By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel agrees that rising HOA fees pose a significant risk to homeowners and the real estate sector, particularly in aging urban condo markets and Sunbelt hotspots. This is due to decreased affordability, potential liquidity traps, and a structural shift in deferred maintenance costs hitting balance sheets simultaneously.
Risk: Mass defaults among subprime borrowers due to special assessments, potentially insolvency events for households.
Opportunity: Compositional shift toward new construction supporting builder margins and new-home pricing power in Sunbelt markets.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
When it comes to buying a home, you might be laser-focused on what your monthly mortgage payments will be and how you'll build a budget around that expense.
But there's another housing cost you might need to consider, and it could take a huge bite out of your budget. Homeowners association and condo association fees are on the rise, and those costs can add up.
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The Wall Street Journal reported in early April that for single-family homeowners, median HOA fees jumped 26% from 2019 to $63 a month, according to Realtor.com data (1). And for condo owners, the median monthly condo fee was $420 in 2025 — a 29% increase since 2019.
An analysis by LendingTree found that in 2024, across the 100 largest metros in the U.S., about 17.5 million homeowners said they paid HOA or condo fees. And about 2.6 million of those people, nearly 15%, said they paid at least $500 a month in fees (2).
When you add these fees to the high mortgage rates and home prices Americans have been facing, along with higher costs for utilities and insurance, it's a combination that could leave some homeowners struggling to keep up.
HOAs are also becoming more common, with U.S. Census Bureau data showing that in 2024, 81% of new single-family homes sold belonged to homeowners associations (3).
HOAs are made up of volunteer homeowners in a real estate development, including condos, townhomes or single-family homes (4). HOAs typically set rules for the development, and they can also oversee amenities and shared spaces, charging dues to residents.
One California resident told The Wall Street Journal that his condo association fees have more than doubled since 2015 (1). Donald DeFesi said he pays $1,500 a month in fees; when those fees are combined with his insurance and property taxes, the total is more than what he pays on the principal and interest for his mortgage.
And a Colorado couple told The Wall Street Journal that their monthly condo fees were about $600 when they bought their home in 2019, but now they pay almost $1,300.
Read More: Robert Kiyosaki warned of a 'Greater Depression' — with millions of Americans going poor. Was he right?
If you're ready to buy a home, make sure you look into whether the property is part of a homeowners association.
If the property is part of an HOA, research what the fees go toward and what the fee increases have been in recent years.
According to HomeLight, HOAs may also require you to pay an upfront fee toward the HOA reserve, which is an emergency fund the association keeps in case of major repairs (4).
Condo and home buyers will also want to look into special assessments — whether there are any incoming special assessments, or if there have been in the recent past. Special assessments are one-time fees for maintenance or improvements that can't be covered by the association's reserve fund (5).
HOAs are required to declare special assessments to buyers, but it's worth talking to the HOA about whether there are any major infrastructure or repair projects coming down the pipeline in the future, and whether there are any discussions about upgrades or changes to shared amenities as well.
You can also look at the HOA's bylaws to see how special assessments are levied, and check out the financials of the HOA — if the reserve fund is low, it could mean the potential for a special assessment in the future (5).
HomeLight also recommends that you look into the CC&Rs (covenants, conditions, and restrictions) of a prospective HOA, as these are the rules that the HOA will enforce, which can sometimes be far-reaching.
CC&Rs can restrict things such as landscaping, paint colors, whether you can park an RV or boat, fences, pets and whether you can use your property for rentals (4).
If you already own a property that's part of an HOA or condo association, and you're unhappy with the fees, look into whether you can join the board of the association to help steer future spending.
You can also look for ways to lower your home expenses in other areas. While homeowners insurance is getting more expensive, spending just a few minutes shopping around for a better deal can help you save hundreds per year.
According to J.D. Power, 47% of policyholders saw their rates rise in 2025, and the average single-family homeowner already pays an eye-watering $2,370 in annual premiums.
This is bad news for those who simply auto-renew with their current provider every year. In such a quickly shifting landscape, it can pay to take 2 minutes to shop around for better rates.
OfficialHomeInsurance.com makes it easy to find the coverage you need without the hassle of calling multiple providers for quotes.
