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Here’s What The Rise of Homeowners Associations Means For Buyers

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When shopping for a home, many buyers may hope to avoid purchasing a property subject to a homeowners association.

But that may be easier said than done.

That’s because HOAs are on the rise in the U.S. Therefore it’s important to understand the ins and outs of these organizations before you buy.

Nearly three-quarters, or 70%, of surveyed homeowners say if they were to buy a new home in the future, they would prefer a community without an HOA, according to recent data from Frontdoor. The home repair and maintenance services company in September polled 1,005 homeowners, 85% of whom are currently part of an HOA.

Why it’s hard to avoid HOAs

Homeowners associations are composed of community residents elected to a board of directors, which govern the neighborhood by a set of rules and regulations. Homeowners pay dues to have common areas like parks, roads, and community pools maintained and repaired.

Such organizations exist for different types of properties, from single-family homes and rowhomes to condominiums and cooperatives.

The presence of HOAs in the U.S. has ballooned over recent decades. In 1970, there were 10,000 community associations with about 2.1 million residents, per the Foundation.

In 2023, about 65% of new single-family homes were built within HOAs, up from 49% in 2009, according to the U.S. Census.

Today, HOA or common-interest communities represent about 30% of the housing stock in the U.S., and house 75.5 million Americans, according to the Foundation for Community Association Research. The entity is an affiliate organization of Community Associations Institute, a membership group for HOAs and other community organizations.

Common-interest communities are becoming more typical because they provide a financial benefit for local governments, according to Thomas M. Skiba, CEO of the Community Associations Institute, a membership organization of homeowner and condominium associations.

“They don’t have to plow the street anymore [or] do all that maintenance and they still collect the full property tax value,” Skiba told CNBC, referring to local authorities.

HOA membership is more common in some areas. Florida has the highest HOA membership rate of 66.86%, or more than 4 million homes in HOAs, according to a data analysis by This Old House, a home improvement site.

“It is truly a luxury in a lot of cases to buy a home that’s not in a community,” said Steve Horvath, co-founder of HOA United, an advocacy group for homeowners in common-interest communities.

How HOAs add to homeownership costs

The price tag that comes with a common interest community will depend on it’s location and the amenities the association offers.

The mandatory membership can cost homeowners as little as $100 a year to more than $1,000 a month, depending on the community, according to the American National Bank of Texas.

Such costs tend to increase over time, and rarely go down. In Frontdoor’s survey, 51% of current HOA members said they experienced an increase in their HOA fees, and 65% say price increases happen frequently.

How to vet an HOA before you buy

Many Americans are satisfied with their HOA. About 60% of surveyed homeowners reported having a positive experience with their community, according to Frontdoor.

But others go through grievances. About 1 in 3 had some experience that made them want to move, Frontdoor found. Of those wanting to leave the neighborhood, 63% complained about fees while 53% cited inconsistent rule enforcement.

“Sometimes HOAs can be really intrusive,” like what colors you can choose from to paint the exterior of your house, said Jim Tobin, CEO of the National Association of Home Builders.

If you’re currently in the market for a home and are unsure if an HOA community is right for you, here are a few things to consider in the shopping process:

  • Ask your real estate agent or the home seller’s agent for a copy of all the HOA paperwork like covenants, bylaws, fee schedule, rules and regulations, experts say. Also ask for meeting minutes, whether annual general meeting minutes or board meeting minutes for the past 12 months, Horvath said. Such documents can be very telling about how an HOA is operated, he said.

  • Inquire about monthly or annual fees, the HOA’s budget and the history of how assessments have grown over the years, according to Skiba.

  • Ask your real estate agent or the seller’s agent if the house you want to buy has any unpaid assessments, said Horvath. Such outstanding balances should be dealt by the seller as part of the sale.

  • Review any pending litigation, disputes or existing judgements within the community, said Horvath.

  • Look into the community’s reserve funds, which ensures repair and renovation. Check if the community is putting enough money aside for big expenses or if they are property funded, Skiba said.

  • Ask if you can attend a board meeting or the member’s annual general meeting if possible.

Read more on CNBC

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3 predictions for Airbnb hosts in 2025, from one of the short-term-rental industry's top analytics firms

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Airbnb and Vrbo hosts can expect more consistency in 2025, a new report from the industry analytics firm AirDNA said.

