Property tax value index by county

Are you getting enough bang for your buck? When it comes to paying property taxes, it’s not easy to tell.

SmartAsset analyzed this by comparing how good schools are, how safe the area is, and how high are the property taxes.

They analyzed all 3,000+ counties across the U.S. by a metric called “tax value index.”

Schools are ranked from 10 (the best) to 1 (the worst) according to an average of math and reading performance proficiencies in standardized tests, weighted by number of students. Counties that rate a 10 have schools in the top decile in the state.

Law enforcement is judged according to violent and property crime rates per 100,000 people. According to the FBI, violent crime includes murder, rape, robbery and aggravated assault. Property crime includes things like burglary, motor vehicle theft and arson.

The effective tax rates were derived from national census data: The median amount of tax paid divided by the median home value in each county.

To create the tax value index, the county school rankings have been divided by the total violent and property crime rates per 100,000 people in each county and then that number is divided by the average property tax amount paid per person per year to obtain a number representing public service value per tax dollar. We then multiplied that number by 1,000,000 to form the tax value index. Basically, the greater the number, the more residents get for their tax dollars.

We then ranked all counties with populations greater than 50,000 people to find the top 10 and the bottom 10.

For some comparison, the average US county, with a population of 92,840, charges a 1.13 percent property tax rate for $742.06 in property taxes per capita per year, has schools ranked at 5.53, and sees 101.3 violent crimes and 826.6 property crimes per 100,000 people yearly.

3 step pathway to stable homes

While many social programs help address specific problems for focused sets of people, they often fail to integrate with other programs addressing the myriad of problems people face.

In poverty, families often cannot secure affordable housing, they fall behind on rent, move frequently and uproot children during important developmental years in their lives. This insecurity can lead to homelessness, sickness, and long-term mental-health issues for parents and children alike.

So what can be done?

Ana Poblacion, of Children’s HealthWatch indicates that while individual state programs exist to ramp up housing production and provide tax credits and childcare subsidies, families and taxpayers need a more comprehensive strategy.

The organization recently released a report that outlines 3 tactics aimed at achieving long-term success in providing family stability with housing.

Existing policies need to work in concert to help families, the report suggests. When policies aren’t in sync, they can cause unintended consequences for families struggling to stay above water.

One example is that to maintain a childcare subsidy, parents must pay a childcare copayment, which can stress their budgets even with a sliding scale. Many families also experience the “cliff effect,” wherein an individual’s or family’s income goes up and results in the loss of the childcare subsidy — but the rise in wages is eclipsed by the lost benefit.

“Our policies should not be designed to create a trapdoor,” said Renee Boynton-Jarrett, MD, ScD, a BMC pediatrician and founder of the Vital Village Network, who moderated a panel discussion at the event.

The Boston Foundation-hosted Pathways to Stable Homes release event offered multiple-policy solutions for improving housing security and ensuring families have the resources to meet their basic needs.

HealthWatch conducted listening sessions with diverse stakeholders, followed by simulation modeling with a healthcare cost analysis. The resulting report, “Pathways to Stable Homes,” recommends three policies.

1. Expand childcare access. Expand affordable childcare access by eliminating the subsidy wait list, capping copay fees to no more than 7% of family income — the standard recommended by the Department of Health and Human Services — and eliminating the copay altogether for families with incomes below the federal poverty line (FPL).

2. Increase state matching of EITC. Increase the state match for the federal Earned Income Tax Credit (EITC) to 50% from the current level of 30%. The EITC is an effective way of supplementing the earnings of low-income working families and has been linked to improved infant and maternal health.

3. Create a rental arrears program to prevent eviction. Expand the state’s Residential Assistance for Families in Transition (RAFT) program to include a rental-arrears program to help vulnerable families avoid eviction if they fall on hard times or face emergency expenses.

Estimated outcomes and savings

The report outlines scenarios for two types of families living in four sample Massachusetts counties, which show how the policies could reduce or erase the gap between families’ incomes and their housing and childcare costs while also providing the state a hefty return on investment in avoided healthcare costs.

For a two-parent family of four with income of about $49,000 (or 200% of FPL), the research’s simulation shows that the proposed policies could erase the gap for a family in Worcester County and significantly narrow it in Suffolk County, which includes the high-rent market of Boston.

For the four sample counties together, the state would save an estimated $650,000 annually in avoidable healthcare costs. In the scenario of a single-parent family of three earning 130 percent of FPL, the potential savings amount to at least $1.4 million.

“This is because housing instability increases mothers’ odds of experiencing depressive symptoms, children’s odds of hospitalizations, and children’s and caregivers’ odds of being in fair or poor health,” Poblacion explained.

