The housing and financial crisis has homeowners on edge more than ever, and the elderly and those on fixed incomes often have extra cause for worry. Hui Shan, a Lincoln Institute dissertation fellow who studied under MIT economics professor James Poterba, who is now president of the National Bureau of Economic Research, has examined the question of whether rising property taxes cause some seniors to move -- or in some cases, in states with tax relief programs, keep them in place. Using household-level panel data from the Health and Retirement Study and a newly collected data set on state-provided property tax relief programs, Shan, who made a presentation at Lincoln House Oct. 3, found that for every $100 increase in property taxes there is an 8 percent increase in mobility within two years. Many factors are present when it comes to elderly homeowner mobility, she said. The 2004 Survey of Consumer Finances data suggest that 16 percent of elderly homeowners have a house value to income ratio of at least 10. Some seniors have paid off mortgages, and thus are more likely to take the standard deduction for their federal income taxes. That means that tax increases would cost them more than if they itemized and could take advantage of the property tax deduction. In terms of local services, they care more about parks and public works than schools. A health shock or the death of a spouse can prompt a move. Still, property tax relief for seniors is an important focus for policymakers, and will be even more so as the growing number of baby boomers join the ranks of the retired. The generosity of property tax relief programs varies significantly across states. For example, as of 2005, a low-income 65-year-old homeowner could receive a property tax credit of up to $1200 in Idaho, but only up to $250 in Rhode Island.
The next presentation in the Fall Lincoln Lecture series is Oct. 24: Inclusionary Housing: A North American/European Comparative Perspective, featuring Nico Calavita, professor in the Graduate Program in City Planning at San Diego State University, and Alan Mallach, nonresident senior fellow at the Metropolitan Policy Program at The Brookings Institution.