Are high residential property tax rates in Austin holding down appreciation? (Pflugerville: sales, mortgages)

[inthecut]

Interesting thought, is it not? I've seen many relocators saying that the Austin home prices were the same as the metros they moved from, when taxes were added to the monthly note.

My thought is that that could be holding down home price appreciation, all things considered. Per lending ratios, the FHA announcing that they were tightening lending standards, and just the plain comparison with other urban metros providing the relocators, along with the local people moving in place as well, at SOME point taxes would certainly put a ceiling on what sellers could charge....

Is that one of the reasons our home prices have traditionally been so low?

Now that they have risen last few years, and taxes have gone up even more, have we hit a pricing ceiling? Could prop taxes be a larger reason per Austin home price flatlining than the supply/demand itself?

As an aside, I recall a small community that lost its corporate tax base in another metro, as a large factory moved out, that had to increase its local res prop tax rates greatly. They had very little appreciation for years, while the surrounding areas did not have that prob, and it was all to do with the taxes, and qualifying/paying for that monthly note. Surely, at a point, that would have an effect on Austin's pricing as well, would it not?

How do the suburbs compare in the Austin metro per prop taxes compared to the city?
Are they ALL high?

[texdav]

Niot really IMO. Property taxes are just a way of financing city serives really. There are too many variables like land prices;infrastruture cost to make that land developable and of course the industrial tax base.many coities have very high cost o total atxes because its their main source of income besides business and sales tax. then you have to look at the fees besides taxes and how the cost of doing business is passed on to consumers, That is why you need to look at the total cost of living as its easy to lose track of what your really paying to live in a area otherwise.When ypou have litmitewd supplies because of different reasons and demand that tends to driveup prices.That is why so many areas with so much supply from a year ago have dropped like a rock.

[inthecut]

Originally Posted by texdav

Niot really IMO. Property taxes are just a way of financing city serives really. There are too many variables like land prices;infrastruture cost to make that land developable and of course the industrial tax base.many coities have very high cost o total atxes because its their main source of income besides business and sales tax. then you have to look at the fees besides taxes and how the cost of doing business is passed on to consumers, That is why you need to look at the total cost of living as its easy to lose track of what your really paying to live in a area otherwise.When ypou have litmitewd supplies because of different reasons and demand that tends to driveup prices.That is why so many areas with so much supply from a year ago have dropped like a rock.

Right, the whole picture should be looked at...that being said, if prop taxes approach 5-6K on a 200K home, like some places I've seen in Austin, it does have a factor in qualification rations per lenders. To the extent that that can cause potential buyers to overshoot those ranges, that would prob effect
the price appreciation, all things being equal.....at least in low to mid-range housing.....high end would obviously not be a concern here....

[JayBrown80]

Originally Posted by inthecut

Right, the whole picture should be looked at...that being said, if prop taxes approach 5-6K on a 200K home, like some places I've seen in Austin, it does have a factor in qualification rations per lenders. To the extent that that can cause potential buyers to overshoot those ranges, that would prob effect
the price appreciation, all things being equal.....at least in low to mid-range housing.....high end would obviously not be a concern here....

Isn't the appreciation on your home partially controlled by comprable listings in your area? And if so, they would be subject to pretty much the same tax rates, wouldn't they?

I have always been told that the biggest factor in appreciation is location. I live in Pflugerville in a new development, and while it is a desireable location to me, there is a lot of open space to build more houses. I don't own in a location that is hard to buy into. This limits my rate of appreciation a lot more than my super high unbelieveable hard to swallow Pflugerville property taxes.

Now if I lived in Hyde Park, I bet my property would nicely increase every year.

[Trainwreck20]

Actually, I think taxes are one of the big reasons that there hasn't been a massive bubble and bubble-bust, even though there has been a lot of growth that is typically associated with fast appreciation.
- Taxes effectively add to the cost of the house if you look solely at the monthly payment, which I am guessing is what many people do. If you could afford a 300k house in a hypothetical 'no-tax' state, you might only be able to afford a 230k house here (haven't actually done the math)
- Even if you pay cash for a house, you have to keep in mind the ongoing tax cost, which makes people more aware of what they are paying. IF you lost your job in 'no-tax' state and sold your house for 500k, then wanted to buy one here, you would not necessarily want to buy another 500k house, since you would have somewhere around 1,000 a month in taxes still.
- Taxes cannot be written-off on investment properties, which adds an additional cost to investment speculation.

Just a few ways taxes can keep the housing market from rising too quicly. I can't think of a single way that it would inflate housing prices.