"There's going to be a bit more stability," Bram Gallagher, the director of economics and forecasting at AirDNA, told Business Insider. "The market is in a more mature phase compared to where it was five, even 10 years ago."

The short-term-rental market's roller coaster kicked off in 2020, when a surge in travel brought hosts record profits. An influx of new properties opened up, leading to a correction. Hosts have been adjusting their expectations ever since, sometimes lowering prices to remain competitive.

2024 has been an improvement for hosts in some ways. Demand for short-term rentals, as measured by the number of nights booked, grew 7% compared with 2023. Occupancy rates, the number of nights a month a rental is booked, declined from February 2022 to April 2024 but have been relatively constant since.

There are early signs that a stabler climate would translate to better returns for hosts in 2025. AirDNA measures a rental's expected revenue using a measure called RevPAR — or revenue per available rental, which combines a unit's average daily rate with its region's occupancy rate. For two years, the average RevPAR declined, meaning hosts could expect to bring in less revenue than the year prior. RevPAR forecasts for 2025 have turned positive.

"We're going to be seeing some gradual improvement from here on out," Gallagher said.

Here are three predictions AirDNA has for hosts in the new year:

1. Occupancy levels will stay about the same

Occupancy rates went through a historic whiplash over the past four years. First, a lower number of overall listings following COVID-19 lockdowns met a nationwide surge in stir-crazy travelers looking for more space, which produced some of the highest occupancy rates in industry history — hitting a peak of 61.9% in February 2022.

Then, a flood of new properties spurred by an investor boom intensified the competition for bookings, pushing occupancy rates down to 54% in April 2024.

Rates settled around the mid-50s this year, and AirDNA expects occupancy rates to stay around that mark in 2025.

"It's such a slight increase, but we're going to be holding on to the gains that we've got this year," Gallagher told Business Insider

2. The number of new Airbnbs and Vrbos has slowed, so there's less competition

The postpandemic explosion of new Airbnb and Vrbo listings is likely over.

"Supply is going to continue slowing, so you're going to have fewer new competitors next year to worry about," Gallagher said.

First, a tight housing market eroded investor appetite for new properties. Increasing regulations on Airbnbs and Vrbos in cities across the US and abroad over the past few years have also dampened new listings.

That's good news for hosts who already manage units.

"It's good for operators that are already in the market because they've got barriers to entry that are already in place for anyone who wants to compete with them," Gallagher said.

3. Large homes with relatively cheap nightly rates are likely to keep growing in popularity

One surprising trend from 2024 that Gallagher said was likely to continue into the new year is the exceptional performance of a certain segment of listings: multiple-bedroom homes that large groups can book cheaply.

AirDNA found that the largest growth in both demand and available listings this year was for listings with six or more bedrooms in the "budget" category, or the cheapest 20% of listings ranked by price per night.

Gallagher said the uptick in interest might be a response to the comparisons some travelers make between hotels and short-term rentals.

"People are looking at the value proposition of renting six rooms at a budget hotel, compared to getting a six-bedroom short-term rental," Gallagher said. "It's been a change to the composition of short-term-rental supply."

In recent years, some loyal Airbnb guests have said they're opting to stay in hotels more frequently over issues like fees and chores.

Airbnb has intensified its competition with hotels in recent months, with one executive teasing that the company would soon start offering "hotellike" amenities.

Read more at Business Insider

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Home for the Holidays: The Rise of Multi-Generational Home Buying

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The concept of multi-generational housing— homes that have adult siblings, adult children over the age of 18, parents, and/or grandparents residing with the primary home buyer — has been gaining traction over the past decade.

According to this year’s Profile of Home Buyers and Sellers, 17 percent of home purchased last year were multi-generational households, the highest proportion since NAR began recording this figure in 2013.

Whether driven by economic factors, caregiving needs, or cultural traditions, more families are choosing to live together. Our data shows that the top reasons for purchasing a multi-generational home were cost savings (36 percent), to take care of aging parents (25 percent), children over the age of 18 moving back home (21 percent), and children over the age of 18 never having left home (20 percent). Rising housing costs have made it harder for young adults to afford homes of their own, while retirees on fixed incomes may struggle to maintain independent housing; sharing a home can ease financial strain for everyone involved. By continuing to live in the home, young adults can save for a downpayment on their own home. Sixty-nine percent of all first-time home buyers used funds from their savings for the downpayment on their home. Simultaneously, with an aging population, many families are stepping in to provide care for elderly relatives.

