Monday, August 16, 2010

Highspire Borough rental inspection ordinance 582; Real estate values threatened.

As I wrote earlier, Highspire Borough has scheduled a vote on a rental inspection ordinance that will require the payment of annual fees to the Borough and the inspection of each rental unit every three years.

As of 2000, roughly 44% of the properties in Highspire were rental units. If the Borough enacts this ordinance, they will decrease the value of 44% of the real estate in the Borough. Real estate, especially investment real estate, derives its value from the net income it produces. As costs increase, value decreases. It is fair to say that if those 44% of properties targetted by the ordinance decrease in value, the other 56% will not exactly increase.

Ordinances such as Highspire's became widespread across Pennsylvania during the past decade and a half because municipal officials bought into the myth that real estate values "always go up" no matter how much that real estate is hampered by municipal interference and regulations. We are slowly finding out how much of a mistake those officials have made as real estate values stagnate while inspection ordinances fail to achieve their stated purpose.

previous - The failure of Reading's inspection ordinance.
update - Harrisburg's failed inspection program.

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