The hidden housing cost: How HOAs are becoming a ‘shadow mortgage’

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Homebuyers often focus on home prices and mortgage rates when thinking about affordability. But for millions of homeowners, another housing cost is creeping higher and quietly reshaping the math: homeowners association fees.

Once considered a small maintenance expense, HOA dues are increasingly acting like a shadow mortgage. This mandatory, ongoing monthly payment can rise unexpectedly and, in extreme cases, even put a home at risk of foreclosure.

That possibility has Jo Meleca-Voigt, a 55-year-old, disabled and retired public educator, worried.

In 2021, Meleca-Voigt and her wife, Christine, bought their townhouse in Rochester, New York. The home’s accessibility features and an HOA that handled exterior maintenance drew them in. The couple, who live on a fixed income, budgeted for the monthly $235 HOA fee.

But over five years, their dues jumped more than 60% to $385 a month. On top of that came two special assessments in 2023 totaling $3,000 to rebuild the HOA’s reserve fund and repair the community’s aging roofs. Meleca-Voigt and her wife needed to dip into their savings to cover the surprise bills – not an easy move when every penny counts.

“This is absolutely a shadow mortgage,” Meleca-Voigt said. “It’s actually worse than a mortgage. If you get a mortgage with a fixed rate, you know what you pay and you can work around it.”

HOAs can offer real benefits by managing residential communities, helping maintain shared spaces and providing amenities, like pools or gyms. But there’s a tradeoff: According to Realtor.com, the median HOA fee has risen to $135 per month, up from $125 last year and $108 in 2019. This rise comes as the number of properties with HOAs is also climbing. Almost 85% of townhomes and condos have HOAs, while 33% of single-family homes do.

“It’s something that’s a little bit more accepted than it was maybe 10, 20 years ago, paying HOA dues every month,” said Joel Berner, senior economist at Realtor.com. “As it becomes more common, it’s kind of a race to the bottom where one neighborhood can say, well, the neighborhood down the street is charging 200 bucks a month for HOA fees. So we can probably bump ours up a little bit, too.”

The bill that never goes away

With sticky inflation and the cost of labor and materials continuing to increase, HOA fees are rising as well, now eating up a significant portion of overall housing costs.

For example, in the Miami-Fort Lauderdale-West Palm Beach area, the average HOA fee is $617 per month for a median home costing roughly $425,000, according to Realtor.com. That’s nearly 27% of a typical mortgage payment.

“These (rising costs) are effectively pricing them out of living in the home that they bought,” Berner said.

In addition to monthly dues, special assessments can be even more shocking. The periodic fees are used to cover major repairs or expenses not covered by the HOA’s budget or reserve fund. Special assessments can sometimes rival the size of a small mortgage, depending on the property’s type and location.

“In downtown San Diego, we have seen some high-rise buildings have special assessments in the tens of thousands of dollars,” said Kimberly Schmidt, team lead of Kimberly Schmidt and Associates with Compass in San Diego, California. “For example, all of the plumbing in the building needs to be redone, and every unit’s portion of that will be $80,000. That’s where it feels like a shadow mortgage. We’re not talking about $50 or $100.”

Even after you fully pay off your mortgage, HOA fees continue to cast a shadow on your finances. Unlike a mortgage, they can’t be refinanced, renegotiated or turned into equity.

“Not only are these homeowners struggling to keep up their (HOA) payments and keep the lights on in their home, but when they go to sell because they can’t afford it anymore, they’re meeting buyers who are more reluctant to make that purchase,” Berner said. “It’s just a lot of friction in the market.”

HOAs reduce your purchasing power

Rising HOA dues can impact your purchasing power differently depending on where you stand in the housing market. For current homeowners like Meleca-Voigt, rising dues increase overall cost of living.

“When we sat down and figured out what it was going to cost us to live here, we understood that HOA fees could go up,” she said. “But we didn’t think they would go up more than 50%.”

Experts say buyers should count on those increases. “A homebuyer should always assume that the HOA fee will increase over their tenure as an owner,” Schmidt said. “If the HOA has not been adequately funding their reserve account, the result can be deferred maintenance in the community itself, dues increases or special assessments to the homeowners.”

For prospective buyers purchasing a home with an HOA, the impact starts even earlier. HOA dues reduce purchasing power before someone even gets the keys, since lenders factor HOA costs into debt-to-income calculations.

“HOA fees can potentially limit the buying pool for a community, forcing buyers to look elsewhere or to seek out a less-expensive home in the community,” Schmidt said. “Less expensive often translates into a home that is smaller, less upgraded and/or in a less desirable location.”

