Recently, as I was walking back from petitioning, I approached a homeowner. I introduced myself and made my pitch. She looked at me and said, “Why should I help you? – What are you going to do about THAT?” – pointing to a new 6 story building right next to her house. Her house is a sprawling corner lot, with a handsome wood-frame home. She looked at me sternly as I tried to answer and asked, “How are you going to stop that?” I politely responded, “we cannot”.
Obviously, she was not happy with my response. I don’t blame her to be honest. Nonetheless, it is the truth, as much as it pains me to say so. However, her concerns reveal a much deeper and bigger issue in our community about “housing”. What does that mean? The answer depends on who you ask. For some, housing means being able to afford rent for an apartment in a reasonably safe neighborhood. For others, housing means being able to hold on to the house you purchased. How does one reconcile the two?
The term “affordable housing” is actually a misnomer, a proverbial urban myth. It cost the same amount of money to build an “affordable apartment” versus a “market rate” apartment. The difference is how property tax is applied. Ironically, when we ask for “affordable housing” in our community, we are making homeownership less affordable. “Subsidized housing” is a better term because through the 421-A, a state property tax abatement, homeowners are offsetting property tax for developers. New apartment buildings in our community DO NOT PAY property tax. Instead, our appraised property value increases to make up for the “subsidy” used to help finance those new buildings. This is important for homeowners to know, as we explore why our community is changing so rapidly and becoming less affordable.
Homeowners with large wood frame houses are in danger. As property tax becomes higher, it is harder and harder to afford maintaining these large houses. You need to invest at least 5 to 8 thousand dollars per year to maintain your home. If you are not spending on maintenance, you are likely not keeping up the “value” of your home (which is different than the value of your land).
When your home falls into disrepair, over time, the land your house sits on becomes more valuable than the house itself. The reason is simple. If your home is in disrepair, it is less likely to be purchased by another family or “end-user” because the cost of buying and repairing the home in disrepair is usually beyond the means of first-time home buyers, and banks will not offer loans to purchase a home that “won’t appraise”. This simply means, a bank will not provide a borrower a loan to pay more than what a “house in disrepair” is worth. This makes it much more likely those houses will be purchased by DEVELOPERS!