HOA Dues and Buyer Perception of Value
It is no secret that Playa Vista has higher than average HOA dues for Los Angeles with combined dues ranging from high $400’s/month to low $1,000’s/month. While you tend to get what you pay for, this added cost, which people argue is not tax deductible, clearly has an effect on buyer perceptions, possibly more than purchasing power.
Let’s say, for example, the added HOA dues are $200 higher in Playa Vista than a comparable condo in Brentwood. Based on current interest rates, that is the same monthly cost as an additional $42,000 loan amount. Per the MLS, the average price per square foot in Brentwood for condos built since 2003 and sold in the last 6 months is $479. When the same criteria are applied to Playa Vista, the average price per square foot is $341.
For a 1,500 sf property, this equates to a difference of $207,000. So, essentially $42,000 less in purchasing power due to higher dues is being valued at $207,000 less, and you actually get something for this money such as cable, internet, use of facilities, security system, etc… Of course this is not counting the simple fact that Brentwood may be a more exclusive, desirable place to live, but it is definitely not night and day compared to Playa Vista, and many people prefer the latter. Mello roos is also a factor reducing purchasing power and if you call mello roos a $200/month expense as well, we have a reduction of another $42,000. Still we are not even half way there!
The above data is presented to show my assertion that Playa Vista is undervalued compared to comparable communities due to the extra fees. Fees are not popular, however people are overcompensating more than double their value into reduced purchase prices.