[tropo]

The developer wants to minimize risk. The homebuyers will choose what they prefer:

a. Without an HOA, every home is well-kept like a postcard. (possibly most desired, but unlikely to happen)

b. With an HOA, every home is well-kept like a postcard. (acceptable)

c. Without an HOA, some homes have a "redneck" or "ghetto" look. (undesirable)

d. With an HOA, every home has a "redneck" or "ghetto" look. (won't happen)

The only rational choice for the developer is "b". If they try for "a", they might only sell a few houses before somebody makes the place look threatening. That drives down the selling price for the nearby lots. The lower selling price may even increase the chance of having buyers who will also make a threatening-looking mess.

I wish it weren't so. I hate how all modern housing has HOAs. Without some very unlikely changes in the law, we're stuck with the situation.

[jessaustin]

You've explained why there are HOAs, and your explanation makes sense, but it doesn't address my point. GP was complaining that HOAs cause shit neighborhoods, which from a temporal perspective is unlikely. HOAs don't exist before homes get built. Cheap-ass, insufficiently-regulated property developers build shit neighborhoods (and, as you observe, often set up the HOAs that infest them). HOAs are merely the crabs in the bucket, pulling down neighbors who attempt to live better lives in the horrible suburban neighborhoods that already exist.