I am about to become a first-time homeowner, so I've done some thinking about HOAs. The house I'm buying is not part of a HOA, but having walked through some houses in similar situations as Doug's example, and thinking about how I'd feel if my own home's value declined, say, 25% because of a lousy neighbor, I have to say I now can see the case for their existence, though I'm personally willing to take the risks associated with not having one.

People in the US have been encouraged for many years now to buy more house than they need, and in many cases, more than they can afford, with the expectation that real estate is their best investment option. The sub-prime lending disaster is finally being recognized for what it is, but even outside of sub-prime borrowers, there are a lot of house poor Americans who have "bet the farm" on their house rising in value over time. In this situation, an HOA protects their investment to some extent.

I recognize that caveat emptor applies, and anyone who goes into massive amounts of debt expecting their home investment to be a "sure thing" deserves their fate. But with the situation being what it is, I don't see anything wrong with homeowners banding together to create some rules for their entire neighborhood, recognizing that they all want good resale value if they ever need to sell. As long as existing homeowners can opt out when new HOAs are established, I see no problem with them.