Quote:

I find it amusing that HOAs justify their rules on the basis of protecting resale value, when suburban real-estate doesn't tend to appreciate much, if at all. If there's always brand new construction around the corner, "used" houses fall in value just like used cars.


I think you may be overgeneralizing "suburban real-estate," and at the same time overstating the depreciation of used houses. The one part of your analogy that holds true is the initial drop in value when the house goes from "new" to "used." There's a huge price premium in many cases for new homes with that "new home smell," and anyone who buys one and has to turn around and sell a few months later probably gets killed. But, once that happens, I don't know how much depreciation is happening in most markets. In most suburbs, you have urban sprawl sending people away from the city, but they also want to be close enough to the city to either work there or play there, so they settle down in the middle. There's only so much middle in a lot of cities, so suburban real estate often holds its value or appreciates.

Also, there are a lot of suburban areas that don't necessarily have new construction all over the place, and when they do, the new construction is often 125% - 150% above comparable homes that are only 10-15 years old. I think this huge price difference keeps the values of existing construction from falling too much.

I'd also be willing to bet that the used homes that *are* appreciating in value by virtue of being in desirable areas are the ones more likely to be covered by HOAs.

Finally, even if every real estate market in the country goes to hell and every home in America depreciates, there will still be homes that depreciate less. One can "protect resale value" and still end up losing money, just not as much as the other guy who didn't take steps to protect resale value.

Again, I don't personally favor HOAs, but I understand why they work, and understand why people might want some protection against a bad neighbor.
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- Tony C
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