Growth
Low Cost Flight To Real Estate Heaven
July 31, 2005 
Like the bankrupt airlines, Idaho government keeps looking for more passengers (residents).
Just like the airlines, we have plenty of crowded flights (subdivisions) that don’t pay their way. Just like the airlines it’s good for the aircraft (housing) industry.
Never mind the comfortable flights we once knew in the form of great service, real meals, pillows and blankets have been replaced by cheap crackers, knees in the back of the seat and surly flight attendants who have lost their pensions.
Never mind the neighborhood has been replaced by the homeowners association, folks communicate with their city council through legal briefs, new homes are a source of tax revenue and each student means $8,000 in state money for the district.
Both the airlines and local government are facing financial woes because they think increased volume will offset bad decisions and the answer to all problems is to get BIGGER. The airlines charge fares so low they can’t make a profit and then offer frequent flyer miles so you can fly for FREE next time and the company can lose even more money.
The cities annexed land to beat their neighbors to potential tax revenues and in the process gave away everything to developers in hopes of future payoffs from the home owners. Meanwhile, demands for service outstripped revenues to pay for them. The big difference is government has a bottomless pit of money to dip into (increased taxes).
And the winner is….the real estate developers! They flock to Idaho where there are few impact fees and existing fees are paltry compared to places like California. They create demands for sewer, water, roads, schools, police, fire and all that goes with a civilized society.
Those demands are financed by YOU–the existing homeowner. That red hot housing market bumps the value of your home, forcing property taxes skyward. You benefit only if you sell.
IMPACT FEES CAN PREVENT A CRASH LANDING
The GUARDIAN received a letter from a repentant California developer who doesn’t want to see Idaho continue to makes deals with the Devil.
He favors Cal style impact fees which he says amount to an average of $50,000 per dwelling unit in San Diego County–a diverse mix of rich, military, illegal aliens, blue collar, and retirees. A single water meter can go for $20,000 to fund new filtration facilities and water mains needed to serve the growth.
Our born-again Idahoan explains:
“These ‘pay as you develop’ fees go hand in hand with the Proposition 13 law that went into effect years ago. The law limited taxes on residences to a nominal annual increase–regardless of value–until it was sold. The limit created a backdrop for cities and counties to go after individual development, not local taxpayers to fund services.”
No wonder so many Californians are flocking to Idaho and many are even buying homes sight unseen, speculating on the continued boom.
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Comments & Discussion
Comments are closed for this post.
Aug 8, 2005, 12:03 am
Having been involved in the real estate industry in various jobs over the last 35 years I am nevertheless astounded at the number of rental properties popping up here in the valley. While I understand that some people are moving from lackluster mutual funds and think that investment property will build amazing new wealth, I can’t help but believe that a fair number of these folks are going to meet the harsh reality that the rental market will shortly be oversaturated and that expected rents to cover mortgages or provide income will not be as forthcoming as their real estate advisors may have predicted.