The Effect of Homeowner Association Lease Restrictions on Property Values. Evidence from South Florida

This paper analyzes the impact of short- and medium-term rental restrictions on residential property values using granular micro-level data from a multiple listing service in a South Florida town, paired with county- and country-level macroeconomic indicators. Our main findings challenge much of the existing literature, which suggests that short-term rentals, such as Airbnbs, increase property values. In contrast, we find that communities allowing Airbnb rentals experience lower home values. Additionally, unlike prior studies, this paper investigates the effects of restrictions on medium-term seasonal leases, which are particularly relevant in vacation destinations like South Florida. Our regressions suggest that prohibiting seasonal leases may signal an overly restrictive and overreaching HOA governance, affecting other areas of a community’s life, and thereby deterring prospective buyers and depressing home prices. These results are robust to alternative regression designs and provide evidence consistent with causality rather than mere correlation.