Why are Taxes so high

[BrianTH]

Originally Posted by h_curtis

The cities you mentioned are way more dense than Pittsburgh and I find it hard to compare them in a direct sense.

There are many neighborhoods in DC, Philly, Baltimore, and so on that are pretty similar to Shadyside, Squirrel Hill, and Point Breeze, because all these cities experienced a similar wave of development in the late-19th and early-20th Centuries.

Generally, my point is that all cities have more expensive neighborhoods. If you make reasonable comparisons, our more expensive neighborhoods tend to be substantially less expensive than most cities' more expensive neighborhoods, particularly in the central area.

[BrianTH]

Just for fun, I looked at DC (the other city whose neighborhoods I know best). Roughly speaking, what I would consider to be comparable properties in DC go for 3-4 times as much (if you are curious, for Squirrel Hill and Shadyside I am looking around the Woodley Park, Cleveland Park area). The millage in DC is 8.5. The millage in the City of Pittsburgh is 29.41, which is 3.46 times as much as in DC.

Funny how that works.

Here is a more systematic study by Harold Miller, which shows that if you look at median property taxes as a ratio of median income, we are actually within a reasonable range of the middle:

Pittsburgh's Future: Are Property Taxes High in the Pittsburgh Region?

Just now we've been looking at the high end rather than the median, but there is really no reason to expect it to be much different on the high end.

EditL Incidentally, Miller also showed our per capita spending on local government (including schools) is around average:

http://pittsburghfuture.blogspot.com...ot-better.html

All this is a pretty conclusive demonstration that by far the primary reason for our relatively high property tax rates is relatively low assessed values.

[gg]

Originally Posted by BrianTH

All this is a pretty conclusive demonstration that by far the primary reason for our relatively high property tax rates is relatively low assessed values.

I would much prefer to have the situation like the DC area. Yes, I one bedroom condo cost $250 and more, but when they sell and move to Florida, look what they can afford. We move and we get crushed because our homes are not worth much.

[BrianTH]

Originally Posted by h_curtis

I would much prefer to have the situation like the DC area. Yes, I one bedroom condo cost $250 and more, but when they sell and move to Florida, look what they can afford. We move and we get crushed because our homes are not worth much.

You are failing to account with what you could do with the money you aren't investing in your housing. By spending much less of your income on housing, you are able to save more in other ways--probably better ways, if you are reasonably wise with your savings. And then there is the question of how well you can afford to live before you make that move to Florida.

Generally, the whole nation just got a powerful reminder that a house is a place to live, not a way to make yourself rich without having to work for it. It may be the case that people who bought in places like DC will still be OK anyway, unlike a lot of the poor folks in places like Phoenix or Las Vegas, who may be looking at over 50% losses:

http://cr4re.com/charts/chart-images/CSCitiesDec2010.jpg (broken link)

But I wouldn't be buying anywhere with anything but the expectation that a more expensive house is, in fact, going to cost you more money. In other words, yes, getting a lot more house for less money is actually a good thing.

[gg]

Hmm. Brian this is the thread that you have me moving to your point of view. I do look at a home as an investment since I have flipped several homes and sold real estate for over 15 years, but there is quite a bit of money that can be invested into other areas if you don't have to lay out $500K on a medium size home with no yard somewhere. The tax structure in Pittsburgh with the crazy school taxes really does prohibit growth however. Why would you want to improve your home if you are going to have to play about $3-4K a year per $100K of home value. You have a very tiny home in Shadyside and you paid $350K for it, you are paying over $10K a year in taxes which most are for a terrible school you wouldn't think of sending your child to. It really is amazing that the East End does as well as it does. I can't imagine how much money you need to make to live there if you have children. It blows my mind.

[BrianTH]

Well, the thing is if you are a dual-income professional couple, you'll probably end up having a decent income in your peak years. And don't forget all the money you may be saving on transportation and such.

What I find hard to understand is how places like DC could have become unaffordable even for most dual-income professional couples--that $350K house may be $1.2 million in DC. And it isn't just housing--their private schools cost a lot more, and so on. Frankly, I don't think that is sustainable, but we shall see.

Edit: Oh, I do agree the tax rate situation would specifically discourage vanity upgrades, at least if it ever went to frequent reassessments. You need to get real value out of your upgrades, and you shouldn't be trying to outpace your neighbors.