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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GraceZ who wrote (8951)2/17/2003 8:47:47 PM
From: Elroy JetsonRead Replies (2) of 306849
 
Which leads me to believe what Elroy said about higher taxes and development fees reducing prices not raising them.

Development fees do not affect the final sales price of the home one way or the other - but they do reduce the value of land used to build homes. The home price is determined by income / wealth available in a given area to buy homes. The uncanny exact match between income (GDP) and home prices tells you development fees don't factor in. In theory development fees could increase the price of a home if they exceeded the value of the land. But there is no practical example of this that I'm aware of.

On-going taxes, such as real estate valuation taxes, do affect the price of a home. These taxes cause a reduction in home value as they are increased. This type of tax can make a property less desirable, unless the taxes provide equal off-setting amenities for the property. Taxes alone are a disadvantage like being located in a flood zone, or next to a smoking factory.

Some home builder and Realtor lobbying groups would have us believe the fantastic idea that both development fees and annual valuation taxes have the mysterious and magical effect of increasing home prices. Just imagine if this fantasy were true - homeowners could push up the value of their homes merely by voting in new taxes!
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