No. A low monthly assessment tells you what your community collects, not what it needs. Associations with below-average fees are often the ones carrying underfunded reserves. That gap doesn’t just disappear; it resurfaces later as a special assessment or a maintenance backlog that owners pay for anyway. Here is what actually signals financial health in a community association and the numbers your board should be watching instead of the monthly fee.
What your monthly assessment is actually paying for
Your assessment does two jobs. Firstly, it funds this year: insurance, landscaping, snow removal, utilities, trash, management, accounting. Secondly, it funds the future: money set aside for the roof, the elevators, the siding, the pool deck, the paving.
The first job is visible – owners notice when the grass goes uncut. The second job is invisible until something fails. When a board wants to hold the fee flat for another year, the reserve contribution is almost always what ends up taking the hit.
A community can balance its budget every single year and still be headed for trouble if reserves are the item absorbing the pressure.
Why a below-average fee can be a warning sign
Fees have been climbing. Realtor.com puts the median HOA fee at $135 a month in 2025, up from $108 in 2019. Condo dues are at a $420 median and up 29 percent over six years. LendingTree found that 82 percent of fee-paying homeowners saw an increase in the past three years, and 44 percent described that increase as significant.
Against that backdrop, a low fee looks like good management. In the Baltimore metro area, roughly 36 percent of homeowners pay an association fee, with a median around $97 a month. That is well under Philadelphia (around $163 per month) and under the Washington, D.C. area (around $133 per month). On paper, Baltimore-area owners are getting a bargain.
A fee below the regional median usually means one of three things. Firstly, the community genuinely has lower costs (maybe it is a townhome versus a high rise or there are no major amenities to maintain like a pool or clubhouse). Secondly, the community has deferred work it should have done. Thirdly, it is underfunding reserves. Only the first is actually good news; but in our experience, it is the least common of the three.
Three numbers that tell you more than the fee does
None of these require new information. Your board already has all three items in documents it receives every year.
Reserve funding percentage
This is what your association has on hand compared with what your reserve study says it should have by this point in the replacement schedule. A community at 100 percent is considered fully funded. Reserve specialists generally treat funding below roughly 30 percent as weak and above roughly 70 percent as strong, though the right target depends on the age of buildings and what is coming due for replacement in the next several years. A newer community with nothing major on the horizon can sit lower safely. A 40-year-old mid-rise cannot.
Reserve contribution as a share of the annual budget
Look at what percentage of your total annual budget goes to reserves rather than operating expenses, then compare that to what your reserve study recommended. If the study called for one number and the budget is funding only a fraction of it, the difference is not savings. It is a deferred bill with an approaching due date.
Delinquency rate
The budget your board approved assumes every owner pays. If a meaningful share is behind, the budget you approved is not the budget you collect, and the shortfall lands on the owners who are paying their dues. A delinquency rate that is climbing year over year belongs on the agenda before the next budget vote, not after.
What is driving increases nationally
Four forces are pushing assessments up almost everywhere, and none of them are going away soon.
- Insurance. Master policy premiums have climbed sharply, and deductibles have moved with them. This is the single biggest driver in coastal Florida, Texas, and California, and it is showing up in the Mid-Atlantic too.
- Reserve legislation. After the 2021 collapse of Champlain Towers South in Surfside, states moved on structural inspections and reserve funding. Florida’s milestone inspection and structural integrity reserve study requirements got the most attention, but Maryland, Virginia, California, and others have tightened their own rules. Communities that were underfunding are now required to catch up, and that catch-up shows in the monthly fee.
- Construction and labor costs. A roof quoted five years ago costs significantly more today. The replacement schedule did not change, but the dollar figure attached to it did. This causes the reserve target to move even though the board did everything right.
- Deferred maintenance coming due. Communities built during the construction boom of the 2000s and 2010s are hitting the age where major systems need replacing rather than patching.
The geographic pattern is worth noting because it explains why national fee comparisons mislead. Sun Belt metros have broad participation with modest fees. Roughly 56 percent of Orlando homeowners pay an association fee, and about 55 percent in Houston. High-cost coastal metros have narrower participation and much steeper fees, with New York at a $558 median and Honolulu at $526. Neither pattern tells you anything about whether an individual community is funded.
The argument that a low fee protects property value
A recent analysis argued that every $100 a month in association fees capitalizes into roughly $20,000 of lost purchasing power for a buyer. Apply that math across metro medians to show what owners give up. The arithmetic is sound. The conclusion does not follow.
An assessment is not a loss – it buys maintenance and reserve funding. Declining to collect it does not make those costs disappear, it just moves them. An owner who saved $60 a month for a decade and then faces a $15,000 special assessment did not come out ahead. The next buyer’s lender is going to look at the reserve balance and the assessment history, not just the monthly number.
Underfunded communities carry a second problem that rarely comes up in fee comparisons. Fannie Mae and Freddie Mac have tightened condominium project eligibility, and projects with thin reserves or significant deferred maintenance can end up ineligible. Fannie Mae currently looks for a meaningful share of the annual budget going to reserves on full project reviews (generally around 10 percent). A unit in a project that cannot be financed conventionally is worth less than a comparable unit in one that can no matter how low the monthly fee is.
What to look at before your next budget cycle
Four things, all of which your board can do without hiring anyone.
- Pull the most recent reserve study and compare the recommended contribution against what the budget actually funds.
- Calculate the reserve funding percentage. If nobody on the board knows it, that in and of itself is a significant finding.
- Look at delinquency as a trend over three years, not as a single number.
- Check the date on the reserve study. A study that predates the last few years of construction cost increases is describing a world that no longer exists.
FAQ block
What is a healthy reserve funding percentage for an HOA?
Reserve specialists generally treat funding below roughly 30 percent as weak and above roughly 70 percent as strong. The right target depends on the age of your buildings and what is coming due in the next several years. A newer community with no major replacements on the horizon can carry a lower percentage safely. An older high-rise cannot.
Do buyers and lenders look at an association’s reserves before closing?
Yes. Lenders request the association budget, reserve balance, and delinquency figures as part of the condominium project review. Fannie Mae currently looks for a meaningful share of the annual budget going to reserves. Projects with thin reserves or significant deferred maintenance can become difficult to finance conventionally which affects the value of every unit in the community.
Can a board raise assessments without a vote of the membership?
That depends on your governing documents and your state. Many declarations let the board raise the regular assessment by a set percentage each year without an owner vote, with anything above that cap requiring membership approval. Special assessments usually carry their own threshold. Read the declaration and bylaws before planning the budget, and get your attorney’s read if the language is ambiguous.
How is a special assessment different from a regular assessment?
A regular assessment is the recurring monthly or quarterly amount that funds the operating budget and the reserve contribution. A special assessment is a one-time charge for a specific expense the reserves cannot cover, usually a major repair or replacement. Special assessments are only the symptom; underfunded reserves are the cause.
What happens to the budget when owners fall behind on dues?
The approved budget assumes full collection, so every delinquent account creates a shortfall that the paying owners absorb. Boards usually address this with a written collections policy and by carrying an allowance for uncollectible accounts in the financial statements. If delinquency is climbing, it belongs on the agenda before the next budget vote.
If your board has not compared its reserve balance against its reserve study in the past year, that is where to start. We have audited community associations since 1986, and we have seen how these numbers usually break down before a board does. Send us your most recent financial statement and we will tell you what stands out. No obligation, and if your reserves are in good shape we will say so. Contact Us Here