- The Washington Times - Wednesday, March 22, 2006

The proposal of the mayor to raise the residential and recordation tax on homebuyers is at odds with his inaugural address in 2003 to increase the city’s population by 100,000 within 10 years.

A boost from 1.1 percent to 1.5 percent on the sale price of a residence is substantial in a city that more and more is coming to terms with the prospect of starter homes flirting with the $1 million mark in the nicer neighborhoods.

The high cost of homeownership in the city is especially discouraging to the young hipsters inclined to put down roots in the urban environment. All too many are forced to resort to creative living arrangements — the ubiquitous group house — out of economic survival. This is a short-term lifestyle that often results in the practitioners seeking the cheaper housing of the suburbs.

The gulf between the haves and have-nots in the city never has been more pronounced. In those neighborhoods undergoing gentrification, the haves of the city are putting ever more financial strain on the home-owning working class whose property assessments result in tax bills that would have been seen as a mortgage payment not too many years ago.

In this good-news, bad-news environment of high appreciation rates begetting high tax bills, the easy remedy is to put your abode up for sale and head to a locale with less-oppressive taxes.

It is hardly surprising in a city that would tax the air that you breathe if it could that the population decline has not been halted. From its population high of 802,178 in 1950, the city had plummeted to 572,059 residents by 2000. A 2004 estimate puts the population at 553,523, a drop of almost 20,000.

City planners think the 2000 census was the city’s bottom point. To be fair, they could not envision the 100 percent-plus appreciation gains in housing during the past few years.

The high cost of housing in the city is only one of the elements that has led to a migration as far west as the West Virginia Panhandle, as far south as Fredericksburg, Va., and the merging of the suburbs of Baltimore and the District. The deplorable state of the city’s public school system also encourages parents to move to the suburbs unless they have a spare $30,000 to send their children to private schools.

The middle class has come to be the forgotten species of the city. In an understatement, D.C. Council Chairman Linda W. Cropp, at-large Democrat, expressed concerns about the mayor’s proposal because of the inordinate hurdles that potential home buyers already are facing in the previously overheated market. Those hurdles especially are daunting for first-time home buyers. A $400,000-plus, 750-square-foot condo in the city qualifies as a bargain these days. The closing costs, taxes, fees and the like function as the insult to the financial injury.

Mrs. Cropp suggests that the council could propose to exempt homes costing less than $500,000 from the tax increase, as if a $500,000 sales price is a kind of demarcation line between the well-to-do and blue collar.

The mayor and D.C. Council members have been able to straighten out their bookkeeping because of the skyrocketing property assessments in recent years. Yet, no matter how much money rolls into the Wilson Building, more tax money is seemingly always necessary.

The resurgence of the city is undeniable. But it is a hollow resurgence in many ways. It is a resurgence limited to urban pioneers and those well-heeled enough to plunk down gobs of cash on an otherwise nondescript living space.

The mayor’s welcome mat, intended or not, is highly selective, which continues to contribute to the city’s population drain.

His goal to add 100,000 residents within 10 years, however essential to the city’s well-being, is more far-fetched than ever.

At today’s prices and tax rates, city leaders should declare victory if they halt the population slide.

As encouraging as the District’s comeback is, it remains fraught with qualifiers and unknowns.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide