HOAs are really good, actually

They’re always strictly better than local governments

It is very common to criticize HOAs. Nobody likes them. They’re regarded as the province of insufferable busybodies, meddling in the most piddling matters of exterior decorating. This may be so. But is there any criticism of HOAs which does not sweep up local governments with greater force? Can there be any solution more perfect than that which everyone agrees to?

We are faced with collective action problems, for which we turn to government. To name but a few examples, local infrastructure suffers from free-rider problems, where, since fees for usage are too expensive to charge, everyone wishes to pass the buck for paying onto the next person; people use of their property may impose costs upon their neighbors, perhaps due to pollution, hazards, loose animals, or ugly aesthetics; and we may want to organize things like fireworks, where the benefits fall without discrimination on everyone. Without government to regulate, we would not be able to get to the optimal amount of positive or negative externalities. Suppose property owners recognize this, and agree to bind themselves. They will abridge some of their rights over their property, so that others will too. They might agree not to burn leaves in their yard, so long as everyone else does not; they will pay for the upkeep of the roads by their, so long as everyone else pitches in too. They agree to make decisions on democratic lines through the organization. Is there anyone among us who would say that this is not something you should be allowed to do?

Our country was founded on the belief that government requires the consent of the governed. The most famous passage of the Declaration of Independence frankly states, “…That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed…”. It is inspired by the writing of John Locke, who wrote “Men being, as has been said, by Nature, all free, equal and independent, no one can be put out of this Estate, and subjected to the Political Power of another, without his own Consent. (Locke, Two Treatises of Government, Ch. 4 p. 95) Decisions in democracies are hardly ever unanimous, and to get the consent of the governed it will suffice to have a sufficiently large majority of the people living there. It would seem strictly better for all people to agree to the government, rather than merely some of the people. 

 Some will object to an HOA on the grounds that moving there is not a free choice; everyone must have somewhere to live, and your choices in an area may be limited. Would these critics apply the same reasoning to immigrants, however? The law of the governments in the United States are still binding on immigrants, even though the restrictions on what country you live in are far greater than that of different townships. And why restrict the analysis to merely immigrants? Do newborns consent to the government through existing? Whatever restrictions there are on your ability to purchase a house, they are far less than the restrictions on the country you live in. Condemning HOAs, while exempting local governments, is an isolated demand for rigor. 

An HOA is superior in its organization to local government. Almost all HOAs are instituted by the developer and agreed to by everyone who wishes to move there, so as to minimize transactions cost and the problems of free-riding mentioned above. Unlike local government, it wants to maximize the total value of the property, so it will not restrict the building of housing below what is optimal. On the contrary, it will restrain itself to providing the amenities and aesthetic preferences which people actually want. According to this study, people are willing to pay 13,000 dollars, or 4% more, to be in an otherwise identical property which is in an HOA. People have a great deal of choice in the housing market, and can choose non-HOA properties, or HOAs with different attributes, for every labor market in America. People simply prefer the HOAs. Nor is the charge that consumers are unaware of the behavior of HOAs until after they move in with any merit. Purchasing a home is one of the biggest decisions in a person’s life. It is not undertaken carelessly or frivolously. To the extent that people wish to know, they can choose to know.

The issue of HOAs teases out the difference between what I see as reasoned libertarians, and temperamental libertarians. Autonomy is valueless if you cannot agree to abrogate it — what good is a right to your body, if you cannot allow someone to cut you for surgery? What good is a right to property, if you cannot commit yourself to paying for anything in the future? A reasoned libertarianism allows people to do whatever they voluntarily agree to, even if we don’t like it, or wouldn’t choose to do it ourselves. By contrast, temperamental libertarianism is a reflexive opposition to authority of any kind, even if fairly earned. It opposes not coercion, but anyone being allowed to have power at all, and is a knee-jerk reaction to the forms of power. 

I believe that people, when faced with a spectrum of options, will always choose the one they believe will make them best off. This does not always mean that they are right; but they are more likely to be right about their specific wants than anyone else could be. This includes even things you may dislike, such as homeowner’s associations. Because they are voluntary, they should be allowed, just as we allow any other sort of voluntary organization.