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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (8951)	2/17/2003 11:39:12 AM
From: 8bits	Respond to of 306849

>>What would the yearly property tax be on a half million dollar new house? In theory 1% of $500,000 or $5,000 a year, however if you live in a city that has voter approved bond measures. (My city has a high percentage of renters) You get to pay for all those additional measures. I pay 1.5%, so in my town it would be $7,500 >>On the same price that was grandfathered by prop 13? Prop 13 passed in 1978. It is possible in some areas and properties of the state that the value of a property has gone up by 10 times or more. Under Proposition 13, the assessed value of property cannot increase by more than 2 percent per year until the property is sold, at which time the property is reassessed at its full market value, usually the selling price. So a house which was valued at $50,000 in 1978 and has the same owner would be assessed at roughly $80,000 with an annual tax at $800 at the low end. (Or if you live in my town $1200)

To: GraceZ who wrote (8951)	2/17/2003 12:06:12 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 306849

What would the yearly property tax be on a half million dollar new house? On the same price that was grandfathered by prop 13? A new house is around 1.25% on average. It depends on how many local bond measures are out there... in SF they have 1.5 in some areas thanks to the zoo. (geez- you gotta have a good zoo, glad the voters passed that one <gg>) But the problem is some areas like mine literally have houses that were sold for around 100K in 1979 that are now over 1 million. The cost of houses have a lot to do with the proximity to huge SV employers, as well as land size. So the longtime holders pay under $2K for property taxes and the new people $15K. There was a big whoosh of appreciation in the early 80s right after the law went into effect so the really low rates are always one age group. Without this law, the harsh reality is that these prices would force owners to move. Imo that would be a good thing, that is the natural ebb and flow of a market. Retired people really have nothing to gain from owning a home next to Oracle, when land is tight. They should take their money and move on. But they don't, because its such a gravy train, they can just keep the house and rent it... if they sell there is no way to get the situation back (i.e. get that house back at the same prop tax rates).

To: GraceZ who wrote (8951)	2/17/2003 8:47:47 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

Which leads me to believe what Elroy said about higher taxes and development fees reducing prices not raising them. Development fees do not affect the final sales price of the home one way or the other - but they do reduce the value of land used to build homes. The home price is determined by income / wealth available in a given area to buy homes. The uncanny exact match between income (GDP) and home prices tells you development fees don't factor in. In theory development fees could increase the price of a home if they exceeded the value of the land. But there is no practical example of this that I'm aware of. On-going taxes, such as real estate valuation taxes, do affect the price of a home. These taxes cause a reduction in home value as they are increased. This type of tax can make a property less desirable, unless the taxes provide equal off-setting amenities for the property. Taxes alone are a disadvantage like being located in a flood zone, or next to a smoking factory. Some home builder and Realtor lobbying groups would have us believe the fantastic idea that both development fees and annual valuation taxes have the mysterious and magical effect of increasing home prices. Just imagine if this fantasy were true - homeowners could push up the value of their homes merely by voting in new taxes!