At the Boston Foundation event, State Representative Marjorie Decker spoke of growing up in poverty and has expressed support for the HealthWatch recommendations.

“We all need people to be fulfilling [families’] potential,” she said. “I think this report really highlights the need for a multi-pronged approach to not only help people survive, but thrive — and it’s doable.”

Vacant properties a drag on city budgets

Vacant and abandoned properties are a problem for local governments, businesses and individuals. Typically the reasons go beyond simply being a government spending, with macroeconomic and social issues lying at the center.

Vacancies can result from any number of reasons: a corporation moves a plant to another state; developers decide to build new blocks of homes on the city’s fringe; or gentrification forces up the rents in the area causing eviction in less-developed, more blighted areas.

Whatever the cause, this is a major problem, especially for local governments. Vacancy and abandonment are major drains on local budgets. They create no property tax — no one is there to pay it. They also lower surrounding property values — no one wants to live near downtrodden, dangerous areas. So property tax, often the main source of revenue for a municipality, decreases in both volume (fewer properties paying tax) and rate (lower taxable value in the property base).

By all accounts, vacant properties are a curse. Just ask anyone who lives next to a drug den, a boarded-up firetrap or a trash-filled lot. But abandonment often seems beyond the control of local officials, and it rarely incites a sense of urgency beyond the neighbors on the block where it occurs.

But the evidence shows that vacant properties are an expense that local governments simply cannot afford – and that the expense grows with every year a property remains vacant or abandoned. Such properties produce no or little property tax income, but they require plenty of time, attention, and money.

Crime

Vacant properties often become a breeding ground for crime, tying up an inordinate amount of police resources. The City of Richmond, VA conducted an analysis of citywide crime data from the mid-90s. Of all the economic and demographic variables tested, vacant/abandoned properties had the highest correlation to the incidence of crime.

Another study focusing on crime in abandoned buildings in Austin, Texas found that crime rates on blocks with open abandoned buildings were twice as high as rates on matched blocks without open buildings.

The survey also found that “41 percent of abandoned buildings could be entered without use of force; of these open buildings, 83 percent showed evidence of illegal use by prostitutes, drug dealers, property criminals, and others. Even if 90 percent of the crimes prevented are merely displaced to the surrounding area, securing abandoned buildings appears to be a highly cost-effective crime control tactic for distressed neighborhoods.”

Lost Tax Revenue

Vacant properties reduce city tax revenues in three ways: they are often tax delinquent; their low value means they generate little in taxes; and they depress property values across an entire neighborhood. Lower property values mean lower tax revenues for local governments.

According to Frank Alexander, Interim Dean and Professor at Emory University Law School and an expert in housing issues, “failure of cities to collect even two to four percent of property taxes because of delinquencies and abandonment translates into $3 billion to $6 billion in lost revenues to local governments and school districts annually.”

Property taxes remain the single largest source of tax revenue under local control, so this loss of income is substantial. Taxes are often lost on vacant properties because of tax delinquency. Abandoned properties often become delinquent because the cost of paying taxes on the property may well exceed the value of the property. If the property goes into tax forfeiture, a common fate for vacant or abandoned properties, ownership is transferred to the municipality which tries to recover the lost taxes through the sale of the property. But such sales are problematic for several reasons.

Simply gaining title is a long and difficult process that consumes government resources. Once the title is obtained, cities often auction off delinquent properties for the amount of the tax lien, but the reclamation of all of the lost taxes is not guaranteed. One study found that 83 percent of the balance due is lost on foreclosed properties. When cities try to recover delinquent taxes on parcels where homes have been demolished, not only are they not able to recover the taxes, but typically the demolition itself was costly – in St. Paul, the overall loss to the city for a single demolished house is about $7,789.”

And while tax sales provide a source of income for municipalities, they do not ensure that the abandoned property will be put to productive use. The properties are sometimes purchased by speculators without any intent to restore them, and the process fails to assemble marketable parcels of land.

Even if the taxes are being paid, those taxes don’t amount to much. In St. Paul, a vacant lot produces $1,148 in property taxes over 20 years; an unrenovated but inhabited home generates $5,650, and a rehabilitated property generates $13,145.

What is the connection between home values and school performance?

Is there a relationship between school performance and property values?

It is largely accepted that school systems tend to be major drivers where many families decide to live. Now while it isn’t always easy to judge how “good” a particular school district performs, it’s much easier to use per-pupil spending as a proxy.

According to a report by the National Bureau of Economic Research, there may be a real connection between school spend and property values. This can be a valuable tool for municipalities looking to weigh budget decisions against the potential impact of growing or shrinking the property tax base.

According to the National Bureau of Economic Research, there is a definite correlation between school expenditures and home values in any given neighborhood. A report titled, “Using Market Valuation to Assess Public School Spending,” found that for every dollar spent on public schools in a community, home values increased $20. These findings indicate that additional school expenditures may benefit everyone in the community, whether or not those residents actually have children in the local public school system.

While the findings of this national study are compelling, they do not paint a full picture of the link between school spending and home values. According to the website, some school districts may operate more efficiently, so while expenditures are lower, the quality of education is still high. In addition, the size of the district or proximity of schools from neighboring districts could impact the perception of a specific school’s value, beyond the simple expenditure formula.

Researchers that published the report also found that wealthy school districts, where home values may tend to be higher, spend their funding more efficiently. The greatest spending was seen in school districts filled with low-income families, large districts and districts containing fewer homes – areas where home values may be lower overall. The results indicate that while home buyers may associate school quality with spending to some degree, this factor will not be the most significant one in influencing home values. Still, the trend has been noted on a national level, which offers some credibility to the association between the two.

GDP vs. Property Value

When organizations talk about creating a “social return on investment,” it often comes in the form of improving GDP of a given area. But what is this really? By definition, gross domestic product is the total market for goods produced within a government’s borders — an overall proxy measure for the success of an economy.

It’s impressive and all, and we can all readily cite impressive GDP growth targets we’d like our country to achieve. But what does it actually mean for the city or state investing in social programs?

The main source of revenue for most municipalities is property tax. And this is influenced by two key drivers: property tax rate and property tax base.

Absent increasing tax rates, a city can devise strategies to increase its tax base, by either bringing in more tax-paying properties, or increasing the taxable value of its current grand list. And here we have our best opportunity to tie social ROI into something tangible for cities — correlating GDP with median property value.

An article by Asian Green Real Estate takes a look at this, examining this relationship across major regions across the world. Accordingly, over the past 45 years, median property values correlate by as much as 95% with GDP. Assuming even half this, gives us a conservative estimate to real social returns on investment that can be expected with many different social and nonprofit programs.

For residential real estate, the basic logic behind the co-integration of GDP growth and real estate capital returns arises from the fact that income has to be accumulated to buy a home. Income, in turn, can be directly derived from GDP with only a few adjustments. Studies in Asia, Europe, and the US reveal that median home prices correlate by as much as 60% to 95% with GDP per capita. In the long run the growth trends of both cycles typically correspond to each other. However, high correlation between GDP and real estate prices might not be given at all points in time. The prevalent real estate cycles do not always mirror GDP cycles, but often follow their own pattern. In the short and medium term real estate dynamics are not just driven by a country’s prosperity and depend on other determinants. These are, for example, urbanization rates, construction activity and demographical changes which all influence supply and demand temporarily.

For commercial real estate, the logic is similar, but investors of commercial buildings – unlike homebuyers – typically evaluate investment properties with respect to their expected income and, therefore, commercial property prices experience a different cyclicality. In general, for investment property the price is a function of current income (cap rate), expected income, opportunity cost (discount factor) and capital value growth expectancy. However, it can be argued that all of these are again highly affected by GDP, albeit in a slightly different way, because economic growth drives demand for commercial spaces.

In sum, GDP can act as reasonable estimator for the progression of residential and commercial real estate markets. Figure 3 exhibits the nominal GDP per capita history as well as the mean residential real estate prices in nominal terms for Switzerland, Germany, the United States, and the United Kingdom. All indices cover the years from 1970 to 2015. The data was collected from central national banks.

What is the cost of racial bias?

Home ownership has long been part of the American Dream. However, this dream isn’t equal for everybody.

Decades of racist federal housing policies and segregation have made it much harder for black people to purchase homes and build wealth, in turn making it harder to afford college education and invest in businesses.

The Brookings Institute researched this problem, attempting to assess the economic cost of racist policies through the lens of the housing market.

If we can detect how much racism depletes wealth from black homeowners, we can begin to address bigotry principally by giving black homeowners and policymakers a target price for redress. Laws have changed, but the value of assets—buildings, schools, leadership, and land itself—are inextricably linked to the perceptions of black people. And those negative perceptions persist.

Through the prism of the real estate market and homeownership in black neighborhoods, this report attempts to address the question: What is the cost of racial bias? This report seeks to understand how much money majority-black communities are losing in the housing market stemming from racial bias, finding that owner-occupied homes in black neighborhoods are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses.

Here is a sample snapshot of the Detroit area housing market, and its impact of racial devaluation:

What does this mean?