Simply fill out a few details and you could save an average of $482 a year.
And whether you’re looking to buy a new home or refinance your existing mortgage, taking the time to shop around could also save you thousands in the long run.
Freddie Mac recommends obtaining quotes from three to five lenders to secure the best possible mortgage rate. Even a small rate reduction can translate into significant savings over the life of a loan.
To make this process easier, places like the Mortgage Research Center (MRC) can help you quickly compare rates and estimated monthly payments from multiple vetted lenders.
By entering basic details — like your zip code, property type, price range and annual income — you can view mortgage offers tailored to your needs and shop with confidence.
If you are looking to invest in real estate, but don’t want sudden HOA fee hikes to eat into your returns, there are other options for investing in property that can give you the benefit of real estate without the HOA headaches.
You can tap into the fractional real estate market by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation.
Once you choose a property, you can start investing with as little as $100, potentially earning quarterly dividends.
And if you’re looking to move beyond short-term rentals, you might also consider investing in long-term multifamily and industrial rentals.
Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.
Lightstone DIRECT lets individual investors tap into the institutional approach of Lightstone, one of the largest privately held real estate investment firms in the U.S., with $12 billion in assets under management.
The platform eliminates middlemen and the extra layers of fees that can add up in traditional real estate investing, usually known as “fee stacking.” This streamlined approach provides more direct access to institutional-quality deals.
Over nearly four decades, Lightstone has delivered strong risk-adjusted performance — including a 27.6% historical net IRR and a 2.54x historical net equity multiple on realized investments since 2004.
Each opportunity requires a $100,000 minimum and undergoes a rigorous review by Lightstone’s principals, including founder David Lichtenstein.
Lightstone also invests at least 20% of its own capital in every deal — roughly four times the industry average. With skin in the game, the firm ensures its interests are directly aligned with those of its investors.
— With files from Rebecca Payne
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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The Wall Street Journal (1); LendingTree (2); U.S. Census Bureau (3); HomeLight (4); Forbes (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Four leading AI models discuss this article
"Rising HOA fees are creating a 'liquidity trap' that will suppress residential resale values and increase default risk in debt-burdened condo associations."
The surge in HOA fees is a classic 'hidden' inflation story that is effectively eroding the equity of middle-class homeowners. When mandatory monthly assessments rise at double-digit rates, they function exactly like a property tax hike, directly compressing the net operating income for investors and the disposable income for owner-occupants. This creates a 'liquidity trap' for condo owners: as fees rise, the property's resale value drops due to higher carrying costs, leaving owners unable to exit without a loss. We are seeing a structural shift where deferred maintenance costs—ignored for a decade—are now hitting balance sheets simultaneously, creating a systemic risk for the residential real estate sector, particularly in aging urban condo markets.
Higher HOA fees are often a necessary correction for years of under-capitalization, which, if managed correctly, actually protects long-term property values by preventing building decay.
"Escalating HOA fees exacerbate affordability strains, threatening transaction volumes and price stability in 81% HOA-exposed new single-family markets."
Rising HOA/condo fees—median SFH up 26% to $63/mo, condos 29% to $420/mo since 2019 per Realtor.com—pile onto 7%+ mortgages, $2,370 avg annual insurance (J.D. Power), and utilities, hitting 17.5M homeowners (LendingTree). With 81% new SFH in HOAs (Census), this squeezes affordability in Sunbelt hotspots like FL/TX/CA, where deferred maintenance and insurance spikes (climate-driven) force hikes and special assessments. Low reserves flag future pain, curbing sales velocity, resale values, and price growth in HOA-heavy segments; watch for uptick in delinquencies/foreclosures.
HOA fees are still minor vs. mortgages (~2-5% of PITI for medians) and fund value-preserving maintenance amid 40%+ insurance surges, while non-HOA homes face similar unpooled repair risks without amenities premium.
"HOA fee inflation is a structural affordability crisis that compounds mortgage stress, yet remains invisible in standard debt-to-income calculations, creating latent default risk for lenders."
