« The Weeds

It's an HOA world; you're just living in it

2023-07-12 | 🔗

If you’re buying a new home, there’s a good chance it’s part of a homeowners association. HOAs are a form of common interest housing, and roughly a quarter of Americans live in communities with one. These private entities work as a pseudo-government in many neighborhoods, and they’re shaping housing policy across the country.

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When your neighbors become your overlords 

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Jonquilyn Hill, host

Sofi LaLonde, producer

Cristian Ayala, engineer

A.M. Hall, editorial director of talk podcasts

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
- Support for this podcast comes from Planned Parenthood. It's hard to imagine a world where we leave future generations with fewer rights and freedoms. Since the Supreme Court's decision to overturn Roe v. Wade, politicians in nearly every state have introduced bills aimed at blocking people from getting the essential sexual and reproductive care they need, including abortion. Planned Parenthood believes everyone deserves access to care and with supporters like you, they can reclaim our rights and protect and expand access to abortion care. Visit plannedparenthood.org/future to learn more and support their cause. you
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Everywhere. Once you start paying attention, you see the way it creeps in. Recently, I was catching up with my friends Jasmine and Chris. I didn't expect it to be a conversation about housing policy, but at the root, that's exactly what it was. I've known Jasmine since For teenagers. We met through church. We were actually roommates on a mission trip to Alaska. Or when we both found out we were going to Howard and staying in the same dorm, we decided to do the roommate thing again. That's also around the time we met Chris. - Yes, we're all at Howard, and then this is the second day of freshman week. So not even everybody else was there. They had a party on the yard, Refford City party on the yard. And we went and I saw Jasmine making fun of the stanky leg and I joined in.
And then we all just became a group after that party. We went to McDonald's. And I think that we solidified our friendship over Big Macs and McNuggets that night. - Yes. - Yeah, only, this was back when I was a pescatarian, so I was definitely only eating fries. - It's filet-o-fish. Oh, did I order? - I don't remember if you did, but I wouldn't even put that slander out there if you had ordered a Filet-O-Fish. - Though our friendship remains the same, we... Now have much different challenges than we did when we were 18 years old. -I'm an adult, but y'all have, like -- A child and a home so y'all have unlocked a next level that I have not yet. Like I'm paying tax but I'm not that grown. -Jasmine and Chris are married and raising their family in Texas. I bought a house right before the pandemic hit. They told me about a challenge that was unfamiliar to me but probably sounds very common to many homeowners across the country.
Yes, so we do have an HOA in our neighborhood. An HOA. It's a homeowners association, even though they're private and They act as kind of a local government for neighborhoods. The status as a private entity can be a source of... Drama at times. Most HOAs are volunteer run by people who live in the neighborhood, but Usually development companies run them before homeowners take over. That's the case for Jasmine and Chris. They were one of the first families to move into their subdivision. When we first got here, they give you all the paperwork and I was reading the articles and I was like, man, they're really strict. But at the same time, I was like, I really want the house, so we'll deal with it. Initially, their association did things like take care of their front yard and maintain the neighborhood pool. But after a while, they told me the...
Management got more and more lax, even as their HOA feet went up and up. Chris live outside Dallas and are paying $1,836 a year for their HOA. That's a fee on top of their mortgage. Now, the app-- The average HOA in Dallas is $98 a month, which puts you a little over $1100 a year. And the national average for a single family home can run you between $200 and $300 a month. Not a small amount of money. One of our issues is that we had a tree die in our front yard. I thought they were in charge of the maintenance and the watering of it, but something happened. And the disconnect, so it died. And I went through several channels to try to get it replaced. So at first I'm emailing them and then nobody answers. So then I call and they're like, everybody's out. So put a work order in.
Quarter in and it takes months for anybody to get back to me, months and years actually. So from the time my first email to the time of putting a work order and was a year of the tree already being gone, 'cause I was able to get it removed. Fast forward to me putting in the work order, it took months to even-- back from them and when I did it was just oh we'll get to you so when it came to the live meeting that happened in 2023, April 2023, I hadn't had a tree since. 2021 and it took Chris basically reading them their rights in front of the entire neighborhood for. The lead person of the HOA to then finally reach out and get our Our situation going of replacing our tree. And then next thing you know, all the work orders are updated. So it's like, you got all of my correspondence, but you just decided to be happy.
