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Efficiency, Accountability, and Private Government: The Impact of Residential Community Associations on Residential Property Values

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  • Laura Langbein
  • Kim Spotswood‐Bright

Abstract

Objective. This study evaluates the impact of residential community associations (RCAs) on RCA property values by testing competing theoretical expectations about the efficiency and accountability of RCAs with empirical evidence. Method. We use pooled data on 195 units in six RCAs in one city, regressing sales price on RCA fees, a proxy for the importance of professional management compared to community involvement, previous property values, and other variables. Results. We find that increases in RCA fees (and services) depress average property values over what they would be otherwise, and that professional management somewhat mitigates this effect by raising property values. Conclusion. RCAs with horizontal, community controls act as if they are governed by a high‐demand, volunteer, review group by producing and charging too much, while professional management (i.e., hierarchical control) slightly reduces the tendency of RCAs to produce and charge too much. RCAs may not be the model of efficiency that proponents of private governments expect.

Suggested Citation

  • Laura Langbein & Kim Spotswood‐Bright, 2004. "Efficiency, Accountability, and Private Government: The Impact of Residential Community Associations on Residential Property Values," Social Science Quarterly, Southwestern Social Science Association, vol. 85(3), pages 640-659, September.
    • Handle: RePEc:bla:socsci:v:85:y:2004:i:3:p:640-659
    DOI: 10.1111/j.0038-4941.2004.00237.x
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    References listed on IDEAS

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    1. Fred E. Foldvary, 1994. "Public Goods And Private Communities," Books, Edward Elgar Publishing, number 167, December.
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    Cited by:

    1. Jeremy R. Groves, 2008. "Finding the Missing Premium: An Explanation of Home Values within Residential Community Associations," Land Economics, University of Wisconsin Press, vol. 84(2), pages 188-208.
    2. Steve P. Fraser & Marcus T. Allen, 2016. "The Effect of Appurtenant Golf Memberships on Residential Real Estate Prices," International Real Estate Review, Global Social Science Institute, vol. 19(2), pages 249-264.
    3. Tahire Erman & Meliha Coşkun-Yιldar, 2007. "Emergent Local Initiative and the City: The Case of Neighbourhood Associations of the Better-off Classes in Post-1990 Urban Turkey," Urban Studies, Urban Studies Journal Limited, vol. 44(13), pages 2547-2566, December.
    4. William H. Rogers, 2006. "A Market for Institutions: Assessing the Impact of Restrictive Covenants on Housing," Land Economics, University of Wisconsin Press, vol. 82(4), pages 500-512.
    5. Kathleen Grace & Joshua C. Hall, 2019. "The Value of Residential Community Associations: Evidence from South Carolina," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 25(1), pages 121-129, February.

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