The Effect of Development Impact Fees on Housing Values

Abstract

This paper examines the effects of impact fees on housing prices using data from 46,420properties in 63 Texas cities, 38 of which impose an impact fee. After controlling forself-selection of the imposition of the impact fee, findings indicate that the prices forboth new and existing homes in areas with impact fees are 1.44% and 6.5% higher,respectively, compared to those in areas without impact fees. The imposition of impactfees is associated with increased property values that benefit homeowners and increasethe property tax base. A coincident negative impact is decreased home affordability.