Article Courtesy of The Business Insider
By Mariette Williams
Published September 20, 2020
For too many Americans, the dream of owning a home has been
stymied by a homeowners association. Owning real estate is one of the best ways
to build wealth and pass that wealth on to the next generation, but for decades,
Black Americans have been excluded from buying in certain neighborhoods.
Homeowners associations were first created in the mid-19th century, but didn't
gain popularity until the 1960s. Their popularity was driven by a rapid growth
in suburban development and a desire by white Americans to keep certain
populations out of their neighborhoods, experts say.
Jonathan Rothwell, author of "A Republic of Equals," told Business Insider,
"There is plenty of evidence from historic records and housing policy
discussions that anti-Black racism motivated some of the strategies used by
homeowner associations, such as deed restrictions and covenants that explicitly
discriminated against Black people by compelling other owners to avoid selling
to them. HOAs perpetuate racial and economic segregation by blocking fair
participation in housing markets, thus denying wealth-generating opportunities
and upward mobility for many Black people and lower-income families."
Today, research shows that an estimated 60% of newly built single-family homes
and 80% of homes in new subdivisions are part of a homeowners association.
Neighborhoods with HOAs have, on average, more white and Asian residents — as
well as more wealthy residents — and fewer Black residents than non-HOA areas.
Homes in HOA neighborhoods also typically sell for 4% more than similar homes
outside of HOAs — a boon for homeowners, but a roadblock for many prospective
Black homeowners say they're targeted by HOAs
While the federal Fair Housing Act was passed in 1968, prohibiting racial
discrimination in the sale and rental of homes, HOAs still find ways to exclude
or discriminate against Black homeowners. A recent report found that
neighborhoods with HOAs are less racially diverse, and less-regulated cities
have higher HOA premiums, leading researchers to believe that residents rely on
HOAs to facilitate segregation.
HOA discrimination can also look like preferential treatment of white
homeowners. In 2019, Greenville News reported that a Black homeowner in South
Carolina sued his HOA board over a long-running dispute over removing a shed in
his backyard. Melchior Julien claimed that his HOA had a history of targeting
his family while other white homeowners were not in compliance with rules and
faced no consequences.
After much back and forth, Julien removed the shed and paid the $2,500 in HOA
attorney fees, but didn't pay the additional $3,600 in attorney fees he was
charged for not removing the shed by the HOA deadline. When Julien refused to
pay the additional attorney fees, a warrant was issued for his arrest. The case
escalated to Julien filing a lawsuit against his HOA for $1 million, citing
"racial discrimination, harassment, and emotional distress."
While some accusations of HOA discrimination can be considered circumstantial,
many HOAs still have "racially restrictive" language in their documents. In
2019, a Florida woman contacted an attorney when she found out that the HOA in
her prospective neighborhood still had a "Caucasian-only" restriction, as WWNY-TV
reported. While the restriction was unconstitutional, because of an easement in
the document, the covenant was still considered active. Initially the city of
Tallahassee considered the outdated covenant a private matter, but later agreed
to address the issue.
Discrimination can happen at any time during a home purchase
HOA discrimination can happen after the sale of a home or even before
purchasing. Rose Vincent, a real estate agent in South Florida, told Business
Insider, "Today, HOAs can make it harder for certain homeowners by requiring
minimum credit scores from prospective buyers, sometimes much higher than what
is required to secure a mortgage. HOAs can also ask for in-person interviews and
use background checks to keep buyers out, denying potential homebuyers for petty
HOAs are also notoriously hard to fight. Vincent said that homeowners may take
an HOA to court, but courts will often side with the association. Homebuyers may
not have the funds to hire a lawyer, and HOA discrimination is often hard to
Not surprisingly, there's a generational gap among homeowners who prefer an HOA.
A recent study showed that 52% of boomer-aged homeowners liked their HOA,
compared to 39% of millennials and 37% of Gen Xers. But even with all the HOA
disdain, homeowners associations are actually growing in number. As of 2018,
nearly 8,000 HOAs form every year, mostly in newly constructed communities.
Rothwell said, "I think HOAs are popular because they work to create and
preserve privilege by excluding others. This drives up the value of properties
by limiting competition and disrupting markets. People don't necessarily seek
out unfair privileges, but they are unlikely to voluntarily give them up without
pressure from a stronger countervailing force."
How to reform HOA culture
HOAs are made up of a small group of individuals voting for their own self
interest, and there is little oversight as to what an HOA can and cannot do once
the majority of members have voted. So how can HOAs be made equitable for all
homebuyers and owners?
Rothwell said, "HOAs are a problem because they allow for the collective action
of a group of people with a shared interest in blocking market exchanges.
Banning HOAs would be an infringement of freedom, but banning the policy levers
they use to exclude people would not. It would make housing more efficient and
While local laws can be passed to mandate HOAs to be more equitable, there is
still little incentive to change. Instead, experts say younger homeowners must
become active in serving on their HOA boards, voting to change potentially
discriminatory rules, and banning problematic board members.
HOAs are here to stay, but they can be divested from their racist roots, opening
up wealth-building opportunities to Black Americans. The answer lies in current
homeowners working to make their HOAs fair by attending meetings, voting on
by-laws, or running for board member positions.
Vincent said, "HOAs do serve their purpose in most communities, but the rules
need to be updated and be less restrictive so people don't shy away from them.
Remember, HOAs are governed by homeowners. If one person is too strict or being
unfair or biased, get involved and vote them out."