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Normally yes but not in areas where prices are already at the maximum ceiling of what people can afford. Raising property taxes shifts net income from the prop
by nugget 11y ago
Normally yes but not in areas where prices are already at the maximum ceiling of what people can afford. Raising property taxes shifts net income from the property owner to the taxing authorities. This reduces net income (yield or CAP rate) from the property and drops the price accordingly as investors sell investment properties and migrate their capital to other assets. Now, there's no free lunch. You end up hurting both wealthy investors and poor/middle class mortgaged-to-the-hilt homeowners who barely squeezed into the market. As we saw in 2008, bad things happen when a large % of mortgages plunge under water.
- prostoalex 11y ago> You end up hurting both wealthy investors and poor/middle class mortgaged-to-the-hilt homeowners who barely squeezed into the market. You don't necessarily hurt anyone, you just lower the attractiveness of real estate as an asset class. The yield chasers will move their money into a more attractive asset class, the value investors who buy real estate for price stability or tax reasons would stick around with lower yields.
- crdoconnor 11y ago>You end up hurting both wealthy investors and poor/middle class mortgaged-to-the-hilt homeowners Yet you'd be helping everybody else who didn't take on irresponsibly large debts.