Why Your Home Costs So Much

By Brandon Houskeeper, Policy Analyst
Washington Policy Center, January 2010

Policy Brief: How Government Officials Increase Home Prices
Get the full report here.

Summary
Policies that increase tax revenues and regulate the growth of communities have a direct impact on the cost of construction in our state.  Lawmakers use a variety of tools to control growth and manipulate revenues,  such as building,  utility and impact fees,  land use regulations and business taxes.  The increased costs affect businesses’ ability to remain competitive,  as well as the price that consumers must pay for the goods and services provided.
 
Key Findings:
1. In the construction industry policymakers specifically use permit fees,  impact fees,  land use regulations and direct taxes, all of which add directly and significantly to the cost of construction in our state.
2. Government policies added as much as 28%,  or $67,400, to the cost of a typical single family home in Olympia.  In the City of Vancouver the government-added cost to a typical home is approximately $54,000 or 25%,  and in Spokane it is about $38,000 or 21%.
3.  A recent performance audit by the Washington State Auditor’s office found that local officials sometimes imposed fees improperly,  collect too much in impact fees,  and identified several ways local officials could reduce costs and maximize benefits.
4.  Conservative estimates by industry sources concede that government officials add around 17% to the price of a typical home.

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