Interesting Pair of Articles

By Dan S.

Today's Standard-Examiner has a very interesting pair of articles on property taxes, the rising cost of housing, and the declining number of families who can afford to own a home.

The first article reports that throughout the Wasatch Front, housing prices have been rising at tremendous rates and incomes have not been keeping up. As a result, the "affordability" of housing (defined more or less as the ratio of family income to housing cost) has declined 22 percent in the last two years. In a ranking of the rate at which housing costs have risen, all three of Utah's metropolitan areas (Salt Lake, Provo, and Ogden) were in the top five nationally. Weber County's housing prices have risen more slowly than in Davis and Salt Lake, but even here, prices are rising fast and fewer people are able to afford a home.

Also, according to a Wells-Fargo banker, "much of the appreciation has been driven by speculative investors from California and other states where real estate values are still much higher than in Utah."

The second article is about property taxes in Weber County, which have apparently risen dramatically due to the increase in assessed values of homes. (The headline screams that the increase this year is 20 percent, but the text qualifies this--"as much as" 20 percent "in some areas"--without saying what the actual average is, county-wide. But it appears that some individuals are seeing increases on the order of 50 percent, and the increases are apparently occurring for "all types of real estate.")

With respect to these articles, I'd like to make a few political points:

1. One of the talking points of our incumbent mayor's reelection campaign is that he has lowered Ogden City's property tax rate. But lowering the tax rate does not mean lowering taxes, when the assessed values of homes are rising much faster than the tax rate is falling.

2. Only about a year ago, the incumbent mayor was giving speeches about how Ogden was in a "downward spiral," the city budget was in a state of crisis, and we have to either raise the tax rates or do something desperate (like sell off park lands) to bring more investment and tax revenue into the city. Strangely, I haven't heard him sing that particular tune this year. Part of the reason is that an incumbent mayor isn't likely to be reelected when he says that, after 8 years under his leadership, his city is in a downward spiral. But the rest of the reason is that there are much larger forces at work here, driving housing prices and tax revenues upward regardless of any efforts the city might undertake to bring in investment.

3. Of course, the incumbent mayor will now be eager to take credit for all the investment coming into Ogden, which is driving property values up. And this is indeed a good thing from the city government's perspective, because it means it's easy to balance the budget and find the money you need for various programs and projects. But for the community as a whole, rising property values are not necessarily a good thing--especially when they suddenly rise much faster than personal incomes.