This empirical study uses a hedonic pricing model and a dataset of Spartanburg, South Carolina homes from 2002 to 2005 to evaluate the effect of Residential Community Associations (RCAs). Spartanburg is focused on due to data availability. The number of RCAs have exploded in the United States in recent decades. Given that RCAs both supplement and complement local government provision of goods and services, it is an important policy question to ascertain whether they create value for their residents. While the literature on RCAs has generally shown that they increase property values, the lack of comprehensive data has led scholars to primarily focus on Virginia and Florida. Given the heterogeneity of state laws governing RCAs and the diversity of local government amenities, the external validity of these results is in question. This study used data on a mid-sized city in South Carolina to provide further evidence on RCAs. The findings suggest that RCAs increase property values by 2.2%. These results are much smaller than estimates from other locations, suggesting that for many people in Spartanburg, local governments are a good substitute. The findings also highlight how failure to properly control for structure age can lead to incorrect inferences about the impact of RCAs on home prices.
This is a preview of subscription content, log in to check access.
Buy single article
Instant access to the full article PDF.
Price includes VAT for USA
Subscribe to journal
Immediate online access to all issues from 2019. Subscription will auto renew annually.
This is the net price. Taxes to be calculated in checkout.
While they discussed issues with omitted variables, Langbein and Spotswood-Bright (2004) did not mention condo age as one of the important missing variables.
By efficiency, we mean the costs of coming to a decision as well as being closer to the median voter’s ideal point.
Agan, A., & Tabarrok, A. (2005). What are private governments worth? Regulation, 28(3), 14–17.
Angjellari-Dajci, F., Cebula, R. J., Boylan, R., Izard, C. D., & Gresham, G. (2015). The impact of taxes and HOA fees on single-family home prices. International Advances in Economic Research, 21(2), 201–211.
Cheung, R., Cunningham, C., & Meltzer, R. (2014). Do homeowners associations mitigate or aggravate negative spillovers from neighboring homeowner distress? Journal of Housing Economics, 24(1), 75–88.
Clarke, W. (2017). Mapping homeowners’ associations: Who lives in them and how do they affect housing values? UC Irvine, mimeo. http://sites.uci.edu/wyattclarke/files/2017/10/HOA_hedonic-57.pdf. Accessed 10 Jan 2019.
Clarke, W. (2018). Essays on market-based provision of local public services. PhD dissertation, University of California, Irvine. https://escholarship.org/uc/item/78v5m48r. Accessed 10 Jan 2019.
Community Associations Institute. (2016). National and state statistical review for 2016. Falls Church: Community Associations Institute. https://www.caionline.org/AboutCommunityAssociations/Statistical%20Information/2016StatsReviewFBWeb.pdf. Accessed 10 Jan 2019.
Dilger, R. (1991). Residential community associations: issues, impacts, and relevance for local government. State and Local Government Review, 23(1), 17–23.
Dilger, R. (1992). Neighborhood politics: Residential community associations in American governance. New York: New York University Press.
Feng, X., & Humphreys, B. (2018). Assessing the economic impact of sports facilities on residential property values: a spatial hedonic approach. Journal of Sports Economics, 19(2), 188–210.
Foldvary, F. (1994). Public goods and private communities. Brookfield: Edward Elgar.
Hall, J. (2017). Does school district and municipality border congruence matter? Urban Studies, 54(7), 1601–1618.
Helsley, R., & Strange, W. (1998). Private government. Journal of Public Economics, 69(2), 281–304.
Hopkins, E. (2016). The impact of community associations on residential property values. Housing and Society, 43(3), 157–167.
Humphreys, B. R., & Nowak, A. (2017). Professional sports facilities, teams and property values: evidence from NBA team departures. Regional Science and Urban Economics, 66(1), 39–51.
Ignacio, L. B., & Fuego, J. H. (2017). Rights and fights: the role of homeowners association (HOA) as compared to local government of gated community. International Journal of Real Estate Studies, 11(1), 11–27.
LaCour-Little, M., & Malpezzi, S. (2009). Gated streets and house prices. Journal of Housing Research, 18(1), 19–43.
Langbein, L., & Spotswood-Bright, K. (2004). Efficiency, accountability, and private government: the impact of residential community associations on residential property values. Social Science Quarterly, 85(3), 640–659.
Makovi, M. (2018). Cookie cutter covenants: Regulation-induced homogeneity of homeowners associations. Texas Tech University, mimeo. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3194419. Accessed 10 Jan 2019.
Meltzer, R., & Cheung, R. (2014). How are homeowners associations capitalized into property values? Regional Science and Urban Economics, 46(1), 93–102.
Nelson, R. (2009). The puzzle of local double taxation: why do private community associations exist? The Independent Review, 13(3), 345–365.
Nelson, R. (2011). Homeowners associations in historical perspective. Public Administration Review, 71(4), 546–549.
Nowak, A., & Sayago-Gomez, J. (2018). Homeowner preferences after September 11th, a microdata approach. Regional Science and Urban Economics, 70(2), 330–351.
Pompe, J. (2008). The effect of a gated community on property and beach amenity valuation. Land Economics, 84(3), 423–433.
Scheller, D. (2015). Neighborhood governments and their role in property values. Urban Affairs Review, 51(2), 290–309.
Scheller, D. S. (2017). Neighborhood racial composition, public goods provision, and homeowners associations: bridging the literatures and future directions for research. Journal of Real Estate Literature, 25(2), 283–309.
Shultz, C., Hall, J., & Strager, M. (2015). Production of wind energy and agricultural land values: evidence from Pennsylvania. Oil, Gas, & Energy Quarterly, 64(2), 267–274.
Spartanburg Association of Realtors. (2005). Spartanburg County South Carolina Multiple Listing Service dataset [electronic file]. Spartanburg Association of Realtors, Spartanburg SC.
Sterk, S. (1997). Minority protection in residential private governments. Boston University Law Review, 77, 273–341.
Stumpf, E. (2018). What roll should government play in regulating the growth in the number of homeowners associations in Sacramento County? Master’s thesis, California State University, Sacramento. https://www.csus.edu/ppa/thesis-project/bank/2018/Stumpf.pdf. Accessed 10 Jan 2019.
Tullock, G. (1970). Private wants, public means: An economic analysis of the desirable scope of government. New York: Basic Books.
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
About this article
Cite this article
Grace, K., Hall, J.C. The Value of Residential Community Associations: Evidence from South Carolina. Int Adv Econ Res 25, 121–129 (2019). https://doi.org/10.1007/s11294-019-09723-w
- Residential community associations
- Homeowners associations