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I feel for everyone as the prices are getting stupid everywhere.... BUTTTT I just looked on Redfin - I could buy a 3300 square foot house in Austin for under $

I feel for everyone as the prices are getting stupid everywhere.... BUTTTT I just looked on Redfin - I could buy a 3300 square foot house in Austin for under $900k with a huge pool and that was a 5 second search. No offense all you Austin folk, but you literally have no clue.

deleted 5y ago
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mullingitover 5y ago
I'd be careful about directly comparing prices, real estate taxes (by rate) in Texas are significantly higher than in California. They might be overall lower given that the real estate prices are cheaper, but Texas is #6 in the country for real estate taxes while California is #34[1]. [1] https://taxfoundation.org/high-state-property-taxes-2021/ https://taxfoundation.org/high-state-property-taxes-2021/
- deleted 5y ago
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- dexterdog 5y ago
  But California makes up for it with other taxes where Texas does not.
  - thebradbain 5y ago
    Like most things, it depends: https://www.bloomberg.com/opinion/articles/2021-05-19/wait-california-has-lower-middle-class-taxes-than-texas https://www.bloomberg.com/opinion/articles/2021-05-19/wait-c...
- rcpt 5y ago
  If you don't want to pay property tax then just rent. Texas rent is nowhere near CA
  - mullingitover 5y ago
    As a renter, you're paying 100% of your landlord's property taxes.
    - rcpt 5y ago
      No you're paying rent. The idea that property tax is passed down to renters 1:1 is just something you made up. The concept you need to look into is called tax incidence: https://www.maxwell.syr.edu/uploadedFiles/cpr/efap/Notes%20on%20the%20Incidence%20of%20the%20Property%20Tax.pdf https://www.maxwell.syr.edu/uploadedFiles/cpr/efap/Notes%20o...
      - mullingitover 5y ago
        I don't think I made up the idea that landlords generally don't lose money renting their property. Higher taxes might reduce their profits in a competitive market, but renters are still paying the property tax for the landlord. Tax incidence theory also leans pretty heavily on the assumption that there's healthy competition in the rental market. In most major cities that's a very unsafe assumption.
      - etchalon 5y ago
        I'd be careful about drawing the conclusion about rent shifting on that paper you linked, which really just says Carroll and Yinger's 1994 paper was right. Carroll and Yinger's paper is not unchallenged in economics (there are so very, very many papers on the problem), and it's entire line of reasoning is basically: 1. Property owners make a lot of money and own a lot of property. 2. When you increase property taxes, people who own a lot of property pay a majority of that increase. 3. Rent prices don't immediately increase 1:1 when property taxes rise, based on one data set. Basically, property taxes are mostly paid by people who own property. Most property is lived in by the owner. So property taxes aren't regressive, since rich people end up paying the majority share. People have been trying to create a model for the impact of rent shifting since the 60s. No one has a good model yet. It's hard to model. If I sign a lease for 2000/mo, and the state increases property tax on the owner, the owner can't immediately increase my rent. Rents increases are generally governed by local laws. But over time, they can raise it, and it can be reset when the current occupants leave. So an owner's profit margin takes a hit when property taxes rise, and renters bare a smaller percent of the burden of the new tax than the absolute amount raised in the short term. Long term, renter's are still covering the owner's total cost of that property, otherwise the owner would be losing money on the property – which, if that were prevalent business practice, we wouldn't have that many landlords. So yes, renter's pay property tax.
- neilparikh 5y ago
  > I'd be careful about directly comparing prices, real estate taxes (by rate) in Texas are significantly higher than in California. The two are directly linked, so this makes sense. A higher property tax means that the future annual rent (real rent if you're a landlord, imputed rent if you're a owner-occupier) you get from property will be reduced, so the capitalized present value will decrease correspondingly.
- bcrosby95 5y ago
  "Effective" rates. It accounts for prop 13, so you aren't getting .7% if you're buying a brand new home. My mom has a million dollar home in California and pays around 1.5k/year in property taxes because she's owned it since the 70s.
  - bradknowles 5y ago
    Whereas we paid about eight times that last year, and our house isn’t valued as high. EDIT: and we’ve owned this house since 2008.
    - bradknowles 5y ago
      And we’ve owned this house since 2008.
thebradbain 5y ago
Taxes for that home in TX would be equivalent to a $1.8M+ home in CA, though (and raise every year with the market), so it's not as simple as comparison. The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA.
- AlbertCory 5y ago
  Indeed, I've also checked it out. No income tax, but property taxes are at least 2% of the assessed value, and sometimes 3. You'll see that on the Zillow listing.
  - hnburnsy 5y ago
    It is nice though that you can control your taxes via choice on a property tax, not much with an income tax. But ultimately it seems like they get you one way or another, through sales, Income, and or property tax.
- deleted 5y ago
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- kelnos 5y ago
  > The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA. Are you talking about paying property taxes via an escrow account that your mortgage lender takes care of for you? That's not your "mortgage payment", which is a function of your loan size, interest rate, and term, and nothing more. The monthly mortgage payment (assuming same term and interest rate) is the same in CA and TX for the same amount of loan. (I guess we could also talk about things like PMI, but that won't raise your payment by all that much.) Property taxes might be quite a bit higher in TX, but I'm not convinced a $900k home in TX is the equivalent to a $1.2-1.3M home in CA. I would expect that's closer to $1.7-2M, and then the property tax amounts end up being not that different.
  - pandaman 5y ago
    Not to mention that the property taxes in TX are not charged on the price but on the assessed value. It's same in CA, I imagine, but the assessed value in CA is >= price, while in TX the price is not disclosed to the government and the assessment lags the market price by quite a lot.

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mullingitover 5y ago

I'd be careful about directly comparing prices, real estate taxes (by rate) in Texas are significantly higher than in California. They might be overall lower given that the real estate prices are cheaper, but Texas is #6 in the country for real estate taxes while California is #34[1]. [1] https://taxfoundation.org/high-state-property-taxes-2021/ https://taxfoundation.org/high-state-property-taxes-2021/

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dexterdog 5y ago
But California makes up for it with other taxes where Texas does not.
- thebradbain 5y ago
  Like most things, it depends: https://www.bloomberg.com/opinion/articles/2021-05-19/wait-california-has-lower-middle-class-taxes-than-texas https://www.bloomberg.com/opinion/articles/2021-05-19/wait-c...
rcpt 5y ago
If you don't want to pay property tax then just rent. Texas rent is nowhere near CA
- mullingitover 5y ago
  As a renter, you're paying 100% of your landlord's property taxes.
  - rcpt 5y ago
    No you're paying rent. The idea that property tax is passed down to renters 1:1 is just something you made up. The concept you need to look into is called tax incidence: https://www.maxwell.syr.edu/uploadedFiles/cpr/efap/Notes%20on%20the%20Incidence%20of%20the%20Property%