Who Is/Are Buying Multi-Generational Home(s)?

More than half (58 percent) of 2024 multi-generational home buyers were married couples, and nearly one-fifth were single-females (19 percent. Across all racial and ethnic groups, married couples lead the way in multi-generational home buying, but there are differences across racial segments. Among Black/African American multi-generational home buyers, single females made up 36 percent of these home buyers, significantly higher than any other racial/ethnic group. Among Asian/Pacific Islander multi-generational home buyers, 12 percent were single males – higher than any other racial/ethnic group. 

There is more racial and ethnic diversity among multi-generational home buyers compared to all home buyers. Seventy-three percent of multi-generational home buyers identified as White (compared to 83 percent of all buyers), ten percent identified as Black/African American, nine percent identified as Hispanic/Latino, and eight percent identified as Asian/Pacific Islander.

Multi-generational home buyers have a median age of 57. While the majority—77%—are aged 45 and above, younger buyers are also part of the mix, with eight percent falling between 18 and 34 years old. Notably, 23 percent are aged 45 to 54, nearly 10 percentage points higher than the share among all home buyers, and 24 percent fall into the 55 to 64 age group.

The Sandwich Generation: Balancing Care for Two Generations

Some multi-generational home buyers are a part of “The Sandwich Generation.” Some multigenerational home buyers are a part of the Sandwich Generation- middle-aged adults juggling the care of both aging parents and their own children. These home buyers are facing increasing challenges as the longer lifespans and the rising financial dependency are added to their responsibilities. Multi-generational home buyers are more likely than the average buyer to have children under 18 living at home, with 37 percent reporting having at least one child under the age of 18 residing in the home. Among those who cite caring for aging parents as their primary reason for purchasing a multi-generational home, 29 percent also have children under 18 in the household. Financial pressures further compound these challenges, as 17 percent of multi-generational buyers carry student loan debt, with a median balance of $30,000.

Multi-generational living offers families financial and emotional support, stronger bonds, and shared caregiving responsibilities. However, it also requires navigating privacy, space, and interpersonal dynamics. As this trend continues to grow, it reflects on how families are adapting to modern economic and social realities while rediscovering the benefits of living together.

Whether for the holidays or year-round, multi-generational living demonstrates that home is more than just a house—it’s the people we share it with.

See more at NAR

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Everything You Need to Know About Alternative Fireplaces

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No chimney, no problem! Alternative fireplaces are hotter than ever. Learn which one could be right for your home.

A fire makes every room feel cozier, and now you can have one pretty much anywhere you want one. Fireplaces powered by alternative fuel sources, such as gas or electricity, don’t require a chimney — or a major renovation. Some are freestanding and just plug into a regular outlet. Keep reading to find out which type is right for you and start shopping!

Gas Fireplaces

Choose this option if you want the look and feel of a wood-burning fireplace without all the hassle.

The Pros:

  • Real heat-emitting flames turn on and off with a switch, remote or app.

  • Fuel doesn’t require refilling. Units connect directly to your home’s gas line.

  • No need to store and transport real logs. (Faux logs or stones should be dusted.)

The Cons:

  • You need to hire a pro to install; the cost could run from a few hundred to more than $1,000.

  • There are two main types: direct-vent (pulls air from outside) and ventless (pulls air from the room). The ventless systems are illegal in some areas, so check local laws.

Electric Fireplaces

This is the clear winner if you want to do the job yourself. Take it out of the box, plug it in, flip a switch!

The Pros:

  • The most common models are 120-volts that plug into an outlet like any other appliance.

  • Many designs let you customize the brightness of the flame and turn off the heat.

  • There are no fumes, smoke or soot.

The Cons:

  • Flames look fake, but some designs lean in with fun flame color choices (like green and purple).

  • Running it for several hours daily on high could cause an uptick in your electric bill. Occasional usage shouldn’t cost more than a dollar or two.

Bio-Ethanol and Gel Fireplaces

These are typically freestanding or wall-mounted. The fuels burn cleaner than wood.

The Pros:

  • Freestanding models are easy to set up and can be placed almost anywhere, even in the middle of a room.

  • They offer the combo of a real smokeless flame and sleek modern design.

  • Venting is not required.

The Cons:

  • You have to manually light and extinguish.

  • Fuel refills are more expensive than natural gas. You’ll need a liter of bio-ethanol or a can of gel for every two to three hours.

