Higher Property Taxes Increase Home Affordability

[MarkSB]

I'll admit - the first time I read this article title, I thought it was either a typo, or that I was reading it incorrectly.

I don't like paying higher property taxes, but at least there's a societal advantage to it that goes beyond the extra dollars going to schools and whatnot.

(Yes, old article. But thought provoking, nonetheless.)

How higher property taxes increase home affordability | Federal Reserve Bank of Minneapolis

Economists find raising property taxes can boost homeownership for young families

www.minneapolisfed.org

 

[chevyontheriver]

I'll admit - the first time I read this article title, I thought it was either a typo, or that I was reading it incorrectly.

I don't like paying higher property taxes, but at least there's a societal advantage to it that goes beyond the extra dollars going to schools and whatnot.

(Yes, old article. But thought provoking, nonetheless.)

How higher property taxes increase home affordability | Federal Reserve Bank of Minneapolis

Economists find raising property taxes can boost homeownership for young families

www.minneapolisfed.org

Not enough data points. Only Texas and California. They should do all 50 states. Would they get a straight line? I kinda doubt it.

 

[Richard T]

Not enough data points. Only Texas and California. They should do all 50 states. Would they get a straight line? I kinda doubt it.

Yes, I saw that too. They used some national data too. Mostly the dependent variable was looking at home affordibility to younger people not just affordability in general. In the lower 48, Alabama is the lowest property tax state. Home prices there are very low as well. Hawaii is the lowest in all 50 states. What do hawaii and Alabama have in common? Nothing much, the reason both have low property taxes is that Hawaii home prices are so high that the low rate of a million dollar home is in total dollar terms enough revenue. Alabama is a poor state, so they make do with less, plus get more Federal government subsidies.

 

[MarkSB]

Not enough data points. Only Texas and California. They should do all 50 states. Would they get a straight line? I kinda doubt it.

True. They touch upon some of the weaknesses of the model near the end, but not quite explicitly enough. And they never explain why they have cherry picked those two states. With how much the real estate market can vary from one region to the next, there would undoubtedly be differences in how the data analysis plays out.

 

[comana]

While higher property taxes may encourage older homeowners to downsize, it may not be cost effective for many who have no mortgage currently and downsizing into high price markets just means a new mortgage even with the old larger home’s equity paying down the loan amount. Will new mortgage plus lower property be less than old property tax and no mortgage?