It wasn't in 2005, was it?
Plus they couldn't sell to people with kids, could they? Also, where would they live after the sale? Even in 05, the prices were going up like crazy. So they had an older home, probably not in the best shape, and they had to sell it for enough to be able to replace it. Sounds like they couldn't qualify for much of a mortgage so they were just as screwed with the skyrocket's ride up as they are now with its return to earth.
That's what leads me to deduce that there's some problem with the community (and hence with the HOA) -- in 2005, the sky was the limit.