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Study Correlates Regulations with Increased Housing Prices

January 3, 2019

The James Madison Institute, a free-market think tank, has released a new policy study authored by Hilton Center Assistant Director Adam Millsap, DeVoe Moore Center Director Sam Staley and Vittorio Nastasi, a senior in economics at FSU.

The study analyzes the effects that impact fees and land-use regulations have on the price of houses in several southwestern Florida communities.

According to the study, housing rents and home prices in many areas of the nation, including Florida, have increased much faster than the cost of construction since the 1990s, squeezing the household budgets of middle- and lower-income families. The authors suggest that impact fees, land-use regulations and permitting delays increase the price of houses. The study further asserts that these increases are proportionally larger for smaller houses. A larger impact on smaller houses makes home ownership difficult for lower-income working families in these communities at a time when housing affordability is a major concern of government at all levels.

“Florida is on the verge of another housing affordability crisis, and local regulations are playing an important role in making the problem worse," said Staley. "Our research strongly suggests that workforce housing is being squeezed out by lengthy permitting delays and unwieldy permit fees in those areas that need it most. Impact fees were created by the state to fund infrastructure, but our research shows lower-income households suffer the most. Uncertain fees combined with a lack of transparency in the process are contributing to delayed housing development and higher costs, squeezing prices for those at the lower end of the affordability spectrum.”

“Housing prices will continue to rise in Florida unless supply keeps up with demand," Millsap added. "This means we need to build more, not less, but in many Florida communities zoning regulations like minimum lot sizes, height restrictions, and parking requirements get in the way.”

The full study may be accessed here.