Hazard about responding to us. And yet you want my money on time every time Of the month. It made me feel old because fighting with the HOA feels like 55 plus activity. I'm raising a young child. I'm working. Yeah, I don't have the time to be at home all day emailing and following up for you for something that you're employed to do. I really don't want that hassle next time around. So what's-- - Next for y'all in your home owner journey, if you don't mind. - Yeah, so we're probably gonna move into an apartment while I do like the space that house provides. Number one, the HOA was not helpful. It felt like a thing that we just had to pay into, and then they would often police us, but wouldn't necessarily help. So if we left our trash can out a day later, they would come by and take a picture of it, and then email it to you and say,
know, pay this or if you're a day late on paying HOA, they would call you or email you, Hey, you just passed due. But when you're asking for things of them, they weren't very helpful. And then just the added responsibility of a homeowner. If something goes awry in the house, you're making those calls. Like you are the repairman. And so it's difficult with just kind of the schedule that we have and the busyness of life. And having a little boy, it would just be easier to have a maintenance person, honestly, on a whole bunch of the things that we have to deal with. At least for now, we don't, not saying forever, we'll never own a home again, but the comfort of an apartment does sound quite nice compared to... The responsibility of home ownership right now. - Yeah, I consider it taking a break from home ownership. Add for more. At a close glance, this may seem like a non-issue. Just one of the facts of life, like death and taxes.
But HOAs are more than an occasional headache and potential fodder for neighborhood gossip. And it's been decades in the making. My name is Evan McKenzie and I'm a professor of political science. And on the law faculty at University of Illinois at Chicago. Evan's also the... Author of not one, but two books on the topic of HOAs. The first is Private Homeowner Associations, and the Rise of Residential Government. government. The other one is, you guessed it, Beyond Privatopia, rethinking residential private government. I was surprised to learn just how widespread HOAs are in the US. It's about 20% of the US population. It lives in some form of common interest housing. And they are very widespread. They are in every state across the country.
They all have HOAs, they all have condos. They are especially prevalent across the Sunbelt, from coast to coast, from California to Florida, and in between. Almost every place where... A lot of housing has been built in the last 50 years. You will find a high concentration of homeowner and condominium associations because the real estate industry turned toward... Building housing this way in the 60s and 70s, and it's just gotten more that way by the decade. So common here in the United States? There were very few of them until... Of the 1960s, there were maybe a total of a few hundred, maybe fewer than 500 according to the survey in 1964. So, but then they began to take off in large numbers, in the 70s and 80s and 90s and through the present. And they became.
Became the dominant form of new housing construction in most of the major rapidly growing parts of the country during those decades. And the main reasons are because they are very lucrative for local governments. And they are very lucrative for real estate developers. Local governments can get... New housing and new property tax payers who pay a full share of property tax, but they The same kinds of services that they have to deliver if you didn't have an HOA. So As one city manager once put it, they're cash cows. HOA's are like cash cows for local government because... All the residents are paying all these taxes, but they're not getting the services that taxes pay for. Instead, they're getting paid. Privately for a lot of the same services. I don't know. I think of the local government. It's like, you have to pave these roads. You have to do these sidewalks. - You just come to the agreement of like, okay, the city steps away? - Yes, the way--
development in big subdivisions works is there's what's called a development agreement where the developer will propose to local... Hey, I would like to build X number of houses. And then the local governor is always thinking, Well, what's it going to cost us? additional pre-HOA subdivisions the way they used to do it, Build the streets and the sewer system and the water system and parks and all that sort of thing. And they were responsible for that. And if they wanted all those taxpayers, they had to provide the infrastructure and the services. But now developers came up with this brilliant idea starting in the 60s and 70s. Well, wait a minute. We'll build all that privately. We'll pass the cost of it on to the home buyers who will pay for it and will maintain it forever. And guess what local government? You don't have to. Do all that and pay for all that, and you can just, it's just pure gravy, you know. These extra property taxpayers are just a benefit, but they're not much of a burden with this type of construction.
And it has become very attractive, particularly since local governments got hit in the late 70s and 80s with all these property tax revolts, you know, tax resistance and limitations. On what they can spend and borrow, which we call in the business tax and expenditure limitations or TELs. Government's are saying, well, wait a minute, where do we get new revenues from? We can't raise property taxes, we can't borrow, we can't do this. Well, guess what? You can make a deal. With a developer to do this type of development, and it kind of turns them into almost a fiscal or taxing instrument for them. I want to get into costs. So there are a lot of costs that come with home ownership. You know, you have your mortgage, you have property taxes, and then you have upkeep. Like, it seems like there's something always going wrong. There's always something to fix. So HOA fees, what do those types of fees look like? They vary widely from depending upon.
