The Not So Hidden Cost of Homeownership or Why Palo Alto HOA Fees are Not So Unreasonable

HOA fees are high, and in Palo Alto they tend to be even higher than in surrounding areas. So are homeowners getting ripped off? Is someone behind a curtain making thousands of dollars off the backs of people living in townhomes and condos? The answer is an emphatic NO.  

HOA fees are set to cover the costs of maintaining and fixing the development. If there is a professional management company hired to do this then they will get paid about 10% of the HOA fee.  That is the only money that does not go directly to the upkeep of the building. 

Different developments will have different fees because they cover different things.  The basics that are covered are usually insurance and exterior maintenance like the roof, painting, landscaping, and exterior utilities. Many complexes also cover water, garbage, and sewer. Some cover cable service or gas for heating.  If there are common amenities like pools or parks those are covered.  All developments will have a reserve fund to cover the cost of future repairs and replacements.

If you own a single family home in Palo Alto you may have the following expenses:

• Fire insurance  $100 a month
• Earthquake insurance: $100 a month
• Gardiner  $130 a month
• Water garbage sewer: $100 a month

So you can see that you are already over $400 a month without your utility bill.

What if the house needs painting or the roof needs replacing? These cost money. It can be $4000 or more to paint the exterior every 10 years. That averages about $35 a month you should save up.  A roof replacement is about $15,000 every 20 years or $40 a month you need to put aside.

Now, looking at these figures the HOA fee does not look so bad to me.  

I am not saying that everyone should go out and buy a condo instead of a single family home.  There are plusses and minuses to both.  What I am saying is that it costs money to maintain a house, and it costs money to pay an HOA fee. The costs are not that much different. So if you are planning on buying  the decision about condo vs single family home should be based on the bigger differences. Things like location, lot size, age, square footage, future appreciation, are much more important considerations than most HOA fees.

In Palo Alto and the surrounding communities you can get a newer and larger condo or townhome than a single family home. The newer it is the more expensive. There are a lot of condos/townhomes in downtown PA, and not as many single family homes.  There are more single family homes in south Palo Alto than condos/townhomes.  The condos/townhomes that are new in south Palo Alto are not in the best locations.   There is more room to play outside in  a single family home.  There are pet restrictions in most condos/townhomes.  The newer townhomes/condos are more energy efficient.  These are some important considerations in your home search.  You are not going to get away without paying insurance, utilities, and maintaining your structure, so the HOA fee is not as important as your lifestyle choices and what you can afford in mortgage payments.

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com 

D.R.E. 01191194