We thought we should post this article again for those that may not have read or heard of Housing Affordability Threshold (HAT %). This is a very old concept dating back to the late 1800’s, where it was stated that a “man should not spend more than a week’s wages for his monthly housing costs”. The federal government increased it to 30% under their federal housing assistance program.
If you own your home, compare your payments for your mortgage, utilities and property taxes to your annual income. If all three are 30% or more of your annual income, then your home is deemed unaffordable for you. It does not mean you should move immediately, only that you will have less disposable income for the other “needs and wants” in life.
For the renters, you would add your monthly rent plus your utilities to determine your HAT %.
As you decide whether to vote or not vote for a property tax levy, always take into consideration your HAT %. For example, if the tax levy will cost you an extra $100 in property taxes each year and your HAT % is 25%, you will have to earn an additional $400 in income so that you will not to creep closer to the 30% unaffordability rate. [$100 / .25]
Here are the HAT% based on 2018 data. We are sure the percentages have only gone up since that time with the pandemic negatively impacting wages for most people. As tax revenues continue to slide for the various governmental political sub-division, there will be increased pressure to go back to the voters for additional property taxes for a variety of reasons.
If we continue on our path of ever-increasing property taxes, we will price seniors and those living on fixed incomes out of their homes that they have worked all their lives to achieve. Believe it, because it is happening right now.
National Statistics 52.8% Renters 29.3% Homeowners
Ohio Statistics 50.9% Renters 24.7% Homeowners
Northeast Ohio Statistics 51.4% Renters 25.6% Homeowners
Lake County Statistics 49.6% Renters 24.8% Homeowners