[Zzyzx]

Originally Posted by Trainwreck20

Actually, I think taxes are one of the big reasons that there hasn't been a massive bubble and bubble-bust, even though there has been a lot of growth that is typically associated with fast appreciation.
- Taxes effectively add to the cost of the house if you look solely at the monthly payment, which I am guessing is what many people do. If you could afford a 300k house in a hypothetical 'no-tax' state, you might only be able to afford a 230k house here (haven't actually done the math)
- Even if you pay cash for a house, you have to keep in mind the ongoing tax cost, which makes people more aware of what they are paying. IF you lost your job in 'no-tax' state and sold your house for 500k, then wanted to buy one here, you would not necessarily want to buy another 500k house, since you would have somewhere around 1,000 a month in taxes still.
- Taxes cannot be written-off on investment properties, which adds an additional cost to investment speculation.

Just a few ways taxes can keep the housing market from rising too quicly. I can't think of a single way that it would inflate housing prices.

This is my take exactly.

I came from NV and was gauging a home around $350-$375. Once the property taxes were factored in my gauge was $100K less.

The homes in Austin are a realistic price for all the things mentioned above.

[CptnRn]

Originally Posted by inthecut

Right, the whole picture should be looked at...that being said, if prop taxes approach 5-6K on a 200K home, like some places I've seen in Austin, it does have a factor in qualification rations per lenders. To the extent that that can cause potential buyers to overshoot those ranges, that would prob effect
the price appreciation, all things being equal.....at least in low to mid-range housing.....high end would obviously not be a concern here....

Total property taxes are only 3-4K on a 200K home. At least they are for the two I own in the lower 200K range.

[HappyTexan]

I got a buddy that just forked out $7K on his home..older one in Austin and no, he's not in any of the fancy areas. He's getting fed up though and is thinking of moving.

[inthecut]

Originally Posted by JayBrown80

Isn't the appreciation on your home partially controlled by comprable listings in your area? And if so, they would be subject to pretty much the same tax rates, wouldn't they?

I have always been told that the biggest factor in appreciation is location. I live in Pflugerville in a new development, and while it is a desireable location to me, there is a lot of open space to build more houses. I don't own in a location that is hard to buy into. This limits my rate of appreciation a lot more than my super high unbelieveable hard to swallow Pflugerville property taxes.

Now if I lived in Hyde Park, I bet my property would nicely increase every year.

May I ask what the Pflug taxes are for your place?

I have another interesting query....most suburbs draw people out of their urban metro with cheaper prices and Taxes...I can understand why a home in Austin proper would have a high tax rate, but couldn't the suburbs just undertax the city homes by comparison, and cause a huge exodus out of Austin Proper? That's actually a reason most cities are having such problems...their property tax and retail tax base simply bailed out to the suburbs.....

or perhaps being such a new metro, the city AND suburbs of Austin are growing equally in lockstep...

[inthecut]

Originally Posted by Trainwreck20

Actually, I think taxes are one of the big reasons that there hasn't been a massive bubble and bubble-bust, even though there has been a lot of growth that is typically associated with fast appreciation.
- Taxes effectively add to the cost of the house if you look solely at the monthly payment, which I am guessing is what many people do. If you could afford a 300k house in a hypothetical 'no-tax' state, you might only be able to afford a 230k house here (haven't actually done the math)
- Even if you pay cash for a house, you have to keep in mind the ongoing tax cost, which makes people more aware of what they are paying. IF you lost your job in 'no-tax' state and sold your house for 500k, then wanted to buy one here, you would not necessarily want to buy another 500k house, since you would have somewhere around 1,000 a month in taxes still.
- Taxes cannot be written-off on investment properties, which adds an additional cost to investment speculation.

Just a few ways taxes can keep the housing market from rising too quicly. I can't think of a single way that it would inflate housing prices.

TW nailed this one...indeed, the bubble-barrier, AND the hidden tax on appreciation are BOTH to do with high property taxes......

I also mentioned that the lenders are planning on getting far more stringent per qualification rations next year, as FHA has announced many tighter standards/conforming ratios..considering that FHA-backed mortgages have single-handedly propped up the Austin housing market this year, along with the nations, you will see less home appreciation than before the next few years going out in the Austin metro.....

Again, simply think of high prop taxes as hidden 'Appreciation Taxes" as well......it simply raises the bar per note qualification, and, again, single-handedly explains the slow/no appreciation rates traditionally seen in Austin as a trend, except for the anomalous last few years, never to be repeated here OR nationallly again, when easy money was flying around like hotcakes...