Student Corner: Can an HOA revitalize a neighborhood?

Common interest communities and homeowners associations (HOAs) – love them or leave them, they have become quite common. The Foundation for Community Association Research, which supports the Community Associations Institute, found that 61 percent of new housing built for sale is located within a community association. In 2018, one in four people (73.5 million) in the United States lived in an HOA community, and the trend is similar across North Carolina.[1] Management of “owners’ associations” is provided under North Carolina’s Planned Community Act (NCGS § 47F), which builds upon the similarly codified Uniform Condominium Act (NCGS § 47C).[2] Traditionally, the role of HOAs has been largely to manage upkeep, maintenance, and improvements in a community, but could they also act as an effective tool to help revitalize low-income neighborhoods? There seems to be a gap in the literature on this current issue. This blog hopes to elucidate why HOAs are effective at maintaining housing values for recently constructed communities, and then explore the benefits and potential challenges of using an HOA as a neighborhood revitalization tool. Effectiveness in New Communities To understand the effectiveness of HOAs, it may be necessary to explain their rise. HOAs were first instituted to maintain common areas and infrastructure, but larger HOAs now provide “enclaves of service[s]” which local municipalities may not be able to afford. Because of these services and amenities, Cheung and Meltzer explain that HOA properties tend to sell at higher values than comparable properties nearby. As a result, neighborhoods with HOA’s are associated with higher homeownership rates and higher [...]