RealNews

Not sure if the homeowners association (HOA) is worth the fees and regulations? Turns out the answer is yes.

A study by economists Alex Tabarrok and Amanda Agan found that homes in HOAs sold for over 5% more than very similar homes outside of HOAs - even similar homes in the same subdivision. The value difference was as great as the difference in value between a 3-bedroom and a 4-bedroom home outside an association.

Marginal Revolution: What are Private Governments Worth?

After controlling for a wide variety of housing characteristics including age, size, style and so forth we find that homes within HOAs sell for a whopping 5.4 percent or $14,000 more than similar homes outside of HOAs. Put differently a 3 bedroom home within an HOA is worth about as much as a 4 bedroom home outside of an HOA. This result is robust and continues to hold even when we look at similar homes inside and outside of HOAs but within the same subdivision.

An informal survey of readers by the Charlotte Observer found that gated communities, which are often a feature of homeowner’s associations, are desired for security as expected. They are also perceived as more family friendly. One reader, involved in the development industry, “conjured up images reminiscent of his own childhood, of kids playing in neighborhood streets and yards after dark without fear, of neighbors visiting on front porches, of casual evening strolls on tree-lined streets.”