Going Up.

Going up! Home prices are on the rise.

With many cities and towns thriving amidst a spectacular construction boom, area home values have burst through the ceiling that collapsed under the weight of the subprime mortgage crisis just about a decade ago.

The economic resurgence, which is literally transforming the horizons of Middlesex East communities like Woburn, Burlington, Reading, and Stoneham as new multi-story apartment buildings and mixed-use "lifestyle centers" take shape, has been welcomed by local leaders as municipal coffers are replenished by new tax revenue streams.

Likewise, many longtime residents, especially those who weathered the 2008 financial crisis by paying off mortgages that exceeded the plummeting value of their homes, have celebrated the return of a red hot real estate market.

But not everyone is thriving.

At the outset of 2019, Woburn Mayor Scott Galvin, delivering his annual State-of-the-City address, acknowledged that a growing number of senior citizens and others living on fixed incomes are struggling to cover tax liabilities being fueled by soaring property values.

To combat that problem, the city executive last week proposed an expansion of a state-sanctioned tax work-off program that currently allows qualifying senior citizens and military veterans to perform administrative functions at City Hall in exchange for a maximum tax bill discount of $1,500.

"The city continues to exhibit signs of strong growth with solid increases in residential

values, and Woburn continues to become an even more desirable place to live and raise a

family," Galvin wrote in a recent memo to the City Council. "At the same time, however, there are many senior citizens living on fixed incomes who struggle with the effects of increasing property values on their real estate tax bills."

In FY'19, the average single-family homeowner in Woburn is expected to pay $4,520 in real estate taxes.

Technically, Woburn homeowners enjoy the lowest tax burden in the immediate region. However, those annual costs have still climbed by close to $800 over the past five years, when average single-family home values skyrocketed by nearly $109,000.

Galvin's proposed legislation to help struggling senior citizens, which would double the number of volunteer openings available for the tax program and broaden the eligibility pool by increasing qualifying asset and income thresholds, is now pending before the City Council.

Two years ago, in neighboring Reading, town officials also tried to address growing tax liabilities for senior citizens by launching a tailor-made property tax exemption program.

Pitched by town officials in 2016, when voters were considering a $7.5 million override, Reading Town Meeting supported passage of a Home Rule petition that shifts a portion of low income seniors tax burden onto the rest of taxpayers.

Under the program, senior citizens who qualify for Massachusetts Senior Citizen Circuit Breaker, which provides state income tax breaks, could also receive local real estate tax discounts. In order to qualify, applicants must own their home, have resided in the community for 10 years, and meet other asset restrictions.

The Reading Board of Selectmen sets the size of the tax relief during its annual tax classification hearing, and in 2018, when 182 applicants qualified for the program, the discount was worth $2,140.

Over the past five years, the assessed value of a standard single-family home in Reading has climbed by nearly $130,000 to $594,568.

Further fueled by the 2016 override that precipitated the passage of the unique senior citizen exemption program, the average Reading tax bill has jumped by a staggering 24 percent over that same five year period.

In FY'19, according to records from the state's Department of Revenue (DOR), Reading residents can expect a total tax bill of $8,461.

Full real-estate market recovery

Though Reading and Woburn officials have tried to address escalating financial burdens for senior citizens, local leaders in other communities have similarly taken note of how soaring home values have impacted taxation trends.

In fact, last December, when Stoneham's Board of Selectmen set its tax rate for FY'19, Town Assessing Director Brian Macdonald revealed that the median single-family home in the community surpassed the $500,000 threshold for the first time in history.

In news that took some selectmen by surprise, Macdonald also warned that home values had catapulted so high in recent years, the selectmen would no longer be able to contain residents' tax bill increases by shifting a greater financial burden onto commercial landowners.

That common practice, known as adopting a commercial-industrial-property (CIP) shift, establishes a dual tax rate for cities and towns that adopt it.

"In recent years, as we've gone through the rapid appreciation of residential home values, we've recommended an increased shift to maintain [consistency]. Unfortunately, we're at the point where a maximum shift will no longer hold [back the size of residential tax increases]," the chief assessor explained.

Hamstrung by a series of financial crises that resulted in mass layoffs in the early-to-mid 2000s, Stoneham was just emerging from those budgetary woes when the subprime mortgage crisis crippled the nation's economy beginning in 2008.

The bedroom community was hit particularly hard by the so-called Great Recession, which resulted in numerous vacancies across the town's commercial sector.

In 2007, just before the crisis broke, the median single-family home in Stoneham was valued at $440,882. However, during the next six years, Stonehamites watched their home equity evaporate as the assessed value of a typical home dropped by roughly $60,312.

Amazingly, during the same time frame, when many citizens were paying off mortgages that exceeded the actual fair market value of their properties, the average tax bill in the community shot up by nearly $741.

The steep decline in Stoneham's residential property values began to reverse in 2012. By 2017, the average single-family home was assessed at $460,125 — surpassing the previous 2007 high.

In FY'19, the average Stoneham resident, the owner of a home now valued at more than $537,000, can expect to pay $6,028 in real estate taxes. Meanwhile, the community's once-depleted tax coffers have begun to be replenished by revenues from a glut of new construction projects, including the addition of hundreds of new apartments and housing inventory.

However, that recovery, driven in large part by rezoning commercial land for residential developments, is now hurting town officials' ability to grant tax relief to homeowners through a larger CIP shift.

"The only control we have to change this would be to increase the value of our commercial [properties]. We're actually losing commercial, which makes that harder," acknowledged Stoneham Selectman Anthony Wilson. "Someone would have to improve their property or bring in a commercial development…And that's something that becomes controversial, because that development has to go somewhere."

Though not hit as hard as Stoneham, Burlington's homeowners have also witnessed their property values recover completely from the Great Recession.

The previous housing bubble reached its pinnacle in Burlington in 2007, when the average value of a single-family residence was assessed at $421,178. Over the next five years, town residents watched as the average assessed home shed some $47,000 in value. During that same time frame, local tax bills jumped by $636.

By 2016, Burlington's residential property values had surpassed the 2007 highs, and the median single-family dwelling is now valued at 502,545. The average tax bill in Burlington for 2019 will be $5,267.

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