The article conflates two separate problems: structural HOA fee inflation (real, documented) and a marketing vehicle disguised as consumer advice. The 26-29% fee increases since 2019 are genuine and reflect aging infrastructure, insurance spikes, and reserve underfunding—legitimate headwinds for ~17.5M homeowners. But the article's 'solutions' (fractional real estate platforms, mortgage refinancing) are sponsored content that don't address the core issue. The real story is that HOAs are becoming a hidden tax on homeownership that buyers systematically undervalue at purchase, creating negative equity surprises. This should concern mortgage lenders and housing affordability advocates, not prompt readers toward Arrived or Lightstone.
HOA fee increases may reflect rational cost recovery (insurance, labor, materials all up 20-30% since 2019) rather than mismanagement; if reserve funds are being properly rebuilt, future special assessments could stabilize. Additionally, the article's data point (81% of new single-family homes in HOAs) suggests this is now a priced-in feature of the market, not a surprise shock.
"HOA fees are a factor, but the biggest housing affordability risk remains mortgage rates and inventory; well-managed HOAs can support property values, not uniformly drag them down."
Bold take: HOA angst is real but not universal. The piece leans on anecdotes and a handful of medians, while glossing over wide dispersion in fees, reserve health, and the risk of special assessments. In many markets, HOA dues fund capital maintenance and amenities that preserve or even bolster property values, which can support demand when rates rise. The real risk isn’t 'more HOA' per se, but poorly funded associations that hit owners with big, sudden assessments or restrictive CC&Rs that curb rental income. For investors, the article’s push toward platforms like Arrived/Lightstone ignores liquidity, leverage, and sponsor risk; fees are part of the equation, not the whole story.
Counterpoint: HOA fee inflation is not just an anecdotal nuisance—it's material in some markets, where rising dues compound mortgage costs and can dent affordability for a non-trivial share of buyers. It also risks large, opaque special assessments and reserve shortfalls in aging communities.
"Special assessments represent a hidden, non-discretionary credit risk that could trigger widespread defaults in under-capitalized condo associations."
Claude is right to flag the sponsored content, but everyone is missing the second-order credit risk. If HOA fees become a de facto 'senior lien' through special assessments, we are looking at a massive increase in default risk for subprime borrowers who lack liquid reserves. When an association forces a $20k assessment for structural repairs, that’s not just a monthly cost increase—it’s a potential insolvency event for the household, regardless of their mortgage status.
"HOA-driven foreclosures aren't spiking per data, but fee hikes risk condo inventory buildup that stifles urban price appreciation."
Gemini overstates HOA credit risk: special assessments rarely trigger mass defaults, as delinquency rates remain <1% (NAR data), and HOA liens are often junior to mortgages (e.g., federal rule in many states). Nobody flags the flip side—inventory overhang in aging condos as owners delay sales amid fee hikes, potentially capping price growth in urban markets while diverting demand to new SFH builds (81% HOA-tied per Census).
"HOA fee inflation may be a feature of builder economics, not a bug in housing affordability."
Grok's inventory overhang thesis deserves more weight. If HOA fee hikes suppress condo sales velocity while 81% of new SFH are HOA-tied anyway, we're not seeing a flight from HOAs—we're seeing a compositional shift toward new construction. This could actually *support* builder margins and new-home pricing power in Sunbelt markets, offsetting affordability headwinds. The real losers are secondary-market condo holders stuck with aging buildings and rising fees.
"Tail risk exists: large special assessments in aging condo stock can trigger solvency shocks even when national delinquencies stay low."
Yes, national delinquency rates are often <1% and HOA liens are typically junior to mortgages, but that masks tail risk. In aging condo stock with weak reserves, a few large special assessments can trigger sudden solvency shocks for households, even if monthly dues look affordable. Lenders may tighten underwriting, raising reserves and dampening HOA-heavy market liquidity. That could strain valuations and push some markets into negative feedback loops.
The panel agrees that rising HOA fees pose a significant risk to homeowners and the real estate sector, particularly in aging urban condo markets and Sunbelt hotspots. This is due to decreased affordability, potential liquidity traps, and a structural shift in deferred maintenance costs hitting balance sheets simultaneously.
Compositional shift toward new construction supporting builder margins and new-home pricing power in Sunbelt markets.
Mass defaults among subprime borrowers due to special assessments, potentially insolvency events for households.