Impact on equity and housing value

If you miss mortgage payments, fees, interest and potentially legal costs pile on, raising your balance and shrinking your home equity, which is your home’s value minus what you owe. Unpaid HOA dues, with their own late fees, interest and attorney costs, can eat into your equity, too.

Normally, as you pay down your mortgage, your equity increases. But if your home’s value isn’t rising faster than the remaining balance and you need to sell, the HOA debt still has to be settled, cutting into your housing stake, explains Ashley Morgan, attorney, owner and founder of Ashley F. Morgan Law, a law firm based in Virginia.

“By increasing in a linear fashion these HOA fees every year, you’re diminishing the value of the asset, the home that you bought and you’re so eager to maintain the value of,” Berner said. “We’re not in 2022 when home values are just shooting through the roof, and so these little pieces on the margin really make a difference.”

Still, HOA fees aren’t always negative. A well-managed association uses your dues to fund repairs and conduct maintenance or to rebuild reserves, all of which can make a property more attractive and marketable.

“The value of what the community looks like, that does add value to our home,” Meleca-Voigt said. “That is something that people comment on when they come to our house, just what a great little community it is. There is value that the HOA brings for somebody who does have the financial ability to keep up with the increases. It’s very appealing.”

Living in an HOA community means agreeing to follow its rules and its covenants, which are legally binding and part of the property’s documents of record. Just like a mortgage, HOA dues are attached to your home. If you don’t pay, the debt doesn’t simply disappear.

“Any debtor can file a lien against the property,” said Brian Fox, chief revenue officer of Benutech, a real estate data solutions firm based in Southern California. If you get far enough behind on payments, state laws will determine when your HOA can file the lien. “They’re doing that to protect their owed money.”

A lien is a legal claim that secures a debt to real estate. In simple terms, it means you can’t sell or refinance your home without first paying off what you owe. The number of HOA liens is growing.

According to data from Benutech, HOA liens totaled 284,933 in 2025, up 8.6% from 262,446 in 2024, with Florida, Texas and California leading the way.

If the lien isn’t resolved, in some cases, the HOA can initiate foreclosure proceedings to recover unpaid dues, even if you’re current on your mortgage payments. Typically, if your home is sold in foreclosure, the mortgage gets paid first, then the HOA is paid afterwards.

But there are exceptions.

In several states, including Nevada, Tennessee and Washington, D.C, to name a few, HOAs have “super-priority” lien rights, which means they can jump ahead of your mortgage lender if you fall behind on dues.

For a growing number of homeowners, HOA debt has led to the unfortunate loss of their home. Between 2022 and 2025, HOA-related foreclosures jumped 50% nationally, according to ATTOM Data Solutions, with Florida, Texas and California as the states with the most significant activity.

Living in the shadow of

When you buy a home in an HOA community, there’s no opting out of the fees or special assessments. But that doesn’t mean you’re powerless. If you decide to challenge fee hikes or special assessments in court, Morgan’s advice is to be smart about it.

“If you’re going to do that, escrow the money,” she says. “If someone says, ‘you’re this far behind,’ you can say, ‘I have the $20,000. It’s just, I don’t think I should have to pay for XYZ reasons.’ The judge is going to take you way more seriously.”

The key, Morgan stresses, is communication. Talk to the board. Try to negotiate a plan where you’re paying down what you owe while staying current, so you’re not stuck in a constant cycle of playing catch-up. In some cases, she says it might make sense to prioritize paying your HOA over other debts, even your mortgage.

“Your mortgage (company) is probably going to offer you a modification,” she says. “Your mortgage (company) is probably going to have a forbearance program. Your HOA tends to depend on that money more. So they’re less likely to be reasonable. They’re less likely to reduce balances. Settlements are a lot less likely.”

Meleca-Voigt’s HOA gave her the option of paying the $3,000 special assessment bill in installments, easing some of the financial strain. In 2023, her wife also joined the HOA board, giving them firsthand knowledge of how their community operates.

But even with those wins, Meleca-Voigt and Christine are planning their next move. For the past 18 months, they have been looking for a more affordable, HOA-free home that can accommodate Jo’s disability.

After being outbid for potential homes five times, Meleca-Voigt feels stuck, as the fear of rising HOA fees continues to cast a shadow over her finances.

“If the HOA keeps increasing, we have no choice. We have no option,” she says. “It’s scary. I’m 55. I hope I’ve got 30 good years left. If this is what it’s like five years in, what are we going to do?”

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