Municipal governments across the country are paying for increasingly expensive social services by jacking up building fees, cutting off the supply of entry-level homes and forcing upwardly-mobile working families to pay more to enter market. The Wall Street Journal reports:
View ArticleThe housing market has recovered, but sluggish entry-level construction is putting a squeeze on families that would like to buy their first home. A new report pins the blame on City Hall.
The culprit: Impact fees that builders have to pay municipalities when they get permits for new construction, says the report from Zelman & Associates, a housing research firm. These fees fund the local infrastructure needed to support a growing population—schools, transportation, environmental mitigation and utilities. […]
It’s a bigger issue at the entry level because builders face tighter margins to begin with. It is easier for them to pass along these fees on luxury homes that have fatter margins because the fees represent a smaller share of the sales price, and builders have focused heavily on the luxury market in recent years.