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I'm a life long resident of Orange County and I'm wondering whether I can afford to stop renting and actually buy a home. Even with the slight financial advantages poised by this buyers market I'm utter disillusioned at the current costs of home ownership in the Hudson Valley.
My wife and I have rented all our lives. Last year we were married and one of our parents have fallen ill and needs assisted living. So we thought instead of confining him to a nursing home, we would buy a home ourselves and provide a comfortable living environment. Those plans are quickly being dashed when we look at the prices of homes verses the average assessment of property taxes.
We're both mid-30's make more than $120K combined and have very low debt. We've been pre-approved up to $410K 100% financing at 5.875% My guess is when things settle, we'll put down 3% and have a rate of 6.12%. We're trying to keep our monthly under $3000 per month. That would be the bare minimum we could get by if either one of us lost our job. That puts us in the $300K-$350K market. Yet everytime we find a property that meets our needs (3-4 bedroom, mother daughter setup, room for a home office) we are out priced right out by the property taxes. We are looking mainly in Northern Orange County... Montgomery, Walden, western Town of Newburgh.as our parents doctor works in the area and can make house calls. We're finding it impossible to find any house in move in condition (that doesn't need $$$$ of work and upgrades).
I guess my question is how do people do it. The median income in OC is $61K per household. The median home price is $309... simply saying that the median house hold can't even afford a starter home in the backwoods of Otisburgh! A simple home... 3 bedroom, 1800 sq feet priced at $340K with annual taxes of $8K is already over $3K a month. And the taxes are just gauranteed to go up. We've been priced out of so many desireable homes not because of the principle and interest... but because of the taxes. A recent foreclosure we looked at had a desirable price of $325K. Yet the taxes were listed at $11,200???? That's almost $1000 per month in taxes on a home that needed some work.
My question is to OC home owners... how do you do it?
My question is to OC home owners... how do you do it?
I have to laugh for a second, because, I sometimes wonder how people do it as well. The thing to remember that yes, homeownership is insanely expensive, especially in the Hudson Valley now. But the benefits are so great that you just can't pass it up. The interest write-off alone the first couple of years is great and that alone almost doubled our tax return the first year.
There are lots of homes that should fit your criteria right now and still keep you within your budget. We bought our home in May 06 and I wish we waited another 1-2 years because there is so much more in our price range and we could've gotten so much more house for the same amount of money.
Buyer's that decided to stop looking 6 months to 1.5 years ago because they were priced out are now calling back up and starting to shop again. What a great time it is to be a buyer....lots of inventory, prices a little lower, more negotiable sellers (most of the time and if they aren't negotiable, they aren't serious about selling), AND INTEREST RATES AT HISTORICAL LOWS!!! You can't beat it one bit.
Best of luck to you in your home search! Don't forget to enjoy yourself while looking, you are buying your first home!
Like others who moved to Orange County twenty years ago, we would not be able these days to afford to buy the house we now live in. We paid $87,500 for our house, a real structural fixer-upper, and have put close to $200,000 into it in improvements over twenty years. When we bought our house, we were young and foolish, and there were no building codes. We did have an engineer say our house was fine...what a crock. Since then, the building codes have become very strict. Our house is now solid and fantastic, on over four acres with a small stream and pond. The taxes on the land alone have increased more than on the house. The taxes have increased proportionately more than our salaries, and we are having a hard time surviving here, and getting more and more into debt. We could never retire here, even if we had our mortgage paid off. We only have an $100,000 @ 6 percent , but with taxes, our payments are $1,600 a month. Add on utilities, food, car insurance, telephone/cable, cell phones, gas, and it costs us about $4,000 a month just to keep our heads above water. My heart goes out to all young people, as you would have to make a small fortune to afford a decent house in Orange County. If you work in Manhattan and make really decent money, and have a sizeable downpayment, you might be able to afford a great house, in a great school district. Otherwise, it is close to impossible. I wish you the best of luck in your search.
I have to laugh for a second, because, I sometimes wonder how people do it as well. The thing to remember that yes, homeownership is insanely expensive, especially in the Hudson Valley now. But the benefits are so great that you just can't pass it up. The interest write-off alone the first couple of years is great and that alone almost doubled our tax return the first year.
