When you think of local government, you might conjure up a Norman Rockwell-style painting of a small-town mayor and a collection of other humble public servants. Or you might picture a corrupt political machine ruled by men in smoke-filled rooms. But regardless of what form these local institutions take in our minds, most often people interpret “local government” to mean a public institution, whether or not it actually serves the public.
But not all local governments are public entities. Millions of Americans live in neighborhoods that have their own forms of local representation, taxation, and public service delivery. These private, quasi-governmental entities are called homeowners associations, or HOAs.
An HOA-governed residential area may consist of a few houses or it may be a vast empire consisting of thousands of households. Either way, anyone who buys property in an HOA's jurisdiction becomes a member of the association with all the rights and responsibilities that come with it. Perks of HOA membership include access to common property such as trash collection, well-paved driveways, and landscaped common areas. Members may pay dues and be subject to strict regulations that limit property rights. Even if the costs outweigh the perks, HOA members tend to be locked in unless they move out.
Nowhere are these small states more prevalent than in Florida: California has the most HOAs (50,000), and Florida has a much higher percentage of its population that are HOA residents: Just over one-third of Californians live in an HOA-managed community, and nearly 45% of Floridians live under the jurisdiction of one of the state's estimated 49,420 HOAs.
A new state law signed by Gov. Ron DeSantis last month is a long-awaited effort to protect individual property owners from power-crazed quasi-governments. The law limits the extent to which HOAs can regulate and punish individual household decisions. As The Guardian put it, the law is meant to “rein in the Karens.” HOAs can no longer set strict rules about parking, putting trash cans on the side of the road, or growing vegetable patches, and the rules they do set must be more transparent. Additionally, HOA officials will undergo mandatory training.
The introduction of the bill was likely prompted by a high-profile embezzlement case involving one Florida HOA board, but owners have long been unhappy with HOA rules.
The provisions of this law are sensible reforms that should be adopted in more parts of the United States. But they do little more than smooth out the rough edges of the HOA model, when the larger problem lies in the model itself. Pervasive HOA controls reinforce racial segregation, inflate housing costs, and deplete the commons.
If we want to rein in this private government, end the housing crisis, and finish the work of racial integration, it won't be enough to make some tweaks to HOA governance — we may need to destroy the privatized system of governance entirely.
HOAs were born out of the suburban housing boom of the late 1950s. The first recorded association was formed in Rossmoor, California, in 1959. The model spread quickly; by 1970, there were 10,000 HOAs across the country. By 2023, there are about 365,000, representing more than 75 million Americans living within their jurisdictions.
To understand why the HOA revolution in America is so harmful, we first need to understand why it was so appealing. In his book “Crack-Up Capitalism,” he writes: Historian Quinn Slobodian writes that gated communities (always governed by HOAs) are a form of “soft segregation” and an effort to create “small-scale alternative polities.”
Many market fundamentalists are attracted to the idea of the private sector as an alternative to local governments.
This form of “soft separation” has proven attractive to some prominent liberal intellectuals. It may seem counterintuitive that advocates of minimal government would support a form of government that allows busybodies to regulate the color of their neighbors' houses. But as Slobodian shows, many prominent market fundamentalists are attracted to the idea of a private sector alternative to local government.
Consider one of Slobodian's characters, Gordon Tullock, an economist and public choice theorist who spent much of his career at George Mason University. Tullock devoted a chapter of his book, The New Federalist, to describing the HOA in his then-current community of 250 homes in Sunshine Mountain Ridge, Arizona. In exchange for annual dues and residents' adherence to community rules, Tullock explains, the HOA paid for road maintenance, private fire protection, landscaping, trash collection, and private security to supplement the protection provided by the Pima County sheriff. The association also offered its residents “the usual privileges of citizens of a free state,” Tullock writes.
Sunshine Mountain Ridge residents can “file complaints with the board by attending regular meetings of the residents of our little community, circulating petitions, running for office, or organizing others to run for office as a kind of political party,” Tulloch wrote.
Tulloch praised the resulting quality of life: Sunshine Mountain Ridge is beautiful, offers high-quality services to its residents, and exercises outsized political power in county government, he wrote. He also praised the area's homogeneity: “People, by and large, seem to prefer living with people who are like themselves.”
If Sunshine Mountain Ridge residents were like Tulloch, he wrote, that was “definitely not the case” in the surrounding area, where “nearly a third of the population is Mexican.”Given that part of the appeal of the HOA model is its success in maintaining residential segregation, it's not at all surprising that an HOA boom began in the years after Jim Crow laws were abolished.
This explosive growth was driven, at least in part, by the market demand for the kind of exclusivity that Tulloch praised. A 2019 study by economists Wyatt Clark and Matthew Friedman found that home prices in HOAs are, on average, higher than non-HOA home prices in surrounding areas, and that this “HOA premium” is strongly correlated with the size of the neighborhood’s black population in 1960. The more black residents in a neighborhood became during the last decade of legalized and overt racial segregation, the larger the gap between non-HOA and HOA home prices became. One can infer that HOAs in these neighborhoods tend to be more exclusive because they are designed to exclude. Readers will not be surprised to learn that Clark and Friedman also found that HOA residents were more likely to be white or Asian than non-HOA residents.
As former U.S. Secretary of Labor Robert Reich once put it, the “exodus of the successful” to HOAs affects everyone else, and legal scholar Cheryl Cashin argues that HOAs erode the social contract, encouraging residents to think of themselves as property owners first and citizens second.
“As citizens become fragmented into homogenous private communities, they will become less connected to the larger polity and will increasingly resist government efforts to address problems that they do not consider to be 'their problems,'” Cashin wrote in 2001.
For example, as Cashin points out, HOA members may be particularly opposed to public taxation, especially local property taxes. After all, they already pay HOA dues that fund private infrastructure within their community, so why should they pay again to subsidize public infrastructure outside their neighborhood? (Cashin notes that some states, including New Jersey and Texas, have laws that allow HOA residents to deduct the cost of private infrastructure from their taxes.)
NIMBY HOAs contribute to the housing crisis and exacerbate inequality by acting as a bulwark against new housing supply.
Similarly, HOAs can and do use their political influence and zoning ordinances to block the construction of apartment complexes and affordable housing in and around their jurisdictions. America needs millions of homes to meet demand and ease upward pressure on housing prices, but many HOAs have rules that prohibit even small additions like accessory dwelling units, let alone large-scale developments like apartments. It's hard to estimate the extent to which HOAs have blocked housing construction in supply-constrained areas, but one thing is certain: NIMBY HOAs act as a bulwark against new housing supply, fueling the housing crisis and exacerbating inequality.
For HOA members, the inherent benefits of these associations can also become a burden. Many Americans who live in HOAs have faced steep fines for minor infractions, and some have been evicted for seemingly minor violations of neighborhood rules. For example, a Texas couple was sued for $250,000 by their HOA in 2022 for feeding ducks near their home. A new law in Florida seeks to stop these kinds of abuses.
But Florida’s reforms will do little to address the structural problems of the HOA model, which is not surprising given that Florida’s far-right state government is an indirect beneficiary of those ills. Florida’s evolution into an HOA republic likely contributed to its transformation from a swing state into a reactionary laboratory.
The growth of these small private governments has entrenched racial and class segregation, decentralized American public life, and worsened the material quality of life for millions of Americans—a problem far more pressing than HOA standards for lawn care.
Ned Reznikoff She is Policy Director for California YIMBY and co-leader of the Metropolitan Abundance Project.
