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Accountability and Private Governments

Laura Langbein

American University - Department of Economics

Kim Spotswood-Bright

American University - School of Public Affairs

Regulation, Vol. 28, No. 1, pp. 12-16, Spring 2005

It is commonly believed that residential community associations (RCAs)-a.k.a. homeowners associations and condominium associations - enhance the value of residents' properties. If RCAs provide a level of services with benefits equal to or exceeded by residents' willingness to pay for them, then property values should remain constant or increase. But the organizations may not provide an efficient level of services because of inadequate oversight by community residents. Instead, RCAs may adopt policies that reflect the preferences of community activists who have higher demands for services than the mean or median resident. In the most likely type of inefficient RCA, an increment in expenses for services reduces property values because the marginal purchaser gets less benefit out of the services than their cost. In that case, the excessive fee will be negatively capitalized into property values.

Number of Pages in PDF File: 5

Keywords: residential community associations, RCA, RCAs, RCA's, homeowners associations, condominium associations, property, property values

JEL Classification: D23, G12, L85

Accepted Paper Series

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Date posted: September 20, 2005  

Suggested Citation

Langbein, Laura and Spotswood-Bright, Kim, Accountability and Private Governments. Regulation, Vol. 28, No. 1, pp. 12-16, Spring 2005. Available at SSRN: http://ssrn.com/abstract=801525

Contact Information

Laura Langbein (Contact Author)
American University - Department of Economics ( email )
4400 Massachusetts Avenue, N.W.
Washington, DC 20016-8029
United States
Kim Spotswood-Bright
American University - School of Public Affairs ( email )
Washington, DC 20016
United States
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