Rate cut will not affect housing markets much (Austin, West: foreclosures, to rent)

[Trainwreck20]

Can you imaginge how property values would react if the property tax were eliminated and/or reduced? Wow. Since I am already in a house, I need to start campaigning for that to happen .

[Zzyzx]

It amazes me how nonchalant the long time locals are about the property taxes. It's like the boiling frog syndrome:
"If you drop a frog into a pan of boiling water it will leap out. However if you put a frog in a pan of cold water and gradually increase the heat until it is boiling, it will stay there until it is scalded to death."

[love roses]

Come on now...you'd be the same way if you were in the same situation

[Trainwreck20]

Eh, I live in a relatively inexpensive house and make good money (as does my wife). Why would I want to get rid of a property tax and replace it with an income tax? In all likelihood, I would end up paying more. I am quite aware that I pay property tax and that it can be highly variable without any kind of elected representative to intervene one way of the other, but currently I am better off than an income tax. That frog that jumps out of the hot water could just end up in the fire .

[achtungpv]

Property taxes are a significant contributor to keeping Texas real estate prices affordable.

[Zzyzx]

Originally Posted by Trainwreck20

Eh, I live in a relatively inexpensive house and make good money (as does my wife). Why would I want to get rid of a property tax and replace it with an income tax?

I did not mention getting rid of property taxes, they just seem a bit high for what you get in return. Don't get me wrong, I think we should have to pay property taxes for schools, infrastructure, Police & Fire etc.

It's beyond my comprehension that a homeowner should have to pay an excessive $600.00 + a month. If I am to pay that much, which I am, why are the kids not being picked up for schools in limos being driven to there "Exemplary Rated Schools" on non tool roads that are wide enough to accommodate all the traffic in Austin? To me, $250-$350.00 a month tops seems more reasonable for a 250K-350K home.

I paid 0 state income tax in Las Vegas, my yearly property taxes were $1400.00 and my home insurance was $325.00. My home was $285K there. I know that Las Vegas has gaming to contribute to the tax base, but doesn't Texas have oil wells, or are they exempt?

The way I try to justify it is; it's the price I have to pay in order to live in a community I like.

[pdxtech]

Generally, income taxes are based on what you earn, period. Property taxes
are based on where you choose to live. You could be earning a
million dollar salary and choose to live in a 300,000 dollar home. With a
3% property tax, you would pay $9,000 annually. If Texas had a 5% income
tax (much lower than California), you would pay $50,000 dollars a year
(on a million dollar income) in state taxes, assuming you mostly pay in the
highest tax bracket in the state. So, it seems that the lack of a state income
tax always favors people who earn a lot.

I went to this website: mod cut a very nice source of
demographic data and plugged in 78746 where many of our rich people
seem to live! Median family income is about $100,000 a year. So, with
a 5% state income tax, that person would owe $5,000 a year to the state.
Let us assume that tax is traded 1:1 with the property tax and the rate
is 2.5%. Then, the property value needs to be about $200,000.

Now, let's do it California style. Let us say that you moved to Texas and
stopped paying the 10% state tax to the Gubernator. You decide to
live in Westlake Hills, make the median wage there and pay ALL of your
CA taxes as property taxes. In CA, you would have paid $10,000 a year.
In Austin, your home can now be worth $400,000 so that your 2.5%
Tax bill is equal to your California income Tax. So, that should put an
upper limit on justifiable median home value in terms of property taxes.

One more look at mod cut and I found that 20% of the population
of westlake hills makes more than $200,000 a year. So, that would justify
20% of the people living in homes worth more than $800,000. Then, the
county really values the homes on the lower side for taxes. So, I would
say the "rich" homes are really worth a million dollars or so and if these
guys moved from California, they wouldn't feel the pinch!

For the rest of us "median" people out there, $400,000 does look like the
median upper limit until someone passes that bill abolishing property taxes.

[Trainwreck20]

I know that Las Vegas has gaming to contribute to the tax base, but doesn't Texas have oil wells, or are they exempt?

In the hay-day of the oil boom, the oil revenues generated all sorts of income for the state. When I went to college, I paid $4/credit hour plus about $1/hour in fees. My first semester I paid ~$130 or so, but that also had parking, sports package, publication package, etc...the base price for the classes was ~$80. This was pretty much all thanks to oil. If you are planning to send a kid to college in Tx any time soon, you know those aren't the numbers now and that is due to the downturn in oil in the state. Most of the easy oil in Texas has been pumped and a lot that is left out there is very sour, so it is not easily processed by most refineries (Valero built capacity for sour crude over the last decade or so....and have been making a killing).

There are some inate differences in the state's demographics, too.
Nevada
Total population: ~1.2MM people
Rural population: 11.7% (1990) 0.14MM
Land Area: 110M sq. miles


Texas
Total population: ~21MM people
Rural population: 19.7% (1990) 3.35MM
Land Area: 262M sq. miles

Somewhat outdated numbers, but the latest that I could find that was on the same web page . It looks like both states have continued toward an urban percent, but the total rural population is not changing that much. Anyway, my point (if there is one) is that Tx has to provide services to a more spread out and relatively rural population, whereas Nevada has a very concentrated population in the cities. Nevada is an inherently more efficient layout in that regard.

Also, those casinos can provide an amazing amount of income, directly through taxes and indirectly through income provided. There are ~40MM tourists per year to Clark County (per the Clark Co web page) and only around 2.5MM (est. 2006) residents. That is 16 tourists/resident of the state. Texas had ~200MM travelers (or 8.6 per resident) for the entire state of Texas each year, with 71MM of those travelers only staying for the day (not overnight). I would like to see the number or $/tourist per state, but am too lazy to try and find that .

http://travel.state.tx.us/DocumentStore/P4639-1_TravelFacts5.5x8.5.pdf (broken link)

[pdxtech]

Existing Home Sales Drop Again in August: Financial News - Yahoo! Finance (broken link)

Sales were down in all parts of the country in August. The West saw the biggest drop, a decline of 9.8 percent,
followed by declines of 5.2 percent in the Midwest, 2.7 percent in the South and 2 percent in the Northeast.
The fall in sales pushed the inventory of unsold homes to a record 4.58 million in August.
That means it would take 10 months to exhaust the inventory of homes on the market
at the August sales pace, also a record figure.

[Torontonian]

Home sales in Austin continue to fall.

A total of 2,501 single-family homes were sold in August, down 10 percent from a year ago, according to the latest Multiple Listing Service report released Monday by the Austin Board of Realtors. The August sales figure is also down 5 percent from July, further proof of a market in decline.

http://austin.bizjournals.com/austin...ml?jst=b_ln_hl