Tax Rates Driving people out of Lakewood!?

[Jim O'Bryan]

Someone please correct me if I am wrong, but I believe that unlike the income tax, the school bonds and levy's do not increase with the property value, they are capped, that is why they have to come ask for more all the time. Does anyone know if this is a state issue or federal?

Lakewood is a great place, but I think we need to keep the problems up in front, nothing gets done without that.

Ryan


They are capped as spelled out in State House Bill 920.


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[Jeff Endress]

Ryan

Also, bonds are for a stated amount. The amount to be raised is translated into the amount of property tax needed to pay off those bonds over their term. It will never raise more than the original stated amount. When the bonds are paid off, the tax needed to finance their repayment dissappears.

Levies, on the other hand, can be continuing or for a specific term. The total amount raised by either is wholly dependent on the term over which it is collected. 920 has the effect of removing additional taxes as a result of appreciation. As the value appreciates, the effective rate decreases so that the cap is not exceeded.

Jeff

[stephen davis]

Someone please correct me if I am wrong, but I believe that unlike the income tax, the school bonds and levy's do not increase with the property value, they are capped, that is why they have to come ask for more all the time. Does anyone know if this is a state issue or federal?

This is a State of Ohio issue. Jim is right about Ohio House Bill 920. I did a quick Google. I don't vouch for politics of the source, but I found this FAQ to be pretty accurate.

http://chuh.net/lwv/s-a/OhioFunding-JanResseger.html

I don't think they mention that city and county governments always get increases based on increasing, or inflating, housing values. You don't vote on it, they just get it after periodic reappraisal.

As a result of HB 920, school districts in Ohio must go to the polls to increase revenue because they don't get the periodic bump like the city or the county.

If you noticed your taxes going up, and not as a result of a school levy or bond issue, it is a result of housing reappraisal, or another agency's tax issue. The school is not getting any more dollars as a result.

I'm in a hurry to get somewhere. I hope that all makes sense.

[Ryan Salo]

Thanks guys I appreciate all of your information. This is a cool site, where else can post a question and get 3 accurate reponses in less than an hour!

[Kate McCarthy]

Lakewood is a great place, but I think we need to keep the problems up in front, nothing gets done without that.

I totally agree but sometimes these threads tend to focus too much on the negative.

Avon just passed a school levy. I'm very happy for them. But as time goes on these communities will face similar crunches as Lakewood and the so called "value" of living there will diminish over time.

My husband and I ran into a friend at Costco who grew up in Lakewood and now lives in Avon Lake (as a side note....could they please put a Costco in what will soon be the nearly empty Rockport shopping center?). We found our conversation with her baffling. She said she and her husband frequently come into Lakewood because there's nothing to do in Avon Lake. She also said her kids complain there is nothing to do in Avon Lake so they frequently need to drive elsewhere which worries her because they are young inexperienced drivers. She also said her children intend to move to Lakewood as soon as they finish high school because, again, there's nothing to do in Avon Lake. Then she topped it all off and said they moved to Avon Lake because it's a good place for parents because you don't have to worry about your kids.

She said she often drives down the street she grew up on and thought it looked like it's going downhill. I didn't have the heart to tell her it was like that when she lived there and it really hasn't changed very much. Her family didn't have a lot of money and it was the best they could afford. There's probably a family just like her family living in that house also doing the best they can.

Over the years I'm surprised at how many people have assumed that we would leave Lakewood either as soon as we have kids, or when our kids start school, or when they enter middle school, and now it's "oh you'll move when your kids start high school." They have bought the propaganda they if you have options, you must exercise those options and move into the box on the cul-de-sac just like they did. And they spend a lot of energy defending that choice.

The value I have living in Lakewood is that I love living here and my children love living here. And I agree that one shouldn't put one's head in the sand and ignore the problems around them. But have you ever thought that's exactly what many of those people who move out to the cul-de-sac are doing? They would rather pretend that the simple act of moving makes all the bad stuff go away.

[Bill Call]

My point? Anyone blaming tax rates alone for an exodus is throwing out a red herring. It’s a bogeyman. But, don’t trust me. Take a look at housing. Figure out what would be an acceptable house with a lesser tax rate. Run the numbers, including mortgage payments, transportation, etc. If you want to get really artsy, factor in the net loss of return on your down payment vs. projected real estate appreciation. What you’ll see is that despite the scary tax rate, Lakewood housing is still one of the best bangs for the buck around.
Jeff

Any analysis of the effect of property tax rates on behavior has to take into affect the income of the average resident. Your average Woodie is not going to go from his nice house on Belle to a McMansion in Avon Lake.

The following table shows the average property tax bill as a percentage of income:

City AGI Property Average Property As % of
Tax rate Value Tax Income
Lakewood 43405 0.0248 126000 3124.8 7.20%
Avon 69864 0.0166 217000 3602.2 5.16%
North R. 47243 0.0165 142000 2343 4.96%
Parma 39714 0.0186 123000 2287.8 5.76%
Stronsville 62085 0.0178 191000 3399.8 5.48%
Rockyiver 72467 0.0205 189000 3874.5 5.35%
Westlake 88235 0.0183 211000 3861.3 4.38%

As you can see the average Lakewood resident pays substantially more in property taxes as a percentage of income than residents of other communities.

Those who choose to live in Lorain or Medina or Lake County can also save a substantial amount of money on sales taxes. The Cuyahoga County sales tax rate is about 17% higher than the sales tax rate in Lorain County.

As to your point about commute time you are forgetting one minor detail. As people leave high tax areas they take jobs with them. The economic center of gravity is moving away from high taxed Cuyahoga County. As that trend continues it will be the residents of cities like Lakewood who will face higher commuting costs.

