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The Effect of Impact Fees on the Price of New Single-family Housing

Department of Urban Design and Planning, University of Washington, Seattle, Washington, USA, shishir{at}u.washington.edu

Paul Waddell

Evans School of Public Affairs and in the Department of Urban Design and Urban Planning, University of Washington, Seattle, Washington, USA, pwaddell{at}u.washington.edu

Hilda Blanco

Department of Urban Design and Planning, University of Washington, Seattle, Washington, USA, hblareco{at}u.washiregtore.edu

This paper provides new evidence on the effects of impact fees on housing prices, using an inventory of single-family housing sale transactions in the 38 cities and towns within King County, Washington, for the period 1991-2000. Although the effect of impact fees on housing prices has been examined previously, earlier studies have been limited by methodological deficiencies. This paper examines the effect of impact fees on new housing and their differential effect on housing price based on the quality of housing, and finds that the effect of impact fees on the price of new housing is quite significant and elastic, raising new home prices by about 166 per cent of the amount of the fee. The increase is 358 per cent for the higher-quality homes and is statistically insignificant for the lower-quality homes.

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