The Homeowners Associations' 'Preserve Property Values' Myth. It's the HOA Industrial Complex

The Homeowners Associations' 'Preserve Property Values' Myth. It's the HOA Industrial Complex!

If the cities benefit so much from homeowners associations, why are these viewed by city bureaucrats as orphaned children?  Because in the age of artificial intelligence (AI) we are surrounded by bureaucratic Arrogant Incompetence (AI.)

In the early 20th century, with the rise of planned communities and suburban development, as cities expanded and urban sprawl became more prevalent, developers began creating residential subdivisions with shared amenities and common spaces.


A Home Owners Association (HOA) is set up by the developer of a subdivision to provide maintenance of common grounds, amenities and, sometimes, a storm water/drainage facility. Being a member of the HOA is not optional for homeowners. When people buy a home in a HOA, they understand they are subject to association fees and codes, covenants and restrictions (also referred to as CC&Rs). The CC&Rs are a civil contract that is attached to the deed of trust of their property.

To manage these communities effectively, developers established homeowner associations, as a means of governing the community, collecting fees for maintenance and upkeep, and establishing rules to maintain a certain standard of living.

At its core, the primary purpose of an HOA according to the industry is to manage and maintain the common areas of a community and enforce rules to keep the neighborhood appealing and property values high. These rules can cover everything from exterior paint colors to lawn upkeep.

How cities benefit HOAs - The HOA Industrial Complex Spiel

• They offer services the city cannot: HOAs frequently pay for exclusive services that go far and beyond what one gets from the city. From basic repairs to infrastructure development, a properly managed HOA should keep the community beautiful and safe.

• They stabilize home values: HOA communities usually have directions for a motive, and amongst the biggest purposes of those rules is that they preserve property values from diminishing. During the tough economic times, financially sound HOAs keep their neighborhoods going strong.

• The advantages delivered by HOAs even increase property values in adjoining, non-HOA communities.

• They offer leisure amenities like

swimming pools, tennis courts, parks, and greenways that numerous HOAs construct and maintain for their residents.

• Amenities are properly-maintained: When city financial plans are tight, amongst the initial things to get ignored are community centers, parks, public pools, and other facilities.

• They can aid entire cities: Owing to their aptitude to deliver some services conventionally offered by local governments such as street sweeping, HOAs can assuage some of the economic encumbrances from city governments. This makes available city funds and consequently, they can be utilized in a different place, whereas the HOA maintains its neighborhood. The advantages delivered by HOAs even increase property values in adjoining, non-HOA communities.

• Reduced Maintenance Costs: HOAs often take care of landscaping and other maintenance tasks which can save homeowners time and money.

• Improved Property Values: The rules that HOAs put in place can help keep property values high in the surrounding area.

• Increased Neighborhood Security: Many HOAs offer security services like gated access or neighborhood watch programs, resulting in increased safety.

• They are sometimes better organized than city governments: In numerous ways, an HOA is similar to a small, personal government. Due to HOA’s reduced focus, its occupants are frequently apt to receive many of the services they pay for than town dwellers who depend on taxpayer-backed public services that necessitate having a wide-ranging reach.

The HOA Industrial Complex Spiel - Then Reality Sets In

If the cities benefit so much from homeowners associations, why are these viewed by city bureaucrats as orphaned children?  Because in the age of artificial intelligence (AI) we are surrounded by bureaucratic Arrogant Incompetence (AI.)

The industry- aka The HOA Industrial Complex - will tell you that by establishing and enforcing HOA rules, they create a cohesive and attractive living environment for all residents. This helps preserve property values and fosters a sense of community pride and belonging.

But the reality is completely different: it's a developers hit-and-run that benefits the HOA Industrial Complex (HOAIC,) including city officials, property management companies, lobbysts, realtors, politicians,product and services providers: The old proverb comes to mind: 'show me a concentration of wealth and power, I will show you where to find corruption.'

Most planned communities use a cookie-cutting approach, using boiler plate rules and regulations despite the fact that HOA laws are constantly1 changing. The more confused the homeowner, the better for the HOAIC often, construction needs take

 precedence over public safety.

No parking signs should follow the USPS boxes - here, they are placed where the builder decides. Public streets co-managed by the city & HOA - Meaning, not managed.

 When the developer leaves,there's no official handoff involving residents and city official to clearly delineate roles and responsibilities. You do not move into a new home without a walk through.  Developers should not be allowed to walkway without an audit to make sure the HOA is compliant with city, county and state laws and regulations.

Some overflow parking owned by the city, others by the HOA: Both mismanaged.

The HOA becomes a captive audience for the selected property management company's approved suppliers.

Property Management Companies 

Take for instance John Carona. He leveraged his longtime tenure in the Texas legislature to turn Associa into one of the largest residential community management firms in the nation. He is founder and CEO of Associa, a community association management company for more than 37 years that oversees the day-to-day operations of over 9,000 HOAs and condominiums the property of 7.5 million owners' homes and more than 15.000 employees

Other top property management companies built their empire in less than 20 years, because property management is a very profitable business.


Envera Systems. 185 $50M$100M
Alliance Association Management

FirstService Residential, located in Chicago, IL 9.1K $1B

Accell Property Management. $10M.

Spectrum Association Management. $10M -$50M.

Powerstone Property Management
located in Irvine, CA has been a leader in the Californian property management sector since 1993
The Management Trust, located in Irvine, CA


MSI, LLC, located in Westminster, CO. Since 1983, MSI has been offering full-service management for homeowners associations and metropolitan districts in Colorado.


The Building Group, Inc. located in Chicago, IL. Since 2004, The Building Group manages a diverse portfolio from historic to modern properties in Chicago.


County Management Services (CMS), located on Trumbull, CT

Preferred Community Management Services, AAMC, located in Somerset, NJ

The Property Values Myth

In general, while the better managed the association the higher the property values, the reality is that unless the HOA is isolated, main value drivers are location: city, county, state. In a nutshell, it's location, location, location: identical homes can increase or decrease in value due to location, not the HOA.ocation is repeated three times for emphasis, it is the number one rule in real estate, though it is often the most overlooked.


NeighborhoodScout's® Exclusive Home Appreciation Rates shows both the cumulative appreciation rate, and the average annual appreciation rate for each time period (e.g., last 5-years: 84% total appreciation, Avg. per year: 16.8%). In an isolated, gated community, the homeowners and the local governance have total control. Non-gated communities require cooperation with adjacent HOAs. homeowners and city officials.

For example, the cumulative appreciation rate in Washington state for the last five years is around 80%. Properties in Southeast Washington appreciated roughly 25% whether in HOAs or not.


Thus, in general, HOA local governance at best, can help maintain property values and at worse can take away from a property's value - and often do, thanks the Stanford Prisoner Effect and taking up personal pet peeves over the needs of the community.