There are lots of homes that should fit your criteria right now and still keep you within your budget. We bought our home in May 06 and I wish we waited another 1-2 years because there is so much more in our price range and we could've gotten so much more house for the same amount of money.
Buyer's that decided to stop looking 6 months to 1.5 years ago because they were priced out are now calling back up and starting to shop again. What a great time it is to be a buyer....lots of inventory, prices a little lower, more negotiable sellers (most of the time and if they aren't negotiable, they aren't serious about selling), AND INTEREST RATES AT HISTORICAL LOWS!!! You can't beat it one bit.
Best of luck to you in your home search! Don't forget to enjoy yourself while looking, you are buying your first home!
~Joey
Joey,
With all due respect doubling my tax return isn't enough benefit nor incentive to conisder buying a home especially on a PITI of more than $3K per month. Last year (2007) I recieved $3800 back in my joint return and my tax account figured what my return would be like if we had purchased a home that we are looking at last year. Our return would have been instead $7100 dollars however that's still not enough chunk to make a financial difference on a $360K purchase with $9000 in taxes per year. I'm giving serious consideration to just renting (a great house for $1600 per month) and banking the difference into retirement and other investments.
People have told me that it's been the best time to buy in the last five years, and I the urge to check to see if their head is screwed on straight. I don't think the last four years is a good market comparison. After all, prices increased nearly 32% between 2003-2004 in the town of Goshen alone. A good friend of mine purchased 9 acres from his father in Goshen (for $200K) and built a beautiful home ($100K) and is already facing $14K a year tax bill. That's criminal. Many of the houses we've seen, have sellers who are looking to 'escape'. They've been pushed to the brink by an enormous purchase and socked with a right hook with double digit increases on their tax bills. I imagine if you tallied many sellers in OC it's not the subprime situation that's forcing them to leave... it's the additional taxes they see each and every Sept. My father is a great example... he's retired, lives in Warwick and can barely afford the $6800 he pays on his 1970 Bi-Level. And that's with full STAR exemption.
It's true there is alot of inventory on the market... yet the sellers still haven't gotten the clear message. People are not buying in OC because they are preoccupied. Many potential buyers seriously can't qualify for the average inventory on the market. Not without creative reporting on their mortgage application... and we all know where that has led.
After looking for more than three months it's appearant that a majority of homes most mid-priced $300-400K homes are in quality condition, yet carry a hefty property tax tag. Most of the homes we've seen under the $300 mark are either too small or need substantial work and upgrades... and still are swinging $5-7K per year in PT. My realtor tells me their phones are buzzing again too (more NYC calls than anywhere else)... yet no one seems to be closing any business. My prediction the Spring of 08 will continue this standstill and maybe people will begin to commit some coming into the fall. Overall the whole county is due for a serious 12%-15% price correction. As it stands now very few buyers will be able to qualify for homes in the $350K+ and up range, where a large part of the inventory is sitting.
Just my observation...
Last edited by thunder88; 02-10-2008 at 08:10 PM..
I definitely agree that the taxes are outrageous (more specifically the school taxes) and there really is no justifying it what-so-ever. That's one of my largest complaints about this area. I met with someone who was contemplating selling his home...it was a 4 bed 2.5 bath cooker cutter colonial (you know, the ones that popped up all over the place over the last 5 years), and shortly after purchasing his home he got re-assessed. He's taxes are 26,000 a year total---after the STAR exemption! Completely ludicrous.
That's why when people ask me about new construction, I let them know the downfalls to that, as it really isn't worth it. Is there an answer? Possibly some sort of solution? I wish I had an honest answer. I don't feel it's the prices are too out of whack (maybe a little high) but more the taxes. I feel that townships need to be run more like a business and be held more accountable for their spending. If businesses were run like towns, they would go out of business within 6 months.
So what is the answer? What's everyone elses thoughts?
I definitely agree that the taxes are outrageous (more specifically the school taxes) and there really is no justifying it what-so-ever. That's one of my largest complaints about this area. I met with someone who was contemplating selling his home...it was a 4 bed 2.5 bath cooker cutter colonial (you know, the ones that popped up all over the place over the last 5 years), and shortly after purchasing his home he got re-assessed. He's taxes are 26,000 a year total---after the STAR exemption! Completely ludicrous.
