The Federal Reserve Bank has demonstrated a significant increase in housing costs, as shown by the Consumer Price Index for All Urban Consumers (CPI-U): Shelter, which measures the cost of renting or owner-occupied housing. Since November 1982, shelter costs have risen by 311.79 percent, while the prices of all other goods have increased by 189.77 percent.
One overlooked factor contributing to this disparity is government intervention, particularly impact fees imposed by local governments on new development projects. These fees are meant to cover the costs of providing services to new developments, but they end up burdening residents who are charged twice for infrastructure improvements through impact fees and property taxes.
Developers pass on the cost of impact fees to homebuyers, further inflating housing prices. This, along with excessive government regulations in real estate, adds significant costs to home purchases. Presidential candidates have proposed solutions to the affordable housing crisis, but they have not addressed the impact of government intervention on housing affordability.
Impact fees and regulatory costs in real estate push housing out of reach for many, especially low-income earners. Addressing these issues is crucial to tackling the root cause of the affordability crisis. Policymakers have the option to reform impact fees to a user fee model or eliminate them altogether to make homeownership more accessible and affordable.
Revising impact fees, along with other approaches to reduce the existing regulatory obstacles, could result in decreased expenses and potentially boost homeownership rates slightly.
The opinions presented in this piece are those of the writer and may not align with the perspectives of The Epoch Times.
