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Robert Henricks reluctantly voted to increase monthly homeowners association fees in his San Diego County community, lifting them by $100 a month to $550.
“With the cost of living, the cost of projects, we’ve put off raising the monthly assessment two years out of three,” said Henricks, who sits on the board of his Rancho Bernardo HOA.
But even he concedes he’s now among the thousands of Californians feeling pinched by surging HOA fees atop unprecedented mortgage rates, utilities and insurance premiums.
One solution is to cap the fee hikes. California lawmakers are considering a measure, Senate Bill 1007, that would curb how much associations could increase members’ dues each year.
It’s the latest bill targeting HOAs and how they levy fees in the Legislature this session in an attempt to address housing affordability. Although the crackdowns have been mostly successful and bipartisan, this biggest push yet to slow down rising fees has split some Democrats.
The rise of the HOA
HOAs are a near ubiquitous-phenomenon in today’s housing market.
Nationwide, 67% of all new single-family homes in 2024 were in HOAs, up from 46% in 2009, according to the U.S. Census Bureau. More than a third of California residents live in one, including about 65% of all California homeowners.
Californians also pay among the highest median monthly fees in the nation, at nearly $300 per month, according to the Census Bureau. San Francisco Bay Area and Los Angeles owners can face even higher dues, up to several thousand dollars a month.
In an HOA, maintenance, repair and insurance expenses are divided among homeowners after elected board members determine annual budget costs. Some funds go toward routine upkeep for things like pools, clubhouses or golf courses, while others are set aside for major projects such as roof repairs.
They’re self-governing and controlled by residents who create and enforce their own rules, covering everything from which paint colors are allowed to what kind of trees can be planted.
Under current law, dues can’t increase by more than 20% each year.
The new proposed legislation would cap annual HOA fee increases to no more than 8% without a vote by members of the HOA.
“This bill is about providing information to a homeowner to understand how much they’re gonna be paying,” Van Nuys Democrat Caroline Menjivar, the bill’s author, said at a March hearing.
‘Pay me now or pay me later?’
Consumer and realtor groups are championing the bill as a potential lifeline for low- and middle-income families already feeling squeezed by skyrocketing mortgage rates, gas prices and grocery bills.
Supporters point to examples such as a Walnut Creek man whose monthly association fees are $1,500. Those fees, along with his condo insurance and property taxes, now outpace his mortgage.
The U.S. Housing Department and most financial planners agree that Americans shouldn’t pay more than 30% of their monthly income on housing, and soaring HOA fees are getting in the way of people doing just that, said Marjorie Murray, president for the Center for California Homeowner Association Law, at the March hearing.
“This is unsustainable. Even regular assessments raised by 20% will double in four years and triple in five,” she said. “Nobody’s salary or Social Security or retirement income goes up by those kinds of percentages.”
Exorbitant fines and retaliatory lawsuits have made HOAs polarizing for decades. But soaring costs amid an affordability crisis have sparked numerous efforts from state lawmakers to rein in their authority, including a new state law capping fines at $100 per violation.
One billed as the “HOA transparency act” would push them to act more like local governments when it comes to open records and public meetings. Meetings would need to be more accessible for members and disciplinary actions could not occur out of the public eye.
Another proposal would require associations to stash money in a savings account to help stave off pricey one-time assessment fees to pay for major maintenance, an issue most common with older condominiums. Builders and realtors support it.
Follow the money
Under Menjivar’s bill, homeowners could still raise fees by more than 8% a year to cover expenses, but they’d have to do so by popular vote, California Association of Realtors lobbyist Sanjay Wagle said. The association has given more than $10 million to legislators since 2000, according to CalMatters’ Digital Democracy database. He argued that most people wouldn’t let a leaky roof or faulty plumbing go unfixed, for example, because it’d sink their property values.
“The realtors trust the homeowners. They’ll protect their investment,” Wagle said.
Building groups are more skeptical. They worry curbing fees too much would hurt HOAs' ability to keep up properties.
The divide became clear last month when six Democrats joined a majority of Republicans in voting against the bill during a Senate hearing, a rare public opposition in the Democratic-controlled Legislature where lawmakers typically opt to not vote at all rather than against a colleague’s bill. It advanced on a 24-13 vote.
The bill’s opponents said it’s unlikely that a majority of residents would agree to dramatically raise their own fees. This could lead to some downstream effects, such as banks being less willing to fund mortgages if HOAs are low on cash.
And, one lawmaker defended HOA boards, saying skyrocketing energy and insurance bills are to blame for rising fees.
“I don’t think the HOA board members are personally profiting or charging more than what they’re trying to do,” Encinitas Democrat Sen. Catherine Blakespear said, who voted against the bill.
Henricks, who lives in an 88-unit condominium with his wife and cat, agrees.
He’s worried a lower cap would become a “pay me now or pay me later” situation where expensive projects in his 1970s era two-story condo — such as renovating all five of the building’s dated elevators — would become nearly impossible.
“That is the basic number one expense that we’re building our reserves to cover,” Henricks said. He said lower fee hikes would lead to gradual, more frequent increases in the future rather than larger increases spaced out over a few years.
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
