"Private governments,” such as homeowners associations and condominium cooperatives, provide all manner of collective consumption goods, from road maintenance, trash collection, and snow removal to transportation, policing, and medical care. These organizations were practically unheard of in 1960, but today some 54.6 million people in the United States live in various neighborhood associations.
That’s from my latest paper, What are Private Governments Worth? written with Amanda Agan. Despite the explosion of private governments, very little research has been done on measuring their value. Thus, Agan and I compare the value of homes within HOAs (home owner associations) with the value of homes outside of HOAs. 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.
For more on HOAs see The Voluntary City (which I edited) and especially Robert Nelson’s excellent new book from the Urban Institute, Private Neighborhoods And the Transformation of Local Government.