What is considered a reasonable HOA?

[Uday Maripalli]

A lot of condos and town-homes in Seattle/Bellevue area seem to have really high HOAs. How does one decide if HOA fees are reasonable?

We recently saw a town-home that we really like. There are about 20-21 town-homes (2BR and 3BR) in the community. They have a small pool and a decent sized lawn. The HOA fees is $525 per month and it covers exterior (roof, exterior paint etc), common area maintenance, water, sewer, and garbage. They seem to be doing a good job of maintaining the property. They seem to have decent reserves (about 120K).

Is a 500+ per month HOA for a 3BR town-home considered reasonable? It seems a little excess to me but the most of the town-home complexes have similar HOAs. There are very few HOAs that are less than 400 per month. When we talk to our loan officer, he told us that every increment of 10K loan amount equates to approx 50 per month in EMI. A $500 per month HOA equates to buying a home (single-family) that is $100,000 more that what the town-home costs. When I look at it this way, town-homes don't make sense at all. Moreover, HOAs are anticipated to increase every couple of years. How come so many people pay such high HOAs?

TIA for your time.