The Myth of Increased HOA Property Values Exposed

It goes without saying that property values will increase with an HOA. Since there are restrictions on what must be done and what cannot be done to your property, and since there is a duly elected board that is charged with seeing that the restrictions are complied with, property values just have to rise.

That’s my paraphrasing of the view promoted by the real estate special interests over the years to justify to the policy makers and home buyers why HOAs are a benefit to everyone. This view also argues that these benefits outweigh any concern for fundamental rights, liberties and freedoms of the homeowners under the law. “Just follow the money.”

Now, a study of some HOAs in Virginia reveals a different picture. Rather than shouting a broad, generalized, unsupported statement, researchers Laura Langbein and Kim Spotswood-Bright asked if the assessment fees paid to maintain property values actually did that. Are homeowners geting a benefit from their payment of assessments? In short, the answer is NO: property values show a negative affect — loss in value — as fees and services are increased.

The study was the result of the broader, public policy question relating to the efficiency of privatized governments as compared to public government. This approach looks at the costs of any additional benefits from services provided to the community by the HOA to determine if the benefits outweigh the costs. That is, as a result of the regulation and control by either the management company or by the HOA board. These types of studies are studies in economics, in the broad application of governmental approaches to the public in general — to the masses of people — and, contrary to the US Constitution, do not consider principles of democratic government and the affect on individual liberties in the attempt to achieve governmental goals. As the results show, the HOA scheme even fails to produce automatic and pervasive benefits for all planned communities.

See Laura Langbein and Kim Spotswood-Bright, Accountability and Private Governments, Regulation, Spring 2005 (Cato Institute 2005). Regulation.

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Published in: on June 5, 2005 at 5:58 pm  Leave a Comment  

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