Let’s consider housing costs heading into the 2017 spring market specifically HOA or homeowner's association dues, mortgage rates and prices.
An HOA fee is the amount of money that must be paid, usually monthly, by owners of certain types of residential properties. Associations collect these fees to assist with maintaining and improving properties. The fees are almost always levied on condominium owners, but they may also apply in some neighborhoods of single-family homes.
HOA fees often range from $200 to $400+ per month across the U.S. Not all HOA’s are created equal in what they provide. Some HOA fees while higher than others cover items like utilities, cable, internet and insurance.
HOA dues are trending higher now because properties are getting older and are costlier to maintain, as are houses in general. HOA fees have risen 32% over the past decade, twice as fast as home prices.
So HOA dues are going up, mortgage rates (although still ultimately low) are going up (some predict rates will reach 4.5 to 5% in 2017), and because there is only a 3.6-month supply of homes to sell, home prices are staying on the high end, too.
Low inventory and strong demand helped push prices higher in 2016 at the fastest pace in 10 years, according to an analysis by Zillow. Since the housing crash in 2006, home prices have slowly rebounded. The average home price in September 2016 crept above pre-recession levels by 1%. Nationally, over the past year, prices soared 5.5%. But while prices and costs have increased, affordability has remained fairly stable.
So how might this impact the relocating employee?
- It could take longer for employees to find the home they want to purchase and this could add to exception requests related to temporary housing costs and storage for household goods shipments or even multiple trips back home as their homes take longer to sell in the departure location.
- Relocation costs related to home purchases and exceptions are likely to go up for employees (and for relocation programs) because prices are going up, mortgage rates are going up and HOA dues continue escalating.
- Employees will have higher home ownership costs, which will impact their budgets and increase their cost of living.
- Expect increased use or requests for preview trips where candidates can get a sense for what is available and what costs are before agreeing to a relocation.
- As mortgage rates continue to rise, relocating employees who are moving out of a property at a significantly lower mortgage interest rate that is no longer available on their home purchase will find themselves in a challenging situation. This can be addressed by companies offering interest rate buy-down programs with the home purchase benefit.
Where you'll find the highest fees Costs range by region with New York ($571 per month), Long Island ($498) and San Francisco ($463) being the most expensive among the 50 largest metro areas.You'll pay the lowest HOA fees in Nashville ($194), Las Vegas ($198) and Indianapolis ($213).In terms of where you'll run into these fees, Florida cities have the highest percentage of homes that charge an HOA — nearly a third of homes in Fort Lauderdale do. By contrast, only 1% of homes in Fort Worth and San Antonio assess such fees.