAs are wonderful organizations benefiting millions of US residents every day. There are countless benefits to living in an HOA community. To find out how we can help in managing your HOA, reach out to a member of the SpectrumAM team, and let us help you make your community an even better place to live!