Homeowners’ associations and their importance

Dr. Cielito F. Habito, Professor of economics at ateneo de Manila University, gives three reasons why the housing sector is important to the Philippine economy. First, housing is beneficial because it entails large numbers of construction workers. It creates many more jobs than a capital-intensive investment would. Money would circulate more among lower-income and lower-saving individuals and keep more money moving around in the spending-income cycle to boost the textbook multiplier effect.

Second, housing has much lower import content than other government expenditures, so it keeps money circulating in the domestic economy.

Third, housing links to numerous domestic economic activities: home furnishings, utilities, household supplies, and many more. Public spending on housing would permeate much more widely and quickly across various industries and sectors within the Philippines.

Dr. Habito asserts that it is high time for housing to be put at the forefront of the national agenda for infrastructure development. There is a massive housing backlog of about 6.6 million units, and the Philippine Statistics Authority (PSA) reported about 26.4 million households in 2020. This means that one in every four Filipino households is inadequately sheltered.

Nevertheless, despite this huge backlog, housing communities that are fortunate enough to be organized also have an important role to play in economic development. As explained by resource speakers from the Department of Human Settlements and Urban Development (DHSUD), homeowners’ associations are typically incorporated, nonprofit associations of homeowners that create and enforce bylaws in accordance with Republic Act 9904 (“An Act Providing for a Magna Carta for Homeowners and Homeowners’ Associations, and for Other Purposes”). The accompanying table shows that there are 27,620 registered HOAS across the country. If there are 19.8 million households living in adequate and safe dwellings, then, on average nationwide, each HOA would host about 717 households.

Why are HOAS important? From an economic standpoint, HOAS help to ensure orderly and harmonious enjoyment of communities by regulating externalities (neighborhood or spillover effects, such as noise and home improvements) and providing basic services such as security and sanitation. These services are sustained by association dues collected from HOA members. HOAS help to protect against the depreciation of home values resulting from the deterioration of communities.

HOAS may also propose incomegenerating activities through livelihood projects. They may partner with government agencies for such projects through HOA federations. HOAS are meant to complement the local government units. Zoning ordinances, for instance, are typically implemented by HOAS among their members.

In the recent lockdown experience due to the spread of Covid-19, HOAS also played a crucial role in implementing quarantine rules and coordinating with government agencies for testing, tracing, and treatment efforts. The government should, indeed, consider building the capacities of HOAS in disaster risk reduction and management, as well as social protection.

As a microcosm of government, each HOA is also prone to nepotism and corruption. That is why it is important for HOAS to be familiarized with Republic Act No. 9904 and its implementing rules and regulations in order to promote good governance among them. HOAS can represent themselves in city councils through HOA federations, so if good governance can be taught at the HOA level, then, perhaps, positive changes in society could be triggered upwards.

In biology, healthy cells contribute to a healthy body. In like manner, strong HOAS contribute to a strong nation.