As we continue to “go down the rabbit hole” of real estate taxes, we thought it may be helpful to define “Housing Affordability”.
The Northeast Ohio Regional Impact and Outcomes group measures “housing affordability” as 30% of a household’s annual income. This is a generally accepted percentage on other websites I reviewed. There are three factors that they consider: (1) Rent or mortgage, (2) Utilities, and (3) Property taxes. Here is a copy of page 1 of their report that can be found on-line:
So how do we calculate if we are living in a house we can afford? It is easy math— Determine what you pay monthly for rent or your mortgage, utilities, and property taxes, add them all then divide by .3 and multiply by 12 to give you the annual income you must receive to be considered living in a house you can afford.
Example: Your mortgage is $1,000.00 per month.
Your utilities (electricity, gas, water) are $500.00 per month
Your property taxes are $500.00 per month
Your total monthly payments are $2,000.00 per month ($1,000 + $500 + $500)
Divide $2,000.00 by .3 = $6,666,66
Multiply $6,666.66 by 12 = $80,000.00
To check your math: $80,000 x .30 = $24,000 in annual expenses
Monthly expenses are $2,000 x 12 = $24,000.00 in annual expenses
In this example, a homeowner would need $80,000 in annual income to meet their “housing affordability” percentage. For someone that rents, they would only have two factors: (1) Monthly rent, and (2) Utilities. This is because the property taxes paid by the landlord are included in the monthly rental charge.
A 2012 study by the NEORIO group indicates that there are 24.8% of homeowners and 49.6% of renters in Lake County that are paying in excess of 30% of their annual income on housing. I have read another study done in 2014 by another group that reports almost 30% of homeowners and more than 50% of renters are living in un-affordable housing.
It is projected that by the year 2030, more than 1/3 of Lake County residents will be 60 years of older. So we are projecting that is problem is going to impact a greater percentage of Lake County residents as more an more of our citizens are living on fixed incomes.
We will say it again, and we will keep repeating it until our politicians start to understand this very serious problem: If we stay on our current path of increasing real estate taxes, we will start to price seniors and those living on fixed incomes out of their homes.
We have prepared the following report comparing real estate taxes paid to political sub-divisions for the three Concord Township taxing districts for an 11 year period – 2006 – 2017. Please note that there has been a 42.13% increase in real estate taxes for that period – it is not sustainable!
We plan on presenting to all Lake County residents, in the near future, a detailed report of the real estate taxes billed for all political sub-divisions and for all taxing districts for 2008 compared to 2018. It should be very enlightening.
Stay tuned…there is much more to come on this issue…..Also, we will be detailing for you the steps that you must take to file a “Complaint Against the Valuation of Real Property” with the County of Lake Board of Revision. (This is how you file to reduce your real estate taxes)