The Hidden Tax on American Housing: The HOA

When Americans talk about the housing crisis, we debate interest rates, zoning, and supply.
Yet a large and growing share of the housing stock carries a cost that behaves like a private tax: homeowner association dues.

For the roughly 75 million Americans living in HOA-governed communities [HOA Insights Report], a dues increase is often framed as a routine budget adjustment. Markets do not treat it that way. Buyers qualify for a home based on monthly affordability. When mandatory monthly charges rise, borrowing capacity falls. At typical mortgage terms, a $200 per month increase can translate into about $40,000 less purchasing power for the next buyer [Affordability calculation].

This is not mainly a story about bad neighbors. It is a story about institutional design.
HOAs and condo associations govern trillions of dollars in collective assets, but many still operate with fragmented records, opaque decisions, and weak incentives to produce proof.
As buildings age and maintenance, insurance, and legal costs rise, the price of governance failures is no longer measured only in frustration. It is measured in lost wealth.

The math of uncertainty

Condos and townhomes have long been marketed as an entry point to the middle class. But in many markets, association fees now rival property taxes and sometimes compete with mortgage payments. Known costs are not the core problem. Unknown costs are.

A buyer can budget for today’s dues. What is harder to price is tomorrow’s special assessment, a litigation exposure hidden in incomplete minutes, or an insurance gap that makes a building difficult to finance. When a community cannot produce clear, verifiable records, buyers apply an uncertainty discount. Lenders and insurers do something similar through stricter underwriting, higher premiums, or refusals to cover certain risks. The result is a feedback loop: weaker governance raises costs, and higher costs increase conflict and reduce confidence.

In most financial sectors, recurring charges of this scale come with standardized disclosures and a clean audit trail. In many HOAs, the information exists in theory but is hard to assemble in practice. Budgets live in one file, reserve studies in another, votes in scattered emails, and meeting minutes in versions that do not match. Owners are told to “check the portal,” but the portal often functions like storage, not verification.

The structural trap

It is tempting to blame boards. But most board members are unpaid volunteers, elected by low turnout, tasked with managing complex budgets and capital projects under intense social pressure. Professional managers help, but they are constrained by time and legacy tools.
Every hour spent rebuilding records is an hour not spent addressing immediate problems.

The deeper issue is the trust model. Too many associations still run on “trust me” governance: a small group makes high-stakes decisions and expects the community to accept them with limited ability to verify process. In a stressed environment, that model breaks quickly. Trust collapses, disputes intensify, lawyers arrive, and the community pays twice, once in direct costs and again in lost value.

From ethics to architecture

The standard policy response has been to add rules after the fact. But thicker rulebooks do not fix a core issue: information that is hard to verify is easy to dispute. The more we rely on after-the-fact enforcement, the more we institutionalize expensive conflict. Florida’s HB 657 illustrates the direction of travel: build bigger mechanisms to process disputes, because the underlying systems still do not reliably produce proof. If the record is disputable, litigation becomes the default audit

If we want to protect housing wealth, we should treat HOA governance as a risk system and design it to produce proof by default. That means moving toward verifiable governance: governance that creates a clear, auditable trail of what was decided, why it was decided, and whether the decision followed the stated rules. Three reforms would materially reduce the hidden tax effect.

Truth sheets for buyers. Every buyer should receive a standardized one-page disclosure summarizing reserve funding, historical dues changes, major pending capital projects, known litigation, and insurance status. Communities that are well run should be able to prove it, and buyers should be able to compare buildings as easily as they compare mortgage rates.

Plain-language justification for increases. “Costs went up” is not an explanation. When dues rise, owners deserve a short report tying the increase to specific, checkable drivers such as insurance premiums, utilities, staffing, reserves, or planned projects. Owners should also see the main options considered, including the cost of delaying repairs versus raising dues now.

Tamper-evident records for decisions and votes. Modern finance relies on durable, time-stamped records that are difficult to alter without detection. Housing governance should not be held to a lower standard. Key votes, minutes, budgets, and vendor approvals should be stored in a format that is tamper-evident and independently verifiable, so disputes become faster and cheaper to resolve.

Protecting the asset

These reforms protect owners, but they also protect boards and managers by reducing time spent relitigating decisions and searching for missing records. They help responsible communities signal quality to lenders, insurers, and buyers. Proof becomes a competitive advantage.

America will not improve housing affordability while ignoring the private tax engine embedded in its own housing stock. If HOA dues function like taxes, the governance behind them should meet a comparable standard of transparency. The choice is simple: continue operating on “trust me,” or upgrade the system so that trust is earned through proof.