As to your point about real estate values: Values in Lakewood are stronger than you would expect when compared to other communities in Cuyahoga County but weaker than you would expect compared to communities outside of Cuyahoga County.

The bottom line? The continuing decline in Lakewood's population is part of the general trend of people leaving high taxed Cuyahoga County. The fact that Lakewood has some of the highest taxes in the County leads me to conclude that Lakewood's population decline will accelerate at an accelerating rate. That continuing decline will ultimately have a detrimental affect on property values.

If current trends continue we will be faced with the question: What is the taxable value of a house that cannot be rented and cannot be sold?

[Dee Martinez]

Maybe its because of the 20 posts on this topic, only 1 (now 2) were by women.
Deciding where to live is NOT something you do with a calculator and spreadsheet.
Its 90 percent an emotional decision. You buy the house and the neighborhood you feel good about.

For some people it's the tree lined streets and romance of Lakewood's older houses.
For others, its the closets, kitchens, extra baths, and big garages of the newer suburbs.
You can't argue what 'feels right", even with the best statistics.

Once youve made the choice, you MAKE the numbers work.

[Ryan Salo]

Deciding where to live is NOT something you do with a calculator and spreadsheet.
Its 90 percent an emotional decision.

Maybe that is why foreclosures are at an all time high

[Jeff Endress]

As you can see the average Lakewood resident pays substantially more in property taxes as a percentage of income than residents of other communities

Which, in and of itself is meaningless unless there is also an indication of the average incomes for the comparison. It also does not differentiate between owners vs renters, and whether as a group there is any income differential.

As to your point about commute time you are forgetting one minor detail. As people leave high tax areas they take jobs with them. The economic center of gravity is moving away from high taxed Cuyahoga County. As that trend continues it will be the residents of cities like Lakewood who will face higher commuting costs

Bill, if that it so, then why is there any rush hour on 90? Why were additional lanes added? Seen the northbound traffic on 71 every morning from 6-8? I also didn't factor into the equation the value of time spent in the commute....an extra 5-7 hours per week.

The bottom line? The continuing decline in Lakewood's population is part of the general trend of people leaving high taxed Cuyahoga County. The fact that Lakewood has some of the highest taxes in the County leads me to conclude that Lakewood's population decline will accelerate at an accelerating rate. That continuing decline will ultimately have a detrimental affect on property values

If this is in fact true, as the prior discussion demonstrated, those wishing to secure OVERALL savings in housing costs would NOT be moving to Avon, Medina, they'd be moving into Cleveland where the tax rates, combined with the cheaper real estate would yield OVERALL savings. You will never convince me that people are fleeing the tax bite in Lakewood to incur an OVERALL greater housing costs elsewhere. It's counterintuitive. MAybe some who can afford the option do so for myriad reasons. But they're electing to use ecess disposable income on greater OVERALL housing expense. But certainly the average Joe in Lakewood, struggling to make ends meet isn't viewing the out burbs as a sound economic decision.

Jeff

[Stan Austin]

Dee--- Thanks for your refreshing, alternative viewpoint.

Stan

[Bryan Schwegler]

Maybe its because of the 20 posts on this topic, only 1 (now 2) were by women.
Deciding where to live is NOT something you do with a calculator and spreadsheet.
Its 90 percent an emotional decision. You buy the house and the neighborhood you feel good about.

For some people it's the tree lined streets and romance of Lakewood's older houses.
For others, its the closets, kitchens, extra baths, and big garages of the newer suburbs.
You can't argue what 'feels right", even with the best statistics.

Once youve made the choice, you MAKE the numbers work.

I disagree partially. At work, everyone, and I mean everyone, I know who is house shopping take property taxes into account. They know where the high taxes are and they are purposely avoiding those areas.

Jeff is correct that there's more to consider over and above the base property tax rate but at least to these people I work with, it doesn't seem to matter.

For me, I understand where Jeff is coming from and is why I chose Lakewood despite the superficial higher level of property tax.

[Bret Callentine]

At work, everyone, and I mean everyone, I know who is house shopping take property taxes into account. They know where the high taxes are and they are purposely avoiding those areas.

I would suggest that when taxes count that highly, those people are looking more for an investment than for a home.

My wife and I chose Lakewood because of the style of house, size of house, and yes, even BECAUSE the lots are small and houses are close together. We want our neighbors close.

The taxes were almost a non factor. Sure we pay more for civil services, but my garbage is picked up in the driveway, the police never take more than a couple of minutes to respond, and in more than 10 years of living here, I've never been without power for more than 48 hours.

If you don't like lakewood, give me a call, I'll help you move.

[Jeff Endress]

If you don't like lakewood, give me a call, I'll help you move

Thanks Bret....I had forgotten the cost of moving in the computations, as well as the costs of selling a home (if you own). Like I said, even with the tax bite what you've got here is the gigest bang for your OVERALL housing dollar.

Jeff

[Bill Call]

I would suggest that when taxes count that highly, those people are looking more for an investment than for a home.

Most people need a mortgage to buy a house. When calculating your ability to pay the lender always takes into consideration the property taxes. The higher the taxes the less house you can afford.

[Dee Martinez]

I would suggest that when taxes count that highly, those people are looking more for an investment than for a home.

Most people need a mortgage to buy a house. When calculating your ability to pay the lender always takes into consideration the property taxes. The higher the taxes the less house you can afford.

And as its been pointed out, many low-tax cities are also high home priced so it kind of balances. Except in places like Shaker which are high taxes AND high prices.
But Shaker isnt a ghost town by a logn shot, so something else must be driving the decisions.