It appears that in our area, our citizens may shortly be finding it necessary to address yet another attempt at getting a Documentary Transfer Tax through to help fund affordable housing. This is not the first attempt for us, and if it isn’t passed, will likely not be the last attempt. Housing prices exceed sustainable levels based on area incomes in many areas, with market forces driving out the lower income range families - and often times the working families. Having experienced both sides of this coin, both the strong needs communities have for affordable housing for their citizens and the increasing burden being passed along to the “have mores”, I must say I’m very torn over the issue
One of the cities I have lived and worked in during the past is Redondo Beach, California. This high housing cost area in Los Angeles County had a $1.10 County documentary transfer tax AND a $2.20 City documentary transfer tax. With a current median priced home of $695,000 as of August 2008, this would add $2,293.50 to a seller’s closing costs, since they are the one who typically pays this charge. Take this one step further, and if Redondo Beach had 80 homes change hands in August 2008 for a total of $55,600,000 in sales that generated $183,480 in city and county documentary transfer taxes for that month (August 2007, that number would have been 13-23% higher depending on the data source, but that’s a different topic!). That should help create a fair amount of affordable housing to help support lower income families, including senior citizens, don’t you think? I was 22 years old when I lived in Redondo Beach, and I remember afforbale housing being an issue even back then. And that was when the median priced home was a third of what it is today! I couldn’t find the current number of available homes on the City Housing Agency’s website and haven’t heard back from them yet after e-mailing the question, but if they have 1,100 families on their waiting list, however many units they have is not enough.
But, $2,293.50 is a pretty stiff bill to add to a transaction that already has several other necessary charges associated with it – escrow, title, recording, inspections, etc. – other closing costs that are already in excess of around $5,000 BEFORE this tax or commissions get added, and not including the sellers’ recurring charges.
- Does ALL the revenue from these taxes go to affordable housing?
- If $695,000 is the median, what the heck is deemed affordable?
- Is this tax waived when affordable housing is no longer able to be provided? (yeah right, but thought I’d throw the thought out there)
What say you? Which side do you weigh in on – for or against? Do you have better solutions than this funding source for affordable housing?
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