The Private Government Next Door

"There are 370,000 homeowners associations in America. Nobody voted for a single one of them — and in 26 states, they can take your house."

When a private board can ban solar panels, veto an ADU, foreclose on a veteran's home over $800 in unpaid dues, and block affordable housing from being built nearby — is that still a neighborhood amenity, or is it a government without a constitution?

The headline number on a mortgage is the lie everyone agrees to tell. The real cost of homeownership in 2025 includes a second, parallel obligation that doesn't appear on a Zillow listing, doesn't get refinanced, isn't tax-deductible, and doesn't end when the mortgage is paid off. Every $100 a month in HOA dues quietly erases roughly $16,000 in mortgage purchasing power. Multiply by Miami's $835 median fee and the math collapses.

Forty-two percent of first-time buyers now purchase condos. Almost every condo carries mandatory fees. That is not a lifestyle preference — it is what entry-level housing supply now is. The condo became the affordable on-ramp, and the on-ramp came pre-fitted with a permanent monthly bill controlled by a private board the buyer has no realistic way to vet at closing.

Then came Surfside. The 2021 collapse triggered Florida's reserve mandates, which exposed how badly under-funded most condo associations had been for decades. Insurance premiums spiked. Special assessments arrived in five-figure increments. Fannie Mae began maintaining a blacklist of 5,000+ buildings where conventional financing is no longer available — making units in those buildings simultaneously unsellable and uninsurable. HOA-related foreclosures rose 50% between 2022 and 2025.

The condo affordability crisis is now a national story dressed as a Florida story. Reserve mandates are spreading. Insurance markets are tightening from coast to coast. The "starter condo" — the asset class an entire generation of first-time buyers was funneled into — is becoming the most fragile leg of the American housing ladder.

In Miami, the median HOA fee is $835/month — equivalent to 27% of a typical mortgage payment. Add it to the mortgage and most first-time buyers are immediately cost-burdened.

Public policy in the United States now has a private veto. Twenty-nine states have passed solar-access preemption laws limiting an HOA's ability to ban rooftop panels, but the quality of those laws is wildly uneven, the workarounds are creative, and twenty-one states still have no meaningful protection at all. EV charging is worse: only five states plus D.C. extend right-to-install protections to both owners and renters. Accessory dwelling units — the one zoning reform with bipartisan momentum — run headlong into CC&Rs almost everywhere outside California, where AB 670 voids HOA restrictions outright.

The pattern is the same across every category of housing supply. HOAs and aligned neighborhood groups routinely challenge upzoning, affordable housing developments, and missing-middle density in courtrooms and at planning commissions. The Arlington, Virginia Expanded Housing Options case — which paused 45 permitted units of housing across 2023–2025 — was a textbook example: a state housing reform stalled by private-law litigation funded out of homeowner dues.

The climate dimension is hiding in plain sight. The same private board that bans rooftop solar mandates a watered bluegrass lawn in the Mojave. The same CC&Rs that veto an ADU prohibit clotheslines in a state trying to lower per-household electricity demand. Public investment in clean energy and housing supply is meeting a privately authored ceiling — and that ceiling has lawyers.

None of this is by accident. The covenant regime was designed to be sticky. CC&Rs are written for permanence, amended only by supermajority vote, and enforced by boards whose members rotate but whose institutional preferences do not. Public reform is slow; private restriction is structural.

HOAs exercise functionally governmental power. They tax — through assessments. They legislate — through architectural and behavioral rules. They fine. They foreclose. And under American law, they are treated almost universally as private contracts, which means the constitutional protections that limit municipalities do not apply: no First Amendment, no due process, no equal protection. A board may do what a city council could not.

Captain Michael Clauer was deployed to Iraq when his Texas HOA auctioned his $300,000 home over an $800 unpaid balance. Sale price: $3,201. He returned to a foreclosure he had never been served. Larry Murphree, an Air Force veteran, was fined $100 a day over a small American flag in a flower pot. Mary Kunic, in Aurora, Colorado, faced a $5,311.50 judgment of which only $480 was actual dues — the remainder was attorney fees, paid in part by her own assessments. The HOA had effectively used Kunic's own contributions to fund the legal effort to take her home.

The genealogy is not incidental. The modern HOA descends directly from J.C. Nichols' racially restrictive covenant model, popularized in the 1920s and adopted nearly verbatim by the Federal Housing Administration in 1934. When the Supreme Court rendered race covenants legally unenforceable in Shelley v. Kraemer (1948), and the Fair Housing Act later restricted public discrimination, the architectural and behavioral covenant survived. The exclusionary mechanism shifted from race to ruleset — but the structural function of the covenant regime remained: to use private contract to do what public law had been forced to stop doing.

Colorado's 2022–2024 reform package — fine caps, foreclosure restrictions, mandatory pre-litigation negotiation, attorney-fee limits — is now the most consumer-protective HOA regime in the country. The international comparison is starker still: non-judicial HOA foreclosure over small debts is essentially unique to the United States. Canada, Germany, the United Kingdom, Australia, and Singapore all require court process before a home can be taken. The American exception is not a feature. It is a constitutional gap that the private contract now fills.

From $480 to Foreclosure