Every homebuyer has experienced the thrill of thinking they found a hidden gem. They find a home, it meets all their wants and needs, and the HOA fees are lower than every community in the neighborhood. Sometimes, buyers and realtors can shrug the fee discrepancies away. After all, communities offer different amenities, are responding to different financial needs, are evolving at different speeds, and can result in significant yearly savings (a $400/month difference results in a $4800/year saving).

It is important for homeowners to understand what could lead to these fees varying so much, particularly within the same ZIP code.

Community Age

Homebuyers are often tricked, thinking new developments with low HOA fees make sense because the building is newer and requires less maintenance. However, this trick doesn't reveal two hidden secrets.

First, new buildings are the ones that require higher HOA fees as they build up the non-existent reserve fund. Second, many developers own most of the units in the community shortly after everything is built. They keep the fees artificially low in order to sell the homes significantly faster than they would otherwise. Within 2-3 years, if the developer is successful in selling nearly all units, the HOA fees rapidly increase multiple times over, resulting in new, sudden financial burdens. In many cases, a community that has existed for five years already may be a safer bet than a community that has existed for only one or two years. This is because the HOA has most likely already reached a point of stabilization.

Of course, older communities and neighborhoods always tend to have higher HOA fees, but there is generally less of a 'catch'. This is because the community has already filed numerous reserve studies, has established a set list of recurring vendors, and has addressed new needs that pop up over the span of decades.

With that being said, older communities (1970s/1980s) tend to have higher HOA fees because the largest expenses are the ones that tend to expire after 40 or 50 years. For example, a roof typically has a lifespan of 25 years. Windows typically have a lifespan of 25 years. An elevator typically has a lifespan of 25 years. Each of these jobs requires anywhere from $50,000 to $500,000 funding to repair, depending on the building size. Thankfully, new buildings don't have to deal with these expenses, but unfortunately, homeowners in old buildings don't have the long-term foresight to financially plan for these events until they're nearly broken.

Community Size

This is probably the single biggest static factor in HOA fee variance within a neighborhood. Living in a smaller community is beneficial because fewer things break (community areas are used less often), fewer things exist that can break, and when things break, they tend to require less of a repair cost (1 elevator versus 2 elevators). However, the benefits typically stop there.

Smaller communities tend to also afford more space for an individual home, which means large HOA fees are spread across fewer owners. As an example, one of my colleagues lives in a 400-unit building while another lives in a 5-unit building. The 400-unit building just paid $200,000 for a roof repair while the 5-unit building paid $20,000 for a roof repair. A homeowner in the larger building may pay $500 on average into that repair while a homeowner in the smaller building may pay $4,000 on average. This cost is sudden and non-trivial. On top of that, this limits the smaller building's ability to afford amenity upgrades since they lose out on that additional $3,500 that could have gone toward re-painting the lobby and improving property value. This example, while specific to a roof repair, can also be expanded to the case of general due increases and special assessments.

Finally, one thing that is not typically discussed is that contractors will give discounts to larger buildings because it's a larger job. As such, they guarantee a higher payout, ensure more stability of work, and can generate a stronger rapport for repeated, future work.

Community Amenities

Amenities are expensive, but are often viewed as implicit costs. For example, pools must be regularly maintained to prevent safety issues. Larger buildings may require employees or some form of in-person security. And elevators are a recurring nightmare.

For example, swimming pools typically incur $20-40k in annual costs (including $50k for re-surfacing every 10-15 years). A fitness center requires $15-30k in annual costs for equipment memberships (e.g. Peloton), cleaning, insurance, and HVAC. A gated entry with security staff can require anywhere from $50-200k. And an elevator could require $5k+ every year, on top of the $100k required to modernize every 20-30 years.

Those four items bring in an additional $90-280k in additional expenses. Depending on how often the community exercises the amenities, are all of them worth supporting or should those costs be offloaded to homeowners to pick and choose which ones they want to purchase. For example, a homeowner might prefer a specific, off-site gym, and may not find any benefit in the on-site fitness center.

A community with many amenities is attractive, but don't be fooled into the sparkly allure. I've lived in four apartment buildings, all with a rooftop pool. I used the pool one time in one building, and it was the day before I moved out.