  • They don’t provide much heat.

Wood Pellet Stoves

Consider this if you love the look of old-school wood-burning stoves but want to set it and forget it.

The Pros:

  • Wood pellets burn cleaner and more efficiently than logs.

  • Most have easy electric automatic ignition.

  • They give off strong heat that can warm a room nicely. Some have thermostats to set the temperature.

The Cons:

  • A fireplace pro must install a proper vent system, which can cost thousands.

  • You’ll need to refill pellets (a 40-lb bag lasts 8 to 12 hours).

  • Most run on electricity, so it goes out if you lose power.

Read more at HGTV

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This factor can get your mortgage application denied — even if you’re a high earner

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If you need to get a mortgage to buy a house, make sure your finances are in order — especially your debt to income ratio.

Your debt-to-income ratio is all your money debt payments divided by your gross monthly income. It’s the “number one way” lenders measure your ability to manage the monthly loan repayments, per the Consumer Financial Protection Bureau.

The debt-to-income ratio was the most common reason for a denied mortgage application, at 40%, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors. 

Other factors that affected homebuyers in the approval process were a low credit score (23%), unverifiable income (23%) and not enough money in reserves (12%), the report found.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024 and found that 26% of homebuyers paid all-cash — a new high.

Lenders look for a ‘healthy’ debt-to-income ratio

Repeat buyers who gained record home equity in recent years drove that trend, according to the NAR.

But for those who need to borrow in order to buy, lenders and institutions look at your debt-to-income ratio to see if you may struggle to add a mortgage payment on top of other debt obligations.

“The higher your debt-to-income ratio is, the less chance they’re going to feel comfortable lending to you,” said Clifford Cornell, a certified financial planner and associate financial advisor at Bone Fide Wealth in New York City.

It’s a factor that affects home applicants of all income levels, said Shweta Lawande, a certified financial planner and lead advisor at Francis Financial in New York City. 

“If you’re a high earner, you might not experience an issue saving towards a down payment, but that doesn’t mean you have a healthy debt to income ratio,” she said. 

Here’s what you need to know about your debt-to-income ratio.

How to calculate your debt-to-income ratio

If you’re looking to apply for a mortgage, the first step is to know what your current DTI ratio is, said Lawande.

Take your total required monthly debt payments, like your monthly student loan or car loan payment. Divide that sum by your gross monthly income, she said. Multiply the result by 100 and you have your DTI expressed as a percentage.

A DTI ratio of 35% or less is typically considered as “good,” according to LendingTree.

But sometimes lenders can be flexible and approve applicants who have a debt-to-income ratio of 45% or higher, Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender, recently told CNBC.

A way to figure out your housing budget is the so-called 28/36 rule. That guideline holds that you should not spend more than 28% of your gross monthly income on housing expenses and no more than 36% of that total on all debts.

For example: If someone earns a gross monthly income of $6,000 and has $500 in monthly debt payments, they could afford a $1,660 a month mortgage payment if they follow the 36% rule. If the lender accepts up to 50% DTI, the borrower may be able to take up a $2,500 monthly mortgage payment.

The ‘better’ debt repayment strategy

You can improve your debt-to-income ratio by either shrinking your existing debt or growing your income.

If you have existing debt, there are two ways you can work to pay it off, experts say: the so-called “snowball method” and the “avalanche method.”

The snowball method is about paying off the smallest debt balances first no matter what the interest cost is, which can feel less overwhelming, said Shaun Williams, private wealth advisor and partner at Paragon Capital Management in Denver, the No. 38 firm on CNBC’s 2024 Financial Advisor 100 List.

“One is what’s best on a spreadsheet, and the other one is what makes someone feel best from a behavioral finance standpoint,” Williams said.

Yet, “the avalanche is better because the true cost of debt is your interest rate,” he said, as you’re more likely to pay down the debt faster.

Let’s say you have student loans with a 6% interest rate versus an existing credit card balance accruing a 20% interest rate. If you’re sitting with credit card debt, consider tackling that balance first, Cornell said.

“Whichever one’s costing you the most to borrow is the one that you want to pay down as quickly as possible,” he said.

If you’ve already done what you could to either consolidate or eliminate existing debt, focus on increasing your income and avoid other large purchases that would require financing, Lawande said.

“The goal is to just preserve the cash flow as much as possible,” she said.

Read more at CNBC

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