Feb 16, 2024 - News

How insurance is impacting San Diego's HOAs

Estimated number of HOAs, condominiums and cooperatives with fees, 2023
Data: Foundation for Community Association Research; Map: Alice Feng/Axios

More than 14.4 million Californians live in housing associations, making those fees an important piece of San Diego's expensive housing market.

Why it matters: Homebuyers looking at condos or townhomes for their lower prices might not realize HOA dues can cost thousands annually and can escalate over time, Axios' Sami Sparber writes.

Between the lines: HOA fees cover communal things like maintenance, landscaping, pools, gyms and other amenities. Associations also often insure buildings and homes' exteriors.

  • In San Diego, fees can range from under $100 for detached homes in suburban neighborhoods to more than $1,000 per month at luxury downtown condos.

Zoom in: As hundreds of thousands of San Diego County properties face higher insurance premiums because of extreme weather threats, HOA fees are going up, local real estate broker Spencer Lugash explained.

  • Some insurers have also abandoned California, forcing associations to seek new, potentially more expensive policies for their buildings and developments.
  • Plus, HOA boards need to keep up with inflation and rising costs of labor.
  • That cost burden falls on the homeowner, who may face sudden, drastic increases in housing costs.

What they're saying: "It can quickly turn into something you can no longer afford," Lugash said.

  • Yes, but: HOA boards can only increase dues annually and can't exceed 20% without membership approval, with some exceptions, per California law.

Be smart: Condo buyers should pay close attention to the building's age, condition, location and finances, Clare Trapasso with Realtor.com told Axios.

  • "If they're buying [in] an older building that doesn't have much in its reserve fund to pay for emergencies, and the building floods frequently or the elevator gives out, then each individual condo owner may see their monthly HOA fees go up," says Trapasso, the company's executive news editor.

What's next: If dues change, the association board should report that in the community newsletter, website, notices or meetings, according to Thomas M. Skiba, CEO of the Community Associations Institute.

  • Typically, condo fees don't go down unless a special assessment — extra fees charged under unforeseen circumstances — ends, or the building gets an influx of cash, Trapasso says.

🗣️Tell us: What is your experience with HOA rules, dues and fines? Email us.

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