Accountability and Private Governments

5 Pages Posted: 20 Sep 2005  

Laura Langbein

American University - Department of Economics; American University - School of Public Affairs

Kim Spotswood-Bright

American University - School of Public Affairs

Abstract

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.

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

JEL Classification: D23, G12, L85

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: https://ssrn.com/abstract=801525

Laura Langbein (Contact Author)

American University - Department of Economics ( email )

4400 Massachusetts Avenue, N.W.
Washington, DC 20016-8029
United States

American University - School of Public Affairs ( email )

Washington, DC 20016
United States

Kim Spotswood-Bright

American University - School of Public Affairs ( email )

Washington, DC 20016
United States

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