How to save $50,000 on your next home.
When buying a home, most buyers focus on mortgage rates, down payments, and property taxes—but one often-overlooked expense can have a massive impact on affordability: Homeowners Association (HOA) fees. Understanding how HOA fee increases translate into higher mortgage-like costs and how they affect home values can help you make a more informed purchase and potentially save tens of thousands of dollars in the long run.
The Impact on Home Values
HOA fees are typically assessed monthly and are used to maintain community amenities, landscaping, and shared infrastructure. While they may seem like a minor expense compared to a mortgage payment, they can have an outsized effect on your home's affordability and resale value.
A $100 increase in HOA fees is roughly equivalent to $15,000 in mortgage value. This means that an increase of $100 per month in HOA fees has the same impact on affordability as if the home price were $15,000 higher. This assumes a 7% interest rate and a 30 year mortgage.
If an HOA fee rises by $300, that’s like adding $50,000 to the cost of the home in terms of monthly payments. Said another way, if your HOA dues increase, you can expect the value of your home to decrease by the amount of mortgage value.
Here’s why:
Reduced Buyer Pool – Higher HOA fees reduce the number of qualified buyers who can afford the total monthly housing payment, leading to weaker demand and lower home values.
Comparative Home Pricing – If two homes are priced the same but one has a significantly higher HOA fee, buyers are more likely to choose the lower-fee option, making high-fee properties less competitive.
Perceived Value – Buyers may be hesitant to purchase a home in an HOA with rising fees, fearing future financial uncertainty. This can depress resale values compared to homes in communities with stable or lower HOA dues.
The Bottom Line
Many buyers underestimate the impact of HOA fee increases, but as shown, even a seemingly small rise can have a substantial financial effect. By understanding how HOA fees translate into mortgage-equivalent costs and how they influence market values, you can make a smarter home purchase and potentially save $50,000 or more in hidden costs.
Before you buy, contact me to evaluate the HOA financials and fee trends—you might just save yourself a fortune. My expert HOA financial reviews can give you peace of mind by providing a clear picture of the HOA’s financial health.