On what the association has to maintain. The fees are for maintaining. The common areas of the project, which is often, and it can vary, but it could be streets, roads. Expensive. You know, streets have to be resurfaced periodically and that can cost a lot of money. Water things like legs, ponds, retention ponds, detention ponds. Be many other types of things. Recreation centers, parks of course are very common. All these things require maintenance. Many associations have private water systems. They are paying a private water company to deliver. Over the water, they don't have municipal water, or private sewer systems. Those things have to be maintained. And so the association dues every month are supposed to cover operating expenses that the association As every month and also a contribution to what we call a reserve fund for repairing and maintaining these facilities as needed. Other things that you may have to pay for are attorney fees
Associations get involved in litigation, which is quite common, you know, with residents, with whoever, with a developer. Pay your share of those attorney fees. And that can be a lot of money. There will be something really important like for example a government agency says well you have to dredge your lake because it's got something in it and you're responsible for it and then they have to do a big special assessment and make everyone pay extra money for that. So it varies from one place to another. It can go from 40, 50 bucks a month to... To hundreds and hundreds of dollars, or in the case of some situations, even tens of thousands of dollars. Can you get into the sorts of rules these HOAs tend to have? Can and do they tell homeowners to do? - The US Constitution and...
The Bill of Rights limit the kinds of things that a local government can do or a state or national government, because that's what our Bill of Rights does. It limits the actions of government, but it does not limit the activities of private corporations like these not-for-profit corporations that are HOAs. They can regulate almost anything they want unless there's a state law against it. So for example, there are all kinds of. Detailed rules about pets. If your drapes are visible from the outside, they can regulate what color, not only what color you can paint your house, but what color your drapes can be. They can tell you where you can park your car. They can tell you you can't park on the street, you can't park in the driveway. They have told people they can't have pickup trucks. Satellite dishes are a big source of controversy. They had to pass a federal law about that to allow satellite dishes. And many things involving behavior, you know, grills, barbecues, pets, fences.
And sometimes these things lead to tremendous controversies, parties, noise, all that sort of thing. You not only have local government rules about that. But the private rules are much, much more restrictive. They're often much more restrictive. They can be, because the idea is it's voluntary. That's the way it's viewed by the law. Well, you know, you don't have to live there. You could live someplace else that has different rules. - We know who established. HOA's and that's these developers. But who runs them? Do they run them also? And like what's the job requirement for running? in HOA. To control it so that they can sell out without having any problems. Once the developer is sold out, the members, the owners, have to stay.
At the association themselves. People have to run for association director, for president, for vice president, and they are then in charge of the whole project. I guess - That's one thing I struggle with though, is like, why do people care? Is it about home value? Like, what is this about? That's a really important part of this. Many people and many people in the building industry have been saying this and many and certain percentage of the public believes this that. Uniformity and sameness in a neighborhood is good for property values. And I'm sure there is a segment of the buying public that thinks, look, all these houses-- The way they look right now, right after they're created and built by the developer, that's the way they have to look forever. HOA has to make sure that this can never change. And I guess there are people who... That is good for property values. There are those who think that. There are others who don't. But the problem is...
That there's so little choice in the new housing market now. In most major parts of the country, 70 to 80% of the new housing is in homeowners associations or condo associations. And so if you're one of those people who doesn't want that type of life, a very hard time finding anything in the new housing market at all that you can buy. To settle for an older house in an older neighborhood. -One of the reasons HOAs get buy-in from homeowners is the fact that they're supposed to -- increase home value. Do we actually see that increase in home value for HOAs in practice? At the outset, I think it is true that... Neighborhoods that have HOAs. The initial sale prices are gonna be higher than they would be if it was... The comparable neighborhood without the HOA. And that is because the initial sales price includes having to pay. For all the private streets and roads and all the other things we talked about. That's built into the sales price.
Start off costing people more. And then the monthly costs are more because of the monthly assessments that everyone has to pay to maintain all. So yeah, that's true. Now the real question though is, do you get more property value appreciation in an HOA neighborhood than you would in a non-HOA neighborhood? That's the question. Do the prices go up faster? And, you know, the... Evidence on that is really unclear, and it's partly because it's so hard to get comparable neighborhoods. Because there's so many differences. It's hard to find really, truly comparable HOA and non-HOA neighborhoods that are right in the same place, that are really that similar. They're different. The lot sizes are different. Like you're not gonna find a non-HOA development that has little tiny lots like the HOAs do. They're different. Really always apples and oranges comparisons, and I just think it's not completely clear.
