While top tier markets are experiencing an affordability crisis, middle America has a different kind of housing crisis looming: in America’s Rust Belt and parts of the Northeast, millennials and young professionals are leaving rather than moving in, and populations there are dwindling, reports Haisten Willis for the Washington Post.
There is no shortage of homes in Akron, Ohio, for example. But most of them are old, too many sit vacant, and hundreds of abandoned houses are torn down each year. Akron’s population has dipped from nearly 300,000 residents in the early 1960s to fewer than 200,000 today.
Rather than engaging in managed decline, the city last year approved a 100 percent exemption on the added property value of any new home construction or renovation valued at $5,000 or more for 15 years. This means that someone who built a new home on a vacant lot would pay taxes only on the value of the land, saving thousands per year in the process.
Major cities such as Detroit, Cleveland and Buffalo, plus parts of Pittsburgh, Philadelphia and other cities, also face home prices that are too low, leaving little financial incentive to build new homes or improve old ones, because money invested can’t be recouped. The low prices also make it difficult to build wealth through equity, a key path to reaching the middle class.
To combat the issue, municipalities have turned to residential tax abatement programs designed to spur housing development — with or without population growth. Tax incentives are more widely known in commercial projects, such as sports stadiums, but can be created for residential developers and individual homeowners, as well.
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