Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101023
Authors: 
Cheung, Ron
Cunningham, Chris
Meltzer, Rachel
Year of Publication: 
2013
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2013-18
Abstract: 
Experiences reveal that the monitoring costs of the foreclosure crisis may be nontrivial, and smaller governments may have more success at addressing potential negative externalities. One highly localized form of government is a homeowners association (HOA). HOAs could be well-suited for triaging foreclosures, as they may detect delinquencies and looming defaults through direct observation or missed dues. On the other hand, the reliance on dues may leave HOAs particularly vulnerable to members' foreclosure. We examine how property prices respond to homeowner distress and foreclosure within HOA communities in Florida. We combine data sets of HOAs, sales and aggregate loan delinquency, and foreclosures from 2000 through 2008. We find properties in HOAs are relatively less affected by more distressed neighbor homes compared with non-HOA properties, but only when considering less severe delinquency rates. We also find that negative price effects from higher delinquency exposure rates are ameliorated for properties in larger and newer HOAs.
Subjects: 
associations
foreclosures
delinquency
house prices
JEL: 
R00
R21
R31
Document Type: 
Working Paper

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