HOAs and those are Home Owners Associations. And I'm going to be honest, the way these interest rates are set up, I do not know if I will ever get to be a homeowner. But I do still hold on to this dream of owning a sexy condo in the city. Like, I don't know, I just imagine it. Painting the walls different colors, changing light fixtures. Just living a brand new non-apartment life. How are condo associations different from HOAs? in the way they're organized. With the homeowners association, the association actually owns property. It owns everything that is called the common areas. So what you own as the owner, as the unit owner, is you own your house. You actually own a real physical house and you own a piece of land around it.
HOA and the association owns the common areas and you control that by virtue of your vote in the association and you maintain it so it's part yours see but The association actually has title to all that property, the streets, roads, etc. In a condominium, it's really different. Condominiums did not even exist anywhere in the United States until the early 1960s, because they're very unusual. Your individual ownership interest is literally an airspace. It is almost a fictional thing own the air space within your unit and you own the inner finish surfaces of the walls, you own the paint on the walls, you own the fire. So your entire unit, your entire unit, your entire unit, On the carpeting or the floor, the floors, but you don't own the actual structure of the unit. You don't own that individually. You don't own the walls. You don't own the ceiling. You don't own the concrete subfloor. Whole building is in common ownership. So you have 100% ownership of your airspace and you have.
The percentage of ownership in the entire building, all of it, every aspect of it. And so that's the way condos work. And that's why condo association directors. May have a much more complicated job than the HOA directors because they have to manage all the systems. Of a building, you know, like the water system, the electrical, everything about it. The plumbing and on and on is all under the boiler, etc. The roof... It's like managing an entire multi-unit building because that's what it is. What about co-ops? How do those factor into all of this? The co-op is the third main form of common interest housing. Lots of them in New York City. There are several hundred of them here in Chicago. And there are other parts-- To the country as well. They're nowhere near as common as condominiums, but the way they operate is, what you own is a share of stock.
Individual ownership is a share of stock in a corporation, and the corporation is the cooperative corporation. And you have a lease, what's called a proprietary lease. As the unit owner, what you own is the share of stock. And you have a lease to exclusively occupy your unit. But the corporation, the cooperative corporation... Literally owns everything. So it's a really different way of doing things where you don't actually have any true real estate yourself. But in practice it's It's a lot like a condominium in the sense that you do get to vote in all the associations affairs and make many of the same decisions. So functionally, in a lot of ways, it's similar, but legal ownership is quite different. That's how HOAs function, but how exactly did we end up with all these tiny governments in the first place? That's next.
Support for this podcast comes from Planned Parenthood. Your body is your own. That's why Planned Parenthood is committed to ensuring that everyone has the information and resources they need to make their own decisions about their bodies, including abortion care. Today, lawmakers who oppose abortion are challenging Planned Parenthood. Affordable, high quality, basic healthcare for more than 2 million people is at stake. Planned Parenthood believes that healthcare is a basic human right. That's why they fight every day to push for common sense policies that protect our right to control our own bodies. They also work tirelessly to oppose the onslaught of new policies aimed at interfering with personal decisions best left to patients and their doctors. They won't give up and they won't back down. You can join Planned Parenthood in the fight to help make sure that the next generation can decide their own futures. The organization needs your support now more than ever. With supporters like you, they can reclaim our rights and protect and expand access to abortion care. Visit plannedparenthood.org/future to learn more and support their cause.
- Support for this podcast comes from Planned Parenthood. Your body is your own. That's why Planned Parenthood is committed to ensuring that everyone has the information and resources they need to make their own decisions about their bodies, including abortion care. Today, lawmakers who oppose abortion are challenging Planned Parenthood. Affordable, high quality, basic healthcare for more than 2 million people is at stake. Planned Parenthood believes that healthcare is a basic human right. That's why they fight every day to push for common sense policies that protect our right to control our own bodies. They also work tirelessly to oppose the onslaught of new policies aimed at interfering with personal decisions, best left to patients and their doctors. They won't give up and they won't back down. You can join Planned Parenthood in the fight to help make sure that the next generation can decide their own futures. The organization needs your support now more than ever. With supporters like you, they can reclaim our rights and protect and expand access to abortion care. Visit plannedparenthood.org/future to learn more and support their cause. - And we're back. It's the weeds. I'm John Quilin Hill. And today we're talking about HOAs.
