Skipped dues crunch home associations - USATODAY.com: "AVONDALE, Ariz. — A modest housing tract, set amid pecan trees here in suburban Phoenix, faces big problems: About 40% of its homeowners aren't paying their association fees, leaving neighbors with higher assessments and reduced services"
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Thanks to Fred Pilot for this link to yet another story on HOAs taking a hit due to owners not paying assessments. CAI's Frank Rathbun is quoted as saying, "It's happening all over. It's a national problem."
3 comments:
This circumstance illustrates one of the inherent flaws of creating privately chartered micro governments that lack a sufficient revenue base across which to spread the risk of delinquent revenues.
For condos, the problem is the demographics of purchasers. They are typically first time and last time buyers who don't want to fund fiscal reserves to enable them to handle these situations.
I couldn't agree more with Fred Pilot. Perhaps this housing crisis will expose the financial vulnerability of the entire CID concept. From reading the comments in USA Today following the article, I think it is safe to say that there is a widespread perception that HOAs provide little of value to homeowners.
When the housing recovery occurs, it will be lead by housing that is NOT in an HOA. Perhaps that is what it will take to persuade developers that NON HOA housing is both desirable and in demand, the demands of many municipalities that all new developments have an HOA notwithstanding.
I think what we are seeing here is the beginning of a vast walk away from HOA burdened properties. It would not surprise me to hear of the mailboxes of lenders being filled with keys from HOA encumbered properties as owners walk away from the HOA financial black hole.
I think the foreclosure problem is showing the financial fragility of these private governments. The whole institution rests on two kinds of private resources: (1) the willingness and ability of owners to run these private governments, and (2) the financial resources of the owners. On the first count, we have ample evidence that there are some serious problems. Now we are seeing what happens to the second resource as soon as property values stop going up like they were on an escalator forever.
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