How are property values justified?

[loves2read]

buy a house you can afford to live in and pay taxes for
and frankly if the difference in taxes on a 300 vs 500 house is what is keeping you from buying a 500K house--then you can't afford the maintenance and utilities for a larger house
don't be house poor
and there are plenty of diverse neighborhoods in this area--they just don't go street to street
if you want a neighborhood like that you have to look in a more marginalized area that is undergoing gentrification probably...
most people in TX prefer not to spend 500K and have a 250K house next door...

[aceplace]

Originally Posted by motoman

That's a good point about no pool of funds. I was thinking in total, regardless of source. I'm assuming who covers what (city, versus state, etc.) may differ by state, but I have no idea of the details.

Here is an interesting link. It shows state tax revenue by source. It is interesting to see the different sources amongst the states. As an example, California gets about 35% of its revenue from sales taxes, Texas gets 79% from sales taxes.

Here is another link showing total state and local taxes as a percent of per capita income. California averages 10.3% and Texas averages 9.3%.

Texas averages much lower state taxes per capita, but as a percent of income is relatively equal to California, and many other states, so the distribution of source differs, but the relative burden is close.

I think the role of what a municipality funds versus what a state government funds are pretty standard from state to state. Most cities, for example, do not fund state highways, and no states fund city police or county sheriffs.

That's an interesting article about the percentage of tax per capita, but I'd be leery of quoting Money magazine as an authoritative source. What they say usually turns out to be some reporter's guesstimate written to meet a deadline. I'd put my faith in a peer-reviewed study in a reputable technical journal.

The California and Texas sales tax rates are pretty close, actually, but the California income tax is a real and noticeable burden on wageearners. Also, the state of Texas taxes heavily products such as petroleum that are consumed by the entire United States. The taxes that ultimately help fund the state just add to the final price, and are effectively paid by non-Texans. If the Texas state taxes were paid entirely by Texans, then a per capita analysis would be appropriate, but they are not and it is not.

California tends to fund programs that Texas does not, because it tries to buy off the aspirations of one group or another within its population. It is highly idealistic in terms of government solving everyone's needs and desires, whereas Texas is more limited in buying off its population.

Apart from actual amounts, however, an income tax is a political blunder because it punishes something you want people to make more of... income. A better strategy is to punish things you want less of, such as crime, and reward what you want more of, such as prosperity. And so the people of California are fleeing to Texas and the rest of the United States to escape the punishment of income taxation.

[momof2dfw]

Originally Posted by Ilovethewindycity

I don’t know, it seems to me that there is great separation of class here in Texas. You can only live in a neighborhood that you can afford, not in a house that you can afford to buy.

This is so hard for me to get used to, back in Chicago your same block can have homes worth on the market $250,000-$700,000. Your tax would be based on the value of your home not the entire neighborhood.

DING-DING-DING - you got it right.

Yes, you can ONLY buy a house in a neighborhood YOU can AFFORD! Because our taxes and market value comps and what someone is willing to pay for a house is based on the area it does effect your property taxes. Most of the houses in my area that are in foreclosure were purchased in the last few years. Granted there are VERY FEW houses in foreclosure in my area as most people here are not "transient" which is a good thing and it helps keep the market values up or steady. The ones that are in foreclosure I looked up and they bought them in the last few years at a "distress price". These buyers thought they were getting in a "good area" in a nice house in an area more than they could NORMALLY afford. What they did not take into account were the property taxes at the CORRECT market value (more than they paid for their "distress" price), utilities and the HOA fees. They had the same thinking you did - we can get a nice big new house in this great area at a bargain basement price. Not realizing there are other expenses and that the property taxes are NOT going to go down to their "distress" purchase price.

The part you have wrong is the "seperation of class". There is a great varity of cultures in each neighborhood in the Dallas area. BUT you are correct in that we don't have much lower priced homes mixed in with higher priced homes (well, in older areas that are seeing regentrification you will). Developers would have shot themselves in the foot if they would have built neighborhoods with an intermingling of homes valued from $200K-$700K. No one wants to live in a house worth $700K next to one that is $200K. It brings down the higher priced home everytime.

As for getting your taxes lowered. You can protest when your notice of the new years value is sent out (April & May). BUT, even if you paid fair market value and it is lower than what the tax appraiser puts it at does NOT mean they will automatically lower it to your purchase price. My own parents w/ my mother being a realtor went down with their contract and was not successfull in getting it lowered. Comps and contract in hand and they would not lower it. They told her "you got a good deal on the purchase price" and left it at that. I've gone down w/ comps and what they have homes that are similiar to mine in my neighborhood appraised at and been successfull in getting ours lowered. It takes a LOT of homework and knowing how to work the system. This is when you DO WANT homes in your area that are close in market value, size, amenities, etc. Otherwise the tax office can just come up w/ a dollar amount and you don't have a house anywhere near similiar to yours to compare to.

[Ilovethewindycity]

momof2dfw Thanks for not giving me the run around, this is the information that I was looking for. So I'll need to make sure that I check the value of the neighborhood to make sure that the property tax will be of an amount that is comfortable.

[loves2read]

and be careful what you wish for
if you have never lived on larger lot home (since you are city dweller) be prepared for some issues with maintenance/expense related to that--a half-acre is about twice as large as most city lots...takes more watering to maintain the grass--more time/money to mow--
also be aware that some people move to subdivisions with larger lots because they have rec vehicles to store--like boats/RVs/ATVs---make sure you understand what your deed restrictions regarding unsightly parking/storage would be
sometimes neighborhoods like that have very loose deed restrictions/HOA rules--that is not always an optimum situations if people don't maintain their property...
make sure you know what the area is zoned for in way of city/county services like trash, police, fire EMT...don't buy a house thinking it is in the control of one city but it is really only county services--makes a difference in your taxes, insurance, liveability...
also be aware that foundation issues are part/parcel of living in this area of TX--you need to make sure the house you buy has foundation w/o problems...even newer homes can have failing foundations...