Saturday, March 03, 2007

Waukesha's Magic Number.

It is quite the interesting number—referred to often in Waukesha City Council discussion and in news reports of developers approaching the Waukesha Plan Commission. Don’t look for it in the ordinances; it’s more like a principle, a benchmark, a little nugget of conventional wisdom.

Here it is: A new single-family dwelling in a new subdivision shall, ideally, carry a $360 thousand sale price/assessed value, in order to be worth Waukesha’s while.

Jim Payne, City Administrator, did the number crunching several years ago, and asserts--even today-- that this number is right-on-the-money. It is what's needed to produce enough tax revenue for the city of Waukesha to stay solvent and expand services to meet the increase in population.

It is clearly not hard-and-fast; some budget tract mansions (lacking granite countertops) are going for less—but not much less. Moreover, when the rare proposal for low-and-moderate income housing comes up, those houses have to be, by definition, in the range of $190 thousand to $200 thousand.

But, the pressure is there--get all the new stuff to average upwards of a third of a million bucks. Otherwise, the city will not be able to maintain the same level of services to existing residents, as well as the new ones.

How much does it take every month to pay for a house-and-yard that’s priced at $360,000?
The newspapers and the internet are full of teaser ads. . . Mortgage Rates Near 40-Yr Lows $310K loan for under $999/mo. . . . that make one think it isn’t really so much. Read ‘em (and weep over) the fine print. Here’s what I worked out with an old fashioned mortgage guy. He says a prudent person (the only kind he’d make a loan to) with a 20% ($72 thousand) down payment can get a mortgage of $288 thousand, with a fixed interest rate of 6%, for 30 years.

The monthly payment would be:
Principal and Interest $1775
Taxes $540
Insurance $85
Total $2,400 / month
That’s a big nut to crack every month. And it raises a question: what kind of family income does it take to shoulder a monthly obligation of $2400 every-single-month, for the next thirty years? Assuming the normal expenses of suburban lifestyle, plus furniture, kids, existing debt, savings for retirement, heat and electric, kids, college loans, a couple of cars and a Harley, not to mention kids, a prudent lender wants to see $105 thousand-a-year in income.

To those who have that much down payment and that much income, I say mopar to ya. I encourage you to settle in Waukesha, in a house, priced at $360 K. If you manage to just barely meet the criteria, prepare to eat macaroni and cheese every night in house with no furniture.

To those who don’t meet the income standard (or cannot count on maintaining it) I’d suggest trying to live well, but not that well…. Don’t go after a starter manse that costs upwards of a third of a million. If you, the potential buyer, lack a substantial down payment; if you need an Adjustable Rate Mortgage to get payments you can handle; if you are counting on your house as an investment that’ll appreciate thirty percent every four years, or--and this is the big one--if you cannot afford the taxes on a $360 thousand residence (which will, of course, go up 30% if your hopes about appreciation turn out to be realistic), don’t even go to the open house, don’t burn little candles of desire for this kind of over-hyped and over-priced subdivision lifestyle.

This codger, who has lived in two houses in Waukesha over a span of almost thirty five years, who raised two kids in a really fine working-class neighborhood where they could walk (not that they always did) to elementary, middle and high school, plus two years of University of Wisconsin, will not have to listen to whining from those who have chosen to get in over their heads--but think the problem is the taxes. The problem is with the choice made, or about to be made—to get in over your head.

If you cannot afford the taxes on a $360 thousand house, you cannot afford the house.
Finally, this isn’t an argument for retaining the property tax, as is. I believe schools should be funded by income tax, rather than property tax. But, city and county government and services will remain forever supported by the property tax; and the amount paid will always be tied to the assessed value of each citizen’s real estate.

And, what does all of this have to do with water?
Quite a bit, actually. We have enough water for now, and enough for a conservative future. We do need to conserve it. It's the CONSERVATIVE thing to do. We might do well to recognize that continued uncontrolled growth of the city through annexation will produce a situation in which we do not have sufficient water from our only available source--deep wells and shallow wells.

Cutting back on development and annexation is the sensible choice. Pursuing an incredibly expensive and decidedly iffy path like trying to get expensive Lake Michigan water pumped to Waukesha (and then back to the lake) is not the choice of the homeowner who is concerned that the taxes are too high in Waukesha.


James Rowen said...

Very nicely done. The region can use your voice in the water and development debate. Congratulations on getting the blog launched.
Jim Rowen said...


Nice job. It's good to see another blogger who understands the need for sensible land use policy.

My wife grew up in Muskego. She used to take a few empty jugs with her when she visited her parents because she loved the well water. Now she brings her Dad water because it smells like sulfur. That's just over a ten year period.

James Rowen said...

Jim: I turned your item into a posting on both my blogs:

Mpeterson said...

Water water water... there is some background noise up here in Washington County that eventually we'll need a pipeline from Port Washington. The little Divide is just west of West Bend. Hmmm.

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Of the biblical allotment of three score and ten I have lived only three of them more than a bicycle ride from one of the Great Lakes. I grew up ten blocks from Lake Erie in the (once Irish/Italian ghetto, now newly-hip) "Near West Side" of Cleveland. I can still cycle to the Milwaukee lakefront in an hour and a half; but, a round-trip has always been more than I would (noror ever did) attempt. -0- I'm a "...somewhat combative pacifist and fairly cooperative anarchist," after the example of Grace Paley (1922-2007). -0- I'm always cheerful when I pay my taxes (having refused--when necessary--to pay that portion of them dedicated to war). -0- And I always, always vote.