Caudill, Steven

This empirical study examines the impact of a homeowners association (HOA) mandatory membership fee on residential real estate prices, a topic that has not been empirically addressed in the real estate literature. A mandatory membership fee is defined as an initiation fee charged by HOAs that grants homeowners country club access. Many studies have examined the impact of the presence of homeowners associations on price but only a few studies have examined the impact of homeowners associations on price by estimating the impact of homeowners association fees. This research expands the HOA literature by examining the specific HOA fee characteristics of a mandatory membership fee. In this analysis, hedonic price models (HPM) are used to estimate the impact of mandatory membership fee on price by analyzing 31,704 observations of single family home sales between 2018 and 2019 in Palm Beach County, Florida using data from a local multiple listing service. Specifically, Ordinary Least Squares (OLS) models using two dependent variables, sold price and natural log of sold price, with mandatory membership fee as the independent variable of interest are used to estimate the relationship between mandatory membership fee and sales price. By controlling for property, neighborhood, and market characteristics, the hypothesis I investigate states that the impact of the presence of a mandatory membership fee on sales price is negative.