That's why when people ask me about new construction, I let them know the downfalls to that, as it really isn't worth it. Is there an answer? Possibly some sort of solution? I wish I had an honest answer. I don't feel it's the prices are too out of whack (maybe a little high) but more the taxes. I feel that townships need to be run more like a business and be held more accountable for their spending. If businesses were run like towns, they would go out of business within 6 months.
So what is the answer? What's everyone elses thoughts?
~Joey
Well I will agree that taxes (not home prices) are more 'out of line' in Orange County. I'm verifing this as an active buyer. Property tax is at the forefront of my decision to buy. The problem exists that home prices increased in the Hudson Valley at a record pace between 2000-2006. Assessment unfortunately followed the trend and increased at record pace. I can pressure the seller to come down in price but for the taxes I have to file a grievence. There a 1 in 4 chance that my taxes would come down. Realtors will scoff that the taxes have nothing to do with the market price of a home, but I don't see it that way. Orange County is the 26th most highest taxed state in the country.... and in most of these cases property taxes can be as much as 7% the value of the home. So the LP must bear the weight of the entire cost of ownership.
I recently made an offer on a house I was interested in. House was listed for $370K and the taxes were low ($6200). An older home (built 1967), with some upgrades near Middletown/Scotchtown. The house was a ranch and listed as the perfect 'mother/daughter' with an 'in-law suit' built in 2003. I submitted a reasonable offer at $335K, and the seller countered at $364K. I came up to $344K however the seller's LP was firm.
Then I dug into the tax records viewable online on ORSP site. Two things I discovered... #1- home had been recently assessed (in 2004) however a large 900 sqft 'inlaw suite' was not part of the recent assessment. Secondly, the taxes in 2006 were $6200, in 2007 $6900 and in 2008 $7400. The house was in Middletown but part of Pine Bush Schools. That's $1200 increase in just two years. Factor that against the reassement for the extention and that tax bill could be as high as $8500-$9500 after the purchase. This home was listed in Jul 2007. It's recently come off the market but my agent confirmed it wasn't in contract or in escrow... it just came off.
I'm looking at homes listed last June-September with very little movement in the OLP. So I'm considering a rule of thumb... for every $1000 over the average median tax for OC I'll ask $20K to come of the list price. The LP is too high when you factor the overall cost of ownership for that home. It might not seem fair, and of course the seller is in his right to ignore it. Market demand from NYC will prove whether my theory is correct. However my bet is that the home that ignores my bid today will still be listed 6 months anyway. Especially in northern Orange where a commute to Manhatten is 2.5 hours plus.
I definitely agree that the taxes are outrageous (more specifically the school taxes) and there really is no justifying it what-so-ever. That's one of my largest complaints about this area. I met with someone who was contemplating selling his home...it was a 4 bed 2.5 bath cooker cutter colonial (you know, the ones that popped up all over the place over the last 5 years), and shortly after purchasing his home he got re-assessed. He's taxes are 26,000 a year total---after the STAR exemption! Completely ludicrous.
That's why when people ask me about new construction, I let them know the downfalls to that, as it really isn't worth it. Is there an answer? Possibly some sort of solution? I wish I had an honest answer. I don't feel it's the prices are too out of whack (maybe a little high) but more the taxes. I feel that townships need to be run more like a business and be held more accountable for their spending. If businesses were run like towns, they would go out of business within 6 months.
So what is the answer? What's everyone elses thoughts?
~Joey
Joey... here is another thought. I wonder if there is a precedent to actually sue a tax assessor. I am not a fan of litigation and I don't have a legal background however just hear me out. The assessment is based on the tax assessor's belief that the property is worth "X" amount of dollars if it were to be sold. However with declining house values I wonder if a rising assement could be subject to litigation "IF" it could be proven that that tax burden prevented the home from being sold.
Case in point, I recently looked at a Colonial, recent construction in northern OC. The home was LP was originally LP at $410K and then went into foreclosure. It's now being sold at $339K... a verifible steal except the taxes are $11K. The house is assessed at $550K yet not a single house on that street or a single comp in the last two years has sold for more than $420K. The home is clearly over assessed.
If it could be proven the over-assement on that home prevented that home from being sold, I wonder what liability (if any)could be found upon the local assessor's office. After all would the town buy that home for $550K? I'm just throwing that out there... it sounds riduclous I know... but then again NY has probably the most ridiclous tax system in the country.
