Discussions about housing affordability tend to focus on housing supply, local market conditions, income, and the regulatory environment. But when you step back from the abstract and consider a typical family’s economic bottom line, it’s apparent that local property and school taxes play an important — and underreported — role. Just as a rough, back-of-the-napkin illustration of their significance to the Average Joe’s pocket book, a full 33% of my total 2004 mortgage payments went towards local property and school taxes — a hefty chunk of change to be sure. Of course, you have to pay to play, so to speak, so one just has to factor taxes into their ability to cover their monthly note. And while homeowners certainly enjoy seeing the value of their property increase, this feeling is tempered when they realize how rising assessments result in increasing tax payments that cut noticeably into their monthly budget. Where local taxes really come into play is at the margin. For example, low-to-moderate income families may have purchased homes years ago when prices were affordable, but rising assessments in hot markets then push their tax payments sky high and jeopardize their ability to make ends meet. But even taking equity issues out of the equation, the increasing local tax bite in many parts of the country is an issue that impacts most homeowners. According to the Wall Street Journal, homeowners are starting to notice (link available only to subscribers), and they aren’t too pleased:
Read the whole thing. The article goes on to discuss the varying methods that assessors use to value property and the difficulty of achieving uniform assessments. It’s a bit reminiscent of watching sausage get made. It’s nice to see, though, that citizens are stepping up and making their complaints heard. They’re really caught between a rock and a hard place, though, as the total tax bite is composed of two factors — assessments and tax rates — either or both of which can be tweaked by local policymakers when the well runs dry.