Gated Community Premiums and Amenity Differentials in Residential Subdivisions

We use hedonic models to examine price differences between single-family homes in gated communities and a matched sample in non-gated communities in Shelby County, Tennessee. Controlling for idiosyncratic attributes, we find that homes in gated communities carry significant price premiums relative to similar homes in non-gated communities. Price premiums are highest for medium-size gated communities. Premiums were also evident in higher priced gated communities before 2008 but vanished after the financial crisis. Gated communities offer homeowners additional attributes but usually have higher infrastructure and service costs. Thus price premiums result from net gated community benefits.