By Jennifer Riner
(NOTE: RCG is pleased to share this guest post, courtesy of our friends at Trulia. Enjoy!)
Creating a comprehensive housing budget involves more than a mortgage and property tax estimate. Additional costs like utilities are universal, but what about homeowners’ association (HOA) fees? HOA dues are mandatory for the maintenance of a shared property, whether it be a condo building, townhome or single-family home development. These fees help maintain communal conveniences like pools, gyms or clubhouses. Sometimes, partial or full utilities, such as cable and water, are included in your monthly rate.
Fortunately for Las Vegas residents, the metro offers some of the lowest HOA fees in the country. On average, HOA fees on homes for sale in Las Vegas cost $198 per month – the second least expensive metro behind Nashville at $194 per month. While comparatively affordable, HOA fees in Las Vegas impact total housing costs, especially when you’re already searching at the top of your price range.
Looking to lower potential HOA fees even further? Savvy house hunters should keep the following factors in mind to minimize their additional monthly dues.
HOA Fees are on the Rise
In 2005, the average monthly HOA fee among all households nationwide was $250. In 2015, the average fee grew to $331, a jump of 32.4 percent. The rise in average HOA fees outpaced housing prices (15.1 percent) and the inflation rate.
And, although relatively unaltered by the housing crash and financial crisis, HOA fees have continued their upward trajectory over the past decade. Metros with the biggest jump in HOA dues between 2005 and 2015 include Virginia Beach (75.4 percent), Baltimore (68.4 percent), Miami (52.8 percent) and Tampa (49.8 percent). In the Las Vegas-Henderson-Paradise metro area, condo fees increased just 27.4 percent during the same period.
Older Building and Expensive Upkeep
You might think a newer building with fresh amenities would fetch a premium. But, HOAs are more expensive in older buildings that require consistent TLC. On average, HOA fees in buildings built in 2005 or later cost $90 less per month compared to properties built in the ‘60s. Building age is the primary stimulus behind the recent rise in HOA fees, despite the 2008 housing crash that did little to moderate dues. In 2005, the average HOA building was 36-years-old. In 2015, the average multi-family building or development age reached 41-years-old.
Smaller Communities Cost Less
Generally, smaller housing developments typically offer lower HOA dues. Nationally, single-family detached home communities with 20 to 49 units are $160 more expensive every month. Units in buildings with over 50 units come at a $330 premium. And, smaller units usually cost less compared to neighbors with ample square footage. The fewer bedrooms, the smaller your fee. Each additional bedroom boosts condo dues by approximately $30 per month.
Over 8 percent of Las Vegas metro households are required to pay a condo fee, whether monthly or annually, which is down slightly from 10.6 percent in 2005. HOA costs considered, buying is still the better deal compared to renting.
While HOA properties are in the minority compared to the overall housing stock – at least in the general metro area – some home buyers seek out HOAs specifically. Homeowners’ associations buy services in bulk, and when utilities are included, you’ll likely pay your portion of a discounted group rate. In addition, many buyers prefer the grounds keeping that association dues provide, including well-manicured semi-private green spaces. The decision to reside in an HOA-run development boils down to personal preference, available inventory, and, of course, the cost versus value of shared amenities.