The Effect of Development Impact Fees on Housing Values

This paper examines the effects of impact fees on housing prices using data from 46,420 properties in 63 Texas cities, 38 of which impose an impact fee. After controlling for self-selection of the imposition of the impact fee, findings indicate that the prices for both 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 impact fees is associated with increased property values that benefit homeowners and increase the property tax base. A coincident negative impact is decreased home affordability.