Because municipalities are primarily funded by property taxes, this problem places black neighborhoods at a significant disadvantage. Lower property values imply lower taxes, which imply lower funding for good schools, roads, economic development, and other services.

The less money is spent on these critical public services, means the less attractive these communities become to outsiders. This further drives property values down, in an endless cycle.

The answer lies with government. The same institutions that created this mess are the ones that need to enact creative policies for incentivizing more mixing of different types of people. The system in place today has created free market dynamics smothered with racial biases, so absent large government intervention, this market will not change overnight.

Economic benefits of public infrastructure

How adequate is our public infrastructure? Are we investing enough in upgrading our public infrastructure stock? What are the costs of avoiding this upkeep? What are the benefits from increasing the stock?

Benefits of infrastructure on social well-being

New York Fed economist Andrew Haughwout investigated these questions in his study “Infrastructure and Social Welfare in Metropolitan America.”

Infrastructure investments can affect social welfare in two ways. One way is by adding to economic growth. The relationship between infrastructure and economic growth has been the subject of intensive economic research over the past decade.

The second way in which infrastructure investments can affect social welfare is by potentially improving the quality of life of those living in the invested area. For example, public parks, water systems, and other facilities can improve social welfare without having any effect on residents’ incomes.

Benefits of infrastructure on economic growth

Elizabeth McNichol writes in a paper by the Center on Budget and Policy Priorities:

The condition of roads, bridges, schools, water treatment plants, and other physical assets greatly affects the economy’s ability to function and grow.

Commerce requires well-maintained roads, railroads, airports, and ports so that manufacturers can obtain raw materials and parts, and deliver finished products to consumers. Improving many types of public infrastructure boosts the productivity of businesses by reducing their costs.

Growing communities rely on well-functioning water and sewer systems. State-of-the art schools free from crowding and safety hazards improve educational opportunities for future workers.

Better roads and public transit make it feasible (or more efficient) for workers to get from their home communities to more of the places where the jobs are.

The report goes on to cite a study done that looked at the United States’ infrastructure growth between 1949 and 1985, finding that a 10% increase in public-sector stock (e.g., roads, transit, buildings) increased productivity growth by almost 4%.

Current state of affairs

What’s most interesting about infrastructure is the seeming lack of maintenance being done across the country. With so much apparent upside in investing in these projects, it is curious why governments continue to delay spending.

What the math tells us

Using America’s 2016 total GDP of $18.57 trillion, we can try to gauge what increased public spending would mean for economic growth.

Using the bottom chart as a basis for opportunity, if we can get our current level of 2.0% just halfway to the high point in 1965 of 3.0%, that would imply an increase from $371 billion to $557 billion.

In this simplified example, if this additional $186 billion is added to the public stock, total productivity would grow by 20% (using the study cited above). Using 2016’s GDP growth of 1.6%, this would imply a new total growth of 1.9%–a net impact of $56 billion per year.

Now, while many skeptics argue the validity of this study, it should be obvious that deteriorating public infrastructure would negatively impact economic output. So, at the very least, getting investment back up to par with what’s required historically would be a bare-minimum measure toward improving our economies. And if any positive impacts resulted, all the better.

Wet houses: an answer to homelessness?

Seattle facility 1811 Eastlake provides an alternative approach to battling homelessness. It provides “wet houses,” which are supervised facilities that let chronically homeless alcoholics drink on premises. The logic is that by allowing individuals to continue to consume alcohol under their roof, they provide the stability that other stricter facilities don’t, which in turn provide people the opportunity to turn their whole lives around.

It is “permanent housing, not transitional,” said Greg Jensen, who works with Seattle’s Downtown Emergency Service Center, which opened 1811 Eastlake in 2005. “Homeless people living with addiction problems move in and stay as long as they need or want.”

That promise of unconditional “housing first” allows residents to stabilize. A 2013 study found that only 23 percent of residents returned to the streets during the two years after they moved into 1811 Eastlake.

“It didn’t matter how much a person was drinking; they were able to retain housing,” said study author Susan Collins, a clinical psychologist and assistant research professor in the Department of Psychiatry and Behavioral Sciences at the University of Washington. “And this was a group of folks for whom a lot of people, experts even, said they just couldn’t, they would burn through housing. … And we found that to be patently not true.”

Research shows that average consumption among residents drops 8% in three months. This could be a longer-term approach to a chronically difficult problem to solve in homelessness. By treating individuals like real people who have problems, they can mobilize one inconsistent aspect of their lives (housing) in order to set a foundation for additional improvement.

Time will tell whether or not more facilities across the country follow this model, but it certainly looks promising.