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Mansions are artificially cheap? That may seem strange. Mansions are, after all, by and large expensive things. In fact, one often suspects their very expensiveness is their chief function, the better to show off the occupant’s wealth. But I’m going to argue that they are, actually, a lot cheaper than they ought to be.
It begins: Mansions are artificially cheap? That may seem strange.
Mansions are, after all, by and large expensive things. In fact, one often suspects their very expensiveness is their chief function,
the better to show off the occupant’s wealth. But I’m going to argue that they are, actually, a lot cheaper than they ought to be.
Cal Ripken is trying to sell his (actual) mansion.
Asking was down by $10M ... now it's going to auction.
Also consider the hidden costs of owning a mansion.....maintenance, staff, utilities, insurance and taxes. Evander Holyfield's Georgia estate was 100 acres, 54,000 sq ft and he said the place cost him a million dollars a year to run yet it sold at foreclosure auction for less than 6mm. So after 5-6 years of owning it the new owner will have spent double the purchase price maintaining it! Add in the fact a boxer, now a rapper owns it and it is surrounded by 200K houses in a not so wealthy town the chance of selling it for a profit is slim to none. Ironically Mike Tyson's old Conn. mansion is having similar issues (bought cheap by a rapper, expensive to own, built in a not so ritzy town, resale is tough).
After you have bought land, gotten permits, drilled a well, and laid a septic system, the cost of actual building is not a lot different between a 2,000 sq ft house and a 10,000 sq ft house.
A 5X difference is size would imply a 5X difference in price. But a huge part of the expense was already spent in buying the land, the well and septic.
Our current home was built to be a 2400 sq ft house, then a couple years later I decided that I was going to add another 2500 sq ft onto the existing house. We were very surprised at how cheap the addition was.
The difference between building a 2400 sq ft house as compared to a 2500 sq ft addition, was shocking.
While I don't live in a mansion, I do live in a relatively affluent village with very restrictive building codes. Multi family buildings are not permitted, and to maintain the pastoral atmosphere the dwellings have a required perimeter setback that results in 1/2 acre minimum lot sizes or so. There are no sidewalks, streetlights, or public transit and fences or sheds may not be visible from the street- strictly enforced. In Ohio the major reason for property taxes are schools, and this particular use of land results in very low property tax rates for residents as well as quiet streets and very little pass-through pedestrian traffic.
Several times over the last 8 years or so I have lived here someone has proposed an amendment to the building codes for various reasons. Every time they were shot down by overwhelming margins and any Village Council members who supported them were essentially blacklisted then voted out in the next election cycle. Not every community wants to sell out to developers and grow in population.
The premise of the article is that houses are cheaper because they reside on lots that can't be redeveloped into multi family buildings where developers could make a butt load of money. A parcel of land that can be redeveloped with either more homes with smaller lot lines or multi family projects will always be more expensive than a lot that can only contain a single family home. Not exactly a ground breaking concept.
While I don't live in a mansion, I do live in a relatively affluent village with very restrictive building codes. Multi family buildings are not permitted, and to maintain the pastoral atmosphere the dwellings have a required perimeter setback that results in 1/2 acre minimum lot sizes or so. There are no sidewalks, streetlights, or public transit and fences or sheds may not be visible from the street- strictly enforced. In Ohio the major reason for property taxes are schools, and this particular use of land results in very low property tax rates for residents as well as quiet streets and very little pass-through pedestrian traffic.
Several times over the last 8 years or so I have lived here someone has proposed an amendment to the building codes for various reasons. Every time they were shot down by overwhelming margins and any Village Council members who supported them were essentially blacklisted then voted out in the next election cycle. Not every community wants to sell out to developers and grow in population.
This is the math everywhere. Public schools are the dominant expense for the town. Affluent suburban towns where the professionals live tend to have zoning that forbids multifamily housing and has minimum frontage and lot size requirements that make it impossible to build starter homes. Affluent people have a much lower birth rate than poor people. That keeps property tax rates low since the typical home has less than one kid in the public school system. A town with lots of multi dwelling units and starter homes on small lots has a much lower tax base relative to the number of students in the school system.
Of course, this has nothing to do with the thread title. A new construction 10,000 square foot home with all the amenities ain't cheap. Resale of homes like that is entirely local. If you're in a high COL place that is completely built out, you're going to pay a big premium for a large house on a large lot in a good town with an easy commute to work. You're competing with all the other high income people for a very scarce supply of houses like that. If you toss up a McMansion in flyover country, your odds of selling it 5 years later and breaking even are likely pretty low. You'd have very different results in Greenwich, CT or Palo Alto.
This is the math everywhere. Public schools are the dominant expense for the town. Affluent suburban towns where the professionals live tend to have zoning that forbids multifamily housing and has minimum frontage and lot size requirements that make it impossible to build starter homes. Affluent people have a much lower birth rate than poor people. That keeps property tax rates low since the typical home has less than one kid in the public school system. A town with lots of multi dwelling units and starter homes on small lots has a much lower tax base relative to the number of students in the school system.
Well... I just came from a small town in CT, where property taxes are completely local - each town sets a budget and a mill rate by referendum every year or two, and the two are yoked together. Schools were 75% of the budget. Most of what you say is true - it was a town of middling to upscale homes, one apartment complex, virtually no multifamily (in-law quarters not permitted)... and one of the reasons we moved there was for the schools. However, the property tax rate was very high, about $2500/100k annually. Plus cars and business property were assessed and taxed under that rate.
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