This really is a policy story. Whether you see it as filling a necessary gap in what the local government does, or if you see it... As creating unnecessary policy hurdles. I asked Evan how far back these kind of common-interest housing agreements go. The Homeowners Association goes way back. We had in the United States... States, we had early homeowners associations in the mid 1800s. But you know, the basic idea of the way they construct these things, the way they are. The rules are put together. It goes back really to the 1300s in England. The idea... Is that when you sell a piece of property, you are allowed to put restrictions on it. On it. So you can say, I'll sell you this property, but here's the deal. If you buy it, you have to promise that you'll sing in... Of the Lord's Christmas dinner every year for the next 20 years.
Real case and that actually happened and at war and and the reason was because you're the owner you're selling your property and the developer is the same in that position they are the ones selling the property and they basically It's subject to you accepting these restrictions. So in the 1800s they started coming up with a... A lot of restrictions like getting people to pay to maintain beautiful parks and lakes and things like that. And then we have the private streets. And on into the late 1800s and early 20th century, Make property more valuable. If we strict the way it can be used. So they'd say, everyone who buys into the subdivision, you can never have a business on your property. Totally residential and that would be the restriction. You buy it, you're agreeing to that. that.
They started imposing racial restrictions saying, oh, this property will be worth more if we exclude certain people, not just certain uses like gas stations. We're gonna exclude certain people. You know, African Americans or Asians or, you know, any number of groups. They did all kinds of really detailed, you know. Bans on certain types of people. So you're saying when you buy you promise you will never sell. To anyone except, you know, basically a white person. And they did that until the Supreme Court outlawed those. Restrictions in 1948. But for a long time, you know, the-- Segregated housing patterns in many cities around the United States were in part created by homeowners associations who were created To enforce those bans against everybody just as they now say you know you you can't have a - Party pound dog, well, you know, for a long time, they were going to court. They were taking people to court saying.
You can't sell your house to this person. And so the idea was, you know, you restrict the use of property and it makes it more valuable. Pick up it. Even the federal government believed that for a long time in the 1930s and 40s. They had their own race-restrictive covenants that were promulgated by the Federal Housing Administration. And this is a very unfortunate part of the history of these associations, that a lot of them were created to do that. What can you tell us about Shelley v. Kramer, the Supreme Court case that gets at a lot of this? Deli vs. Kramer is the case that says that these race-restrictive covenants, these promises that you'll never sell your house to an African-American are unenforceable in court, that they are in violation of fundamental public policies, and that they cannot be enforced in our courts.
And the Supreme Court did that in 1948, and that's when it forced developers to change the way they practiced exclusion, because they still did. They found—they tried to find ways around showing exclusion. Versus Kramer. So they couldn't go in, they couldn't write those explicitly racial bans. And then go to court and have somebody enforce them because they would be unenforceable. To find other ways to accomplish the same things. Can you talk about those other ways? Because there is that period of time, but you... Between Shelley versus Kramer and the Fairhouse Housing Act. You've got like literally 20 years. What's happening in those 20 years? - During that 20 year period approximately. Developers began to find ways to practice exclusion without using racial terms explicitly. Would say, for example, in order to buy a house in the subdivision, you have to be a member of the country club.
But the country club would have a membership board and they would say, No, I'm sorry, we, you know, we can't accept you for membership, so now you can't buy a house. And the other... One reason for the creation of all these private community swimming pools was because of Brad's work. Versus the Board of Education in 1954, when the Supreme Court said that public accommodations, schools, swimming pools, et cetera, cannot be... Made one race only by law. You can't prohibit people on the basis of race from using public accommodations. You can't have separate but equal. That meant that things like swimming pools and parks and so forth that were owned by the public were all going to be integrated. There were not going to be any white-only parks and pools and etc. And this is one of the reasons why developers found it attractive to buyers to be able to create private swimming pools in private subdivisions and private parks.
