We recently had a buyer who desperately wanted to qualify for a condo purchase but could not because the HOA dues were $800 per month!
This prompted me to remind agents and buyers alike of just how much purchasing power HOA dues extract from buyers.
In the above situation, $800 of HOA dues equates to about $140,000 of purchase power, assuming a conservative 4.25% interest rate and moderate property taxes.
RULE OF THUMB: HOA DUES & PURCHASING POWER
A rule of thumb in this interest rate environment is that each $100 of HOA dues extracts about $17,000 to $20,000 of purchasing power from buyers (depending on property tax and interest rates).
We realize that condos are sometimes the only option for many buyers, but buyers with options should always consider how much HOA dues affect their purchasing power.
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