The Downside to Buying in a Gated Community

July 1, 2016

Homes in gated communities command a much higher price — nearly $30,000 on average — than other properties, according to a new study published by the American Real Estate Society. However, the added costs of upkeep for amenities may offset some of that premium.

Home buyers are likely willing to pay more for homes in a gated community because of perceived benefits such as greater privacy, homeowner's associations with tighter controls on maintenance and home design, and added security against crime. But the extra amenities a gated community offers may not be as desirable. The study found the presence of amenities such as clubhouses, community swimming pools, and tennis courts can actually reduce the sales price of a home in a gated community by about $19,500. 

"Additional maintenance costs associated with these amenities often outweigh their benefits, and it appears that while a gate has value, additional neighborhood amenities do not always provide additional value," notes Mark A. Sunderman, who conducted the study published by ARES in the Journal of Real Estate Research. "From the perspective of both the buyer and the seller, this information should help each to better price property. A good understanding of what adds value and what does not should help create increased marketability of gated homes."

Source: Florida Atlantic University