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Housing-fee proposal lacks common sense

The fact that Orlando officials are considering adding a new housing fee as a solution to the housing-affordability crisis and are being encouraged to do so by the Orlando Sentinel Editorial Board must be disappointing to their high-school economics teachers.

Housing prices in Central Florida have risen during the past few years to the point where thousands of working and middle-class families can no longer afford to buy a home.

Orlando's proposed solution: another housing fee.

That's right. The city's solution to the housing-affordability crisis is a new fee that would make all construction even more costly and even less affordable.

This defies common sense.

In a nationwide study of factors influencing housing affordability, Dr. Edward Glaeser and Dr. Joseph Gyourko of the Harvard Institute for Economic Research summarized that anywhere in the country where housing prices significantly exceed the physical cost of construction, you are witnessing the impact of land-use regulation.

This makes sense. When new fees and ordinances are adopted that add costs and process burdens to land development, housing prices increase accordingly. Whenever costs rise, affordability plummets.

Orlando leaders should avoid looking to states such as California, where housing prices have risen astronomically due to the regulatory choices made by local governments.

The lesson to be learned from California's regulatory mistakes is that governments that increase fees and regulations in response to affordability concerns actually exacerbate affordability problems.

California economists familiar with their state's dysfunctional housing market have concluded that new regulatory burdens discourage production and further reduce supply, which drives prices even higher. These measures produce new waves of citizens who cannot afford to buy or build properties at these new price points.

If Orlando leaders genuinely desire to offer more than lip service to the issue of affordability, they must be willing to acknowledge the root causes of housing unaffordability: land-use regulation and the denial of requests for increased densities.

Imagine any market in America made so dysfunctional by regulation that entrepreneurs are unwilling to step up to produce a product for which they know there is a large demand. This is exactly what is occurring in Florida.

To address affordability in a meaningful fashion, officials must either permit the densities necessary to reduce the per-unit cost of land development or reduce the cumulative burden of government regulation.

Policies that increase the opportunity of all citizens to own and benefit from property ownership offer a better long-term solution to the affordability issue than expanded subsidies that can help only a select few.


Carol Saviak is the executive director of the Coalition for Property Rights ( www.proprights.com), an Orlando-based property-rights education and advocacy organization.

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