Evanston voters go to the polls Tuesday to decide the fate of a plan to raise the real estate transfer tax 20 percent to fund as-yet-unspecified affordable housing programs.
The tax increase is expected to raise $800,000 to $1,000,000 per year.
The way I figure, that might be enough to solve 44 percent of our affordable housing problem in 136 years.
Let’s take a look at a best-case scenario. (Bear with me here, this is going to require some math.)
If the funds are spent as Alderman Ann Rainey, 8th Ward, who first proposed the referendum, has suggested, $1,000,000 could give $25,000 in downpayment assistance to each of 40 new homebuyers a year. (Most other proposals suggest spending more money apiece on fewer total households.)
U.S. Census data shows that Evanston has 5,465 renter households who now have to stretch to meet their housing costs — paying over 30 percent of their income for housing.
So, helping 40 households per year, it would take 136 years to provide downpayment assistance to all Evanston renters who now pay too much for housing. (And the crisis is only solved for them if, after the downpayment assistance, they have a sufficient income stream to carry the rest of the costs of their new home. Some will have that, but many won’t.)
Meanwhile, what happens to the 6,832 current Evanston homeowner households that the Census Bureau says have to stretch to meet their housing costs? That’s the other 56 percent of our housing affordability crisis.
Well, not much. They won’t be helped by a program focused on new-homeowner downpayment assistance, but the transfer tax boost will only marginally raise their housing expenses.
Here’s how to figure that.
With 17,341 Evanston homeowners in 2005 and around 2,000 real estate transfer tax transactions each year, we can estimate that the average Evanston homeowner moves once every nine years. (For a reality check on that estimate, note that the Census Bureau reports that nearly 45 percent of all suburban residents moved in the five years between 1995 and 2000.)
With the median home price here at $338,000 and a new tax of $338 paid once in nine years, that averages out to a cost of $37.55 per year for the owner of a median-priced home.
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