Joey... here is another thought. I wonder if there is a precedent to actually sue a tax assessor. I am not a fan of litigation and I don't have a legal background however just hear me out. The assessment is based on the tax assessor's belief that the property is worth "X" amount of dollars if it were to be sold. However with declining house values I wonder if a rising assessment could be subject to litigation "IF" it could be proven that that tax burden prevented the home from being sold.
Case in point, I recently looked at a Colonial, recent construction in northern OC. The home was LP was originally LP at $410K and then went into foreclosure. It's now being sold at $339K... a verifible steal except the taxes are $11K. The house is assessed at $550K yet not a single house on that street or a single comp in the last two years has sold for more than $420K. The home is clearly over assessed.
If it could be proven the over-assement on that home prevented that home from being sold, I wonder what liability (if any)could be found upon the local assessor's office. After all would the town buy that home for $550K? I'm just throwing that out there... it sounds riduclous I know... but then again NY has probably the most ridiclous tax system in the country.
I wish I could say that yes that would be possible, but unfortunately I don't think it would go anywhere and here is the reason...As a homeowner, there is what they call "Grievance Day" which is when the town gives you the opportunity to grieve your tax assesment. You have the burden of proof to explain why your assesment is too much, you show the assessor why your assesment is too high, and they either adjust your assesment or tell you to go scratch.
If you look at a tax bill, it says specifically on there that if you grieve your taxes and any adjustments are made, they ARE NOT retroactive...essentially they say it's your fault for not grieving them before the bill came out.
The process is a little screwy, but the reason they don't pay you back retroactively is because that can end up putting the town into a really bad spot if say 500 homes are over assessed and they get refunded retroactively 5 years due to a bad assesment previously...the township would be in a really bad spot.
My husband and I are planning to move to Orange Co. this summer. We are literally putting our house on the market today.
We currently live in western NY, however my husband works in NYC and has been commuting from here for two years, so we decided it is finally time to move.
We have been narrowing our choices down and came upon Pine Bush as a place we would seriously consider. Mostly due to the quality schools.
Our price range is between 300-400K, however, it literally is the taxes that are our deciding factors on houses we like on the internet MLS sites. That is so sad, that someone finds a house they love, but the TAXES are what is deferring their possible purchase.
CAN SOMETHING BE DONE ABOUT THESE HIGH TAXES....?????
I mean, what do you really get for you money? What is the per pupil price of a child in school? Are your roads down there in Orange County PERFECTLY PAVED all the time? Do you have EXCELLENT county parks and free activity programs? I want to know WHAT IT IS that these taxes do for ORANGE COUNTY? It is just INSANE.......
My husband and I are planning to move to Orange Co. this summer. We are literally putting our house on the market today.
We currently live in western NY, however my husband works in NYC and has been commuting from here for two years, so we decided it is finally time to move.
We have been narrowing our choices down and came upon Pine Bush as a place we would seriously consider. Mostly due to the quality schools.
Our price range is between 300-400K, however, it literally is the taxes that are our deciding factors on houses we like on the internet MLS sites. That is so sad, that someone finds a house they love, but the TAXES are what is deferring their possible purchase.
CAN SOMETHING BE DONE ABOUT THESE HIGH TAXES....?????
I mean, what do you really get for you money? What is the per pupil price of a child in school? Are your roads down there in Orange County PERFECTLY PAVED all the time? Do you have EXCELLENT county parks and free activity programs? I want to know WHAT IT IS that these taxes do for ORANGE COUNTY? It is just INSANE.......
The part of the taxes that are crazy high are the school taxes. The property taxes are equal to about 1/3 of the school taxes (which isn't too crazy I think) and the reason they have gotten so high (I believe) is because when the area got so crazy over the last several years the schools needed to expand as these towns were growing at outrageous rates and they began needing to grow. That's my thought process as to why they are so high. I could be wrong. Pine Bush isn't too bad, the towns that are the worst are down in Southern Orange County. In most areas I've ever considered relocating to the taxes came into consideration when searching the web for homes, so I don't think it's completely out of the ordinary (or I've just been trained to feel that way, which is a scary thought)
BTW....I absolutely LOVE Pine Bush, it's gorgeous there. If our families weren't in Jersey then I'd be moving out in that direction. We've got a listing out there....it's just absolutely beatiful. Good luck in your search!
~Joey
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Taxes in Orange County