Et cetera, because their view was, well, now we're exempt. You know, this is not governmental. Now we have private pools, we have private parks, we have private this, private that. So as you said, up until you get to fair housing law that bans private racial segregation, that's in the 60s. Long time HOAs were able to enforce these exclusions by saying, well, you know, this is a private facility. What did the fair Housing Act change about the way this works? Well, the Fair Housing Act changes everything, really, because it bans private racial discrimination in the sale or rental of housing in all its forms. And so, you know, if... There are all kinds of practices, very kind of subtle practices that are not expl-- based on race. And the Fair Housing Act is not perfect, but it is a step in the direction of trying
To make it hard, very hard, to enforce racial. Segregation anymore. I mean, and other things like the Community Reinvestment Act, other federal laws as well, that tried to ban the practice of... Of redlining and other things that were keeping African Americans and others from accessing the full housing market in major metro areas and cities. Discrimination just because there's such a long history of it in this country but I'm also Curious what other groups have seen barriers to housing you know I'm thinking gender or disability like what are we seeing? Well the most obvious one is age because private communities are actually allowed under state and federal law to discriminate on the basis of age. And so you can create a seniors community. And if you restrict it to people 55 and over, that is actually allowed. - Yeah.
That's kind of interesting because, you know, you're, you're, you, that's a whole class of people under the age of 55, people with kids and so forth, who you are. Um, ex- Including from membership in communities and from certain parts of the housing stock. You know, Florida's kind of-- We're notorious for this, sometimes we joke about it, you know, but there are gigantic seniors... Communities in Florida, tens of thousands of people. And there isn't anyone under the age of 55 anywhere in the community. And that's if you stop and think about it, that's a bit odd, you know. And then there are the types of units that are constructed, the types of housing that is presented. It's not all the same, but you know, they can create phases in a subdivision. And one phase can be like three and-- bedroom houses and another could be small condos you know with one bedroom or two bedrooms well Obviously, you know, they're going to attract different types of people. And so you are kind of steering people toward homogeneous neighborhoods. And one of the things I think you...
We can say with certainty about all forms of common interest housing is they tend to produce homogeneous neighborhoods. And the homo- as you say, it's not always based on race, but they are homogeneous in certain ways, certain types of people, age groups, income distribution. You know, they advertise this phase of a subdivision or a whole subdivision, and all the houses are between 400 and 400. And four hundred and fifty thousand. I mean, you know, this is very common that there's this. This homogeneity or uniformity in terms of the incomes and the professional status of the financial abilities of people in certain neighborhoods. And it's a type of homogeneity that, you know, we really didn't have, you know, a hundred years ago or even 50 years ago. On one hand, I can see the appeal of a home. Community like for instance living around a bunch of other 30-somethings with similar lifestyles does sound appealing
On the other hand, it feels like that completely changes the nature of what it means to live. Live in a neighborhood, you know? The families are different sizes. Some people live by themselves. Someone, you know, next door may be older and retired. To be able to see and say hello to people in all these different stages of life? Well, I think that's exactly what's happening. The idea of a neighborhood has always, until HOAs came along. Has always involved some notion of change, you know. change you know Change being inevitable and a certain amount of adversity. Now I realize that there have always been also been homogeneous neighborhoods. There have always been rich people who had their own communities. It's always happened. But what... The way I look at it is this was the sort of thing that only rich people had. If you went back to, you know, a 50,
100 years ago. There were homogeneous communities full of rich people, but there weren't a lot of homogeneous communities where everyone was in the middle class, you know? look exactly the same and their houses look the same. Rich people, this is a type of housing, these private communities, that were once the province of rich people. Places like Bel Air in Los Angeles and other places around the country. They had lavished private communities. There were a few hundred of them in the 1960s. But what has happened is the development industry has packaged this. Into a less expensive commodity that allows them to create really high density. And they have kind of trickled down. Trickle down privatization. They have trickled down this private community idea. To the middle classes, the upper middle class, the middle class, and so it is.
It has spread so widely that, you know, it is taking away what you were describing earlier, the idea of this sort of the organic neighborhood where you have In their 60s and 70s living in one house, and a couple doors down the street, there's some kids playing baseball in the street. And by the way, this is not-- fictitious because we actually live in a place like that. And we live in Oak Park, Illinois, just outside Chicago. And this is what we see all the time. To school, playing in the street. We find baseballs in our backyard all the time. That's fun. We just throw them back over the fence. Many communities, but Oak Park was laid out in the early 1900s, 1920. And the... Newer communities that are being built around the country are really quite different because they are not set up to be these organically growing, changing communities that have a diverse population.
