Condo HOA fees in CA seem outrageously high compared to my friends fees back east... Where they get things like snow removal included. Im talking $300 annually vs 400 monthly on average in CA. Anyone know why the wide gap? Id think labor for yardwork and pool maintenance would be cheaper in los angeles with mexican immigrants doing most of this work, so where is all that money going? My guess would be earthquake insurance makes up the largest chunk, but overall it still seems shady to have such high fees.
Why are HOA fees in CA so high?
By LAO Follow Sat, 9 Oct 2010, 11:01am 5,045 views 22 comments
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$300 yearly seems quite low. It all depends on what you're getting--pool? workout room? clubhouse? Does it include heat? Cable?
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San Carlos, CA
Because CA real estate is a racket. No, seriously, I can think of few reasons. Earthquake insurance included? Smaller complexes? Swimming pools? I have lived quite a few places in five states and from what I see CA is the worst quality housing at the highest rates. I guess it's the weather. ;)
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pkowen says
I am thinking of camping all my life in CA. :)
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San Carlos, CA
bubblesitter says
I am thinking of living in a teardrop trailer.
http://www.teardrops.net/
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Pasadena, CA
In one of my condo properties in Old Pasadena the three highest expenses for the HOA are earthquake insurance, two full-time maintenance people and water (hot included). The earthquake insurance alone costs $40,000 a year to cover 100 + units and that is only the structures, bridges, parking garage, etc., and then you have gardeners twice a week, electricity to power 100s of walkway/porch and parking garage lights, pool people twice a week, cleaners twice a week, garbage pick-up 3 times a week, $34,000 a year for a management company, etc.
The earthquake rate went down two years ago from $70,000 so there was no HOA fee increase for that year. It's not cheap to run a complex in CA and maintain a $600,000 + reserve fund.
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Egg Harbor City, NJ
Why? Cause they can. Most HOA's have less to do with taking care of the common good of the community and more about making money. And why? There big money in it. With sweet heart deals for sub-contractors charging inflated fees for work to "special" assessments that cost every homeowner in the development thousands of dollars. In many cases it's not event he HOA board that running things they are manipulated by lawyers and the HOA management company to do pretty much what they want. The Management company are the masters, HOA are puppets and the average HOA resident are sheep to be fleeced.
Most HOA's are determinable to the community then a benefit. There's a few links of out of control HOA's.
http://www.ccfj.net/HOAEagleRes.html
http://www.bankrate.com/finance/real-estate/homeowner-horror-stories-associations-are-heaven-or-hell.aspx
http://www.city-data.com/forum/north-carolina/6461-hoas-horror-stories.html
http://www.ahrc.com/new/index.php/src/news/sub/qa/action/ShowMedia/id/1041
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TechGromit says
My folks live in an HOA area, total f******* nightmare too. Money gets spent frivilously, questionnably. You get liars and swindlers who try to gain the system constantly.
Scary part is that it's basically a representation of federal government corruption just on a much smaller level.
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bubblesitter says
Move into a foreclosed home, I hear it takes 6 month for a sheriff to show up.... which means you just move to another house next door.
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San Jose, CA
Premium
Why are we paying so much for earthquake insurance in California? In an event of a major earthquake, everyone will make a claim, so the insurance company would not be able to pay everyone, and they will go bankrupt. So, earthquake insurance should be much much cheaper than what these companies actually charge, because they are really not insuring you.
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San Diego, CA
Insider info. 90% of HOA money go to administrative/staff salary. Only 10% actually spent on fixing stuff, insurance etc...
My friend is working in a HOA office for over 10 years. It's a rip off for sure. That's why I bought my house in non-HOA area.
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dunnross says
If they went bankrupt that means they weren't charging enough. If they were charging enough they would have the reserves to pay all claims in full.
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Los Angeles, CA
I think this is comparing apples to snozzberries. Maybe if you live in the sticks you only pay $300/year in the east. But if you're talking D.C., north Jersey, NYC, it can be easily 400+/month for HOA fees. For the most part, expensive areas have expensive HOA fees.
I guarantee you HOA doesn't cost $400/month in Dirtville, CA.
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dunnross says
Oh they won't go bankrupt. What happened to AIG? In America everything is on tax payer, I am learning that in hard way after analyzing the causes of slow down turn...that has rewarded the deadbeat mortgage takers and punished the renter like me for not buying into bubble level property. So why are we still cursing Stalin?
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San Rafael, CA
I was an HOA president for 2 years in CA. I think some of these have been already said but here's why I think California is so much higher then other states:
1). Earthquake insurance - We paid $36k/yr for 64 condo units. I never wanted this but it was voted for anyway. Complete waist of money
2). California Liability - People are sue happy here making liability cost more. Owners would file claims on the HOA insurance to get a free renovation to their neglected unit!!
3). Management Companies - The higher the fees, the more they make
4). Cost of living
5). Age of Units - Fees are DIRECTLY related to how old the units are
NEVER BUY a unit with an HOA if the renter/owner ration is anything above 20%!!!! The more renters, the greater the cost to maintain the units.
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kronicade says
Why more expensive west of the Bay vs East Bay ?
Percection of higher incomes. Something that didnt exist pre-bubble era(s). The costs in Santa Clara County 3x more vs Fremont yet COL, Earthquake, Age, Liability is no different.
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dunnross says
Your right on spot here. The dinky quake that occured in 1989 actually bankrupted many insurance companies. Which led to higher temp sales taxes. Given the even highly inflated prices today, insurance companies will be unable to foot the bill and require a tax payer to bail out. It would be a dreadful mess.. lasting years and mega billions $$, which no one has.
Another reason you shouldnt have highly inflated prices in Bay Area.
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You should look at HOA fees in NYC. Over 1000+/month even in the outer boroughs.
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Baltimore, MD
TechGromit says
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Baltimore, MD
CaffeineAddict says
Pretty hefty in the DC area as well.
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It's a risky thing, not being able to ask the HOA Management in these communities to change how much they charge yearly. It's easy for them to take advantage. It's important to be able to trust your HOA executives. Trust me, there are some that are worthy of your trust.
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San Rafael, CA
thomas.wong1986 says
Not sure, I was in Southern California
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Woodland Hills, CA
francophile100 says
To his point - my buddy is the president of his HOA. He lives in 2 bed condo in Santa Monica, CA in an 8 unit building. Each unit pays an HOA of $400.00 a month. For that, they do NOT have:
- Pool/Spa/Hot Tub
- Fitness Center
- Tennis Courts
What they get for that is:
- Building Insurance (I think it includes earthquake insurance)
- 2 Phone Lines (1. Elevator. 2. Automatic Door Open Pin Pad)
- Water and maintenance of around 3 Feet of green plants around the perimeter of the building.
- Property Management Company that apparently sends letters.
Apparently, all this adds up. So while I cannot say that an HOA fee is a rip off, I will say that it is a huge cost that must be factored in when making a purchase decision.