The Reserve Fund

A common theme discussed in these articles in the HOA reserve fund. While no formal definition exists, the standards for HOA funding are typically seen as follows:

• 70-100% funding (Well-Funded): Can respond to any emergency or one-off expense
• 30-70% funding (Properly-Funded): The sweet spot where HOA fees are not too high, but the HOA has flexibility to improve the community
• 0-30% funding (Under-Funded): High risk of special assessments and upcoming maintenance

In many cases, the 'well-funded' HOAs can actually be viewed as 'over-funded'. This is because homeowners don't always stick with their home for 30 years. They live there short-term and either sell or rent their unit after 5, 10, or 15 years. This means strong HOA funding may prove to be useless and may also result in less frugality by the HOA when spending on repairs. One story I heard is that a friend's HOA had an endless amount of money to spend so they would generally just accept the highest bid in the hopes of requiring less hands-on involvement with the contractors. Eventually, they realized nothing changed about the building, but their reserve fund was $30k less than they had hoped, resulting in a scrambling and a lot of finger pointing. If an HOA is over-funded, homeowners will typically argue for the fees to be reduced. In turn, this results in the HOA no longer being "well-funded" over time.

Property Type

There are generally three types of properties: condos, townhomes, and single-family homes. These all have a significant impact on HOA dues.

Single-family homes tend to hover around $50-$150/month. These HOA fees typically cover landscaping, trash collection, and basic signs throughout the community.

Townhomes tend to hover around $150-$350/month. At this price range, there is typically shared roofing, siding, possibly painting, and shared amenities.

Condos and high-rises tend to hover around $300-$1000+/month. This is because they might have shared water systems, elevators, a shared master insurance policy, concierge or security, and a shared parking garage. Again, more amenities result in higher HOA maintenance costs, both as one-time and recurring fees.

Management Structure

HOAs can either be self-managed, partially-managed, or fully-managed. They all make a difference in quality of care, as well as account for a large line item in the annual budget.

A fully-managed HOA is managed via a property management company. The company assigns a property manager to the HOA that handles emails, vendor onboarding, contract management, annual budgeting, legal issues, disputes, paperwork (e.g. assessments), and security of finances. The primary benefits are third-party arbitration (less finger-pointing by members of the community) and the ability to be hands-off for members of the HOA board (it is a volunteer position). These property management companies can cost anywhere from $500-$5000/month depending on the level of involvement and can be extremely difficult to get rid of it turns out the property manager is unresponsive or negligent.

A self-managed HOA does not involve a property management company in any form. The HOA board consists of several members that handle all paperwork and communication. This results in significant cost savings, which can reduce HOA fees or enable more money to be spent on repairs and upgrades. However, this takes up a significant amount of time and can be seen as a huge detractor for the volunteers trying to tackle daily issues.

A partially-managed HOA lies somewhere in-between. There exist property management software, such as AppFolio[1] or PayHOA,[2] that can handle vendors, AI communication, budgeting, and financial reports for a small cost per month, depending on the number of units in the community. For example, a 10-unit community may only incur costs of about $100/month, which removes some of the burden from the board members, while also saving financial costs involved with a fully managed HOA.

Insurance Costs

The master insurance policy is vital to any HOA. In low-crime, low-cost communities with few natural disasters, these insurance policies may range $30-$60/month per unit. However, in high-risk areas, insurance policies may be $150-$400+/month per unit.

For example, Florida condo collapse in 2021 brought in new safety laws. This led to Florida insurance increasing 8% year-over-year.[3] This was a leading cause in the 18% decrease in property values seen in following years.[4] Another example are the 2025 California fires. For many homes, fire insurance was either revoked, not granted to certain homes, or premiums have spiked to control for the additional costs. These natural disasters play a direct role in the insurance of HOA insurance policies, and subsequently HOA fees.

Real World Example

Imagine the following scenarios:

• Community A: Built in 2005, this community has 120 single-family homes, a pool, a park, and basic landscaping. They are a self-managed HOA and are 85% funded. The fees are $95/month.
• Community B: Built in 2018, this community has 80 townhomes, a luxury pool, gym, clubhouse and gated entry. They are fully-managed but only 40% funded. The fees are $485/month.

The $390/month difference (and total annual difference of $328,800 across all units) accounts for several things:

• Increased amenities (~$150/month)
• Property management (~$80/month)
• Exteriors and roofing (~$100/month)
• Reserve funding (~$60/month)

Despite both communities having a pool and existing in the same community, there are many factors at play that affect the dues and financial burden on homeowners.

Takeaways

Prospective homeowners should ask the following questions when purchasing a home:

1. How well funded is the HOA? Request a copy of the recent reserve study.
2. Does the annual budget regularly increase the reserve funds?
3. When was the last special assessment?
4. Is the HOA self-managed or fully-managed?
5. Does the HOA anticipate any fee increases in the near future?
6. Are there any upcoming large repairs?

And prior to buying, watch out for these red flags:

1. Suspiciously low HOA fees (check the HOA fees in a neighborhood by utilizing our free HOA Lookup Tool)
2. A majority of the homes are still owned by the community's developer
3. The board is negligent of repairs

Low HOA fees are great, and should be sought after, especially since homeowner associations tend to be a bunch of bureaucracy. However, these fees should be carefully analyzed when purchasing a home, rather than neglected which is the case for many homebuyers.