Volume 6 | Issue 1 | 2019 | 42-50
Available online at
www.housing-critical.com
http://dx.doi.org/10.13060/23362839.2019.6.1.455
44
Non-payment of fees or fines can result in liens sometimes leading to loss of the property in
foreclosure proceedings and longer term credit issues for the owner (McCabe 2005; Stitzer
2013). One builder included prohibition of criticism of the builder or homeowners association
in its covenants until exposed by a newspaper reporter. The practice was abandoned in
subsequent contracts but continued in neighbourhoods already built (Casey 2003).
Homeowners’ association boards and the architectural committees appointed by the boards
usually have the power to interpret and change the rules. Disputes abound and litigation is not
unusual (McKenzie 2006; Thomas 2016). An internet search of any topic with homeowner
association in the text will result in a list of advertising by law firms. Even minor disputes
occasionally escalate to violence, rarely but importantly including homicides (Staropoli 2003).
That homeowners associations protect property values was assumed in various court decisions,
Federal Housing Administration and other publications as well as by land developers
(McKenzie 1994) but the validity of the assumption has not been well researched. Researchers
have focused on the differences in one-time sales prices between homeowners associations and
other neighbourhoods, not how much the prices change in time. In a working paper published
online Clarke (2017) reviewed several studies that estimated that home prices in homeowners
association neighbourhoods were 0 to 5 percent higher than in non- homeowners association
neighbourhoods prior to the housing price bubble that collapsed in 2009-2012. One of the
studies based on 1992-2001 sales in St. Louis County, MO found no net effect of homeowners
associations on prices when controlling statistically for other factors. Subsets of
neighbourhoods had higher prices in relation to homeowners associations and others had lower
prices depending on the homogeneity of houses in the neighbourhoods. When houses looked
similar in design, the prices in homeowners associations were lower, but when the houses had
a variety of designs, the prices in homeowners associations were higher (Groves 2008).
More recently, Angjellari-Dajci, et al. (2015) analysed prices of homes sold in Duval County
Florida (Jacksonville and its suburbs) during 2002-2013 in relation to a variety of home and
neighbourhood characteristics including whether the home was in a homeowners association.
They concluded that, other things being equal, homes in homeowner associations commanded
higher prices. A study of sales prices in Richardson Texas, an adjacent suburb of Dallas, in
2007-2009 during the financial crisis, found lower sales prices of properties in homeowners’
association neighbourhoods (Ayers 2011). In the city of Dallas, housing prices were higher in
homeowners’ association neighbourhoods in 2004, prior to the crash in prices (Diaz et al.,
2008).
The correlation of homeowners’ association membership with sales price at a given time does
not address the question of whether or not homeowners’ association rule enforcement
influences the change in price from the time the house was bought until it was sold. Meltzer
and Cheung (2014) studied home prices in all Florida homeowners associations and found that
price premiums were highest for new homeowners associations but lower the older the
homeowner association. This suggests that the premium is associated more with the newness
of the house than its location in a homeowner association. Higher house prices associated with
homeowners association neighbourhoods could also occur because the developers placed their
developments in more desirable locations or included aesthetic or other features desirable to
potential buyers that may not be adequately controlled statistically in the mentioned studies.