The Impact of Increased Development Fees on Existing Housing: Evidence from South Carolina

Abstract

This paper investigates the impact of increased development fees in the residential housing market of York County, South Carolina. In July 2018, the Fort Mill school district, located within York County, increased new residential impact fees from $2,500 to $18,158. As the increased development fees only pertained to a single school district in the county, we consider the increase as a quasi-natural experiment and test for difference-in-differences in listing prices, closing price, and inventory after two separate increases development fees. The evidence suggests that increased development fees correspond with a decrease in asking and closing prices and an increase in available inventory in the period immediately after the increase. This result is consistent with the capitalization of expected future tax liabilities in the prices of existing residential properties

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Sean Brunson
PhD Candidate Finance

My research interests include real estate, home prices, and mortgages.