Measuring the Price Impact of Municipal Incorporation on Homeowner Associations

This paper investigates the impact of municipal formation, and subsequent change in land-use restrictions on existing deed-restricted subdivisions (DRSs) using a unique case in the suburbs of Saint Louis County: the city of Wildwood incorporated in 1995 even though a majority of houses were already in a homeowner association. Data was collected on single-family housing sales from 1990 through 2000 and on characteristics of 830 DRSs. Using a hedonic model, the surrounding 10 municipalities, and unincorporated area, results show a decline in DRS premiums after incorporation; however, the decline seems to have been concentrated in lots larger than 1 acre.