Is homeowner association capitalized

"margin-bottom:.0001pt;line-height:normal;">Private homeowners

associations (HOAs) levy binding fees and provide local services to

members. Both should be capitalized into the value of member

properties, but the net effect is ambiguous. We construct the most

comprehensive, longitudinal database to date on HOAs for Florida

and estimate the impact of HOAs on property values. We find that

properties in HOAs sell at a premium just under 5%. The premium is

strongest immediately following HOA formation and declines over

time, suggesting quick capitalization of HOA benefits. Properties

in larger HOAs sell for less, and this is particularly true for

properties in the biggest HOAs. Finally, properties located

immediately outside of an HOA sell at a premium relative to other

non-HOA properties, and this premium marginally decreases

(increases) in the size (frequency) of neighboring HOAs.