I understand what HOA’s do, and was first introduced to the term in a condo building (not mine). I understand in a condo building, or high rise, you’re all sharing one building and need to contribute to that building’s maintenance. But I don’t understand HOA’s in neighborhoods…when you live in your own house. Is it only certain neighborhoods? I know someone who lives on a nice street in a suburb and there’s no HOA. Who decides if there is one, and what do neighborhood HOA’s exist for? Are you allowed to opt out?
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Say I own an asset I hope to sell someday for a lot of money. Unfortunately, all my neighbors own similar assets that they hope to sell as well. In theory, competition between me and my neighbors could drive down the price of our assets. If one neighbor sells their asset very cheaply it could ripple outward and hurt the sale value of everyone else’s asset.
My neighbors and I all recognize this of course, so we agree to start meeting with each other to discuss ways to maximize the values of our respective assets. In practice this will end up doing a lot of regulation on how people’s assets look: can’t park junky cars in the driveway, can’t let the grass grow tall enough to flower, can’t paint that asset a non-approved color, can’t sell the asset to someone who won’t agree to the rules, etc. Typically these regulations stress conformity and regularity to make the assets seem like parts of a matched set.
Sometimes HOAs offer direct benefits like a clubhouse. Things like that are paid with dues and fees collected from members. If it sounds like I’m describing a cartel… Lol. Yeah.
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