Diverse in all the ways, as you were saying. Diverse in a lot of ways. You know, age, occupation, housing type, housing price. That has been the norm. - Hypotiversity for most of us, not for the wealthy, but for most of us. And now that whole. ...uniformity idea and the private government has been trickling down and pervading the entire housing market and it really is changing the nature, I think, of neighborhoods. I guess... In the back of my mind, I'm like, why? Like, you know, people buy a house, the whole re-- I don't know, I'm living apartment life and just the idea of being able to, you know-- paint my walls and not have to worry about painting them back is very, very attractive to me. Why? - Why are HOAs so strict and why are people signing up to be told what to do? Well, there are people who feel like they would be willing to give up some of their freedom in exchange
For making sure that their neighbors don't have that freedom, because they are worried about what their neighbors are going to do with their property. So they'll, some people are happy. To have all these rules because they know their neighbors can't, for example, put a car up on blocks in the front yard. They're afraid of things like that or paint their house, you know. Bright orange. And so because they're afraid of what the neighbors might do, they will give up voluntarily some of their own freedom. That's how HOA's shape neighborhoods. Up next, regulation, reform, and oversight. Stick with us.
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About the latest court news from Trump's trial. The episode is out now. Search and follow Stay Tuned with Preet wherever you get your podcasts. So Evan. Do residents know what they're getting into when they enter one of these contracts or, you know, do they... Even have a choice since so many new builds have these HOAs. I think the vast majority of people do not understand what HOA's and Congress's associations are about or how they work. The way they are marketed by the real estate industry is, Oh look, you... This, all these things are gonna be taken care of for you. You've got an association that's gonna manage things. And so that's the. As much as they know, what they don't know is that they themselves are responsible for maintaining the association.
If they don't run for office, somebody else will, because it's run by them. It's their association, it's run by the owners, and I don't think they understand it. Most people read the declarations and the rules, which can be hundreds and hundreds of pages before they enter, and that's why... Often their expectations are disappointed because they say, Well, I thought I could do this or that. And they discover, You mean I can't put a ham radio antenna on my roof? That's the problem. See, they aren't paying attention to it because they don't understand how pervasive it can be. The choice issue, I think, is really critical, because I know there are some people who are attracted to this type of living. I know some people want it because they want to control their neighbors and they want the uniformity, but the lack of In the housing market around the country, where 70 to 80% of the new housing in most rapidly growing parts of the country is in HOAs and condo.
Association, 70 to 80 percent. The vast majority of the new housing is in these Associations and that means that it's hard to find a place to live. Once you've found a location, a school district, etc., you may find yourself choosing between... New homes that are in HOAs, all of them, and going to an older house because they just... This isn't any new housing that is available to you or very little. And what might be available could be expensive custom homes that you can't even afford. Now that lack of choice to... Is a huge issue and local governments could control this. They could influence that because... They are the ones who decide what gets built. They are the ones who issued the building permits. For a variety of reasons, you know, financial reasons and the financial benefits of local government, they often... Go right ahead. In fact, in some parts of the country, they mandate that all new housing has to be in HOAs, and that is the case in many parts of...
Arizona, Texas, and elsewhere in the West, where they simply say, look, if you wanna build more than three houses. Or five houses, they have to be in an HOA. They make the developers do it. Guaranteeing that all the new housing is going to be in associations. And that's taking a certain type of choice right out of the market. So what kind of power can these boards yield? In particular, I'm thinking legally, like what legal recourse do these Boards have because I don't know in my mind, you know, say if I want a garden full of flowers that pollinators like and everyone is like, No, you have to keep your grass. Cut short if I don't do that, like, what can they do to me legally? They have a very... Very real and very strong enforcement powers.
It's the associations have not just the power, but the duty to enforce the declaration against all the owners. That's what their job is. They are required to enforce it. And they can do all kinds of things. They can fine people. This is the case all over the country. For misconduct. If you don't pay your assessments, for example, at a protest or whatever reason, or. Or for whatever reason you owe them money, fines or overdue assessments, they can put a lien on your house. For unpaid assessments and or rule violations, money that you owe them for parking violations or whatever. They can actually collect these. Through a lien on the house. A lien is like a legal right to the property. You will find that you can't sell the property effectively because whoever buys it has to pay off the lien, but they can also foreclose. So in...
For unpaid assessments that associations can foreclose on your property. They can sell your house out from under you against your will. And collect their money that way. And it happens all the time, all across the country. HOA foreclosures. Law firms specialize in assessment collection and enforcement actions and in-- opposing these liens and foreclosing if people don't pay them. Are there things that... At any local governments do to regulate HOAs. I mean, they're private entities, but you know. Are there any examples in reform that we're seeing across the country? Mostly happening at the state level. I think local governments should take a much stronger hand associations resolve their conflicts, you know, to resolve their internal conflicts at low cost without recourse to the courts. I think local governments could really do a lot in that regard.
What we are seeing now, particularly since the collapse of the Champlain Towers South, a condominium building and surfside in Florida. We are starting to see some movement toward regulating particularly the finances and the building maintenance and inspection practices of condominiums. Especially. But this is an issue all across the country that I've been concerned about for many years, which is that, you know... There's very little oversight of the property management practices and the budgeting practices and the banking, Financial practices of associations. And this can lead to real problems, where suddenly they have a major expense and they don't have the money to pay for it because they have not planned it properly. We're starting to see emergence of more state laws regulating those practices and saying, Hey, you have to do a reserve study to find out how much money you should be setting aside, have an expert tell you. You should be setting aside.
How much per month per year so that you'll be ready when the roof fails on your condo building or the lake has to be dredged. You'll be ready with some money there and you won't be hitting people with $75,000 special assessments that cause them to lose their homes. Oh, there is some regulation on that front. I have not seen what I would like to see. And I'm hoping it happens, which is greater regulation of the developers Set up properly at the outset. To get them set up with sound financial practices they are launched and I think that is something local government could certainly take a stronger And I certainly hope they do. So they could take a stronger hand, but it seems like this is a pretty. Sweet deal both for governments and these developers.
Any incentive for local governments to regulate these organizations? -Well, that is -- The key question, the way things stand, I think there really is a very limited concern on their part. Where the concern happens is where they are worried about something like what happened in Surfside, Florida. Or Miami Beach area, where people start to look at buildings and say, Wait a minute, there may be a lot of condos, condo buildings that either have become dangerous. Or that are going to require major repairs, because that can affect the market. And I think where local governments certainly get concerned is when they start thinking that the local real estate market could be threatened because... People are worried, wait a minute, if you go in this area, maybe salt water is gonna be a problem. And so--
I think that's one area where there are concerns. And obviously they're concerned with safety as well. I think until recently they have not realized, local governments have just turned a blind eye to this, they have not been worrying about these issues. Hopefully now they're going to take a look at it. The other area where they, I think, have an interest. Is in environmental retrofits because a lot of states, New York, California, a number of other states, have said, We have to reduce our carbon footprint. Well, that can't be done without doing something about existing buildings that have a much larger-- carbon footprint. The city of New York is trying to get all existing condos and co-ops and apartment buildings to reduce their carbon footprint and that's going to be expensive. But they have an interest in it. Why? Because state and local policy says this. Something we have to start doing. We have to meet some of these carbon reduction goals.
Existing buildings have to be retrofitted. That's gonna cost money. And so I'm hoping that this, among other things, is gonna cause the next. And state governments to start making resources available to condos and... Some of HOA's so that they can retrofit and that in turn should I think lead to more oversight of their finances generally. And I think that'd be a very good thing for everybody. Oh, HOA's, condos, and co-ops. It does not seem like they will be going anywhere anytime soon or that they will be. Be losing the amount of power they have anytime soon. What should listeners be aware of when Looking at a property like this? -Well, I think you're right that they're not going anywhere Urban land is so expensive and housing prices are so high that the density issue drives a lot of what is happening with common interest housing. This density is never...
To keep prices anywhere near affordable. But if you're moving into this market, if you're going to buy into to a condo or an HOA, I think it's very important to think, not just about the unit, the house or the condo unit, which is very important. But it is to look at the overall picture of the community, to find out about the association, and as soon as you possibly can, to get hold of the association's financial-- records to make sure that you're not going to walk into an underfunded association. Where they will immediately be demanding a lot more money from you than you anticipated. You know, you really need to read the rules and make sure you can live with them. Because you can't live with the rules. If you... if they have restrictions on pets and pools and parks... And other things that you don't like. You need to know that upfront because those are enforceable and they almost certainly will be enforced. And if you aren't happy with anything about...
Finances or the lifestyle rules, you need to clarify that before you end up owning the unit. All right. Evan McKenzie, thank you so much for joining us on The Weeds. My pleasure. Thank you. That's all for us today. Thank you to my colleague, Emily Stewart, who wrote the article that inspired today's episode. When your neighbors become... Your overlords. You can read that and all of Emily's reporting at Vox.com. Thank you Evan McKenzie, Jasmine Francois, and Chris Francois for joining me. Sophie Lalanne. Vince Fairchild engineered this episode. Colleen Barrett and Caitlin Pinsie Moog fact-checked it. Our My name is Dr. Isam Hall and I'm your host, John Guillen Hill.
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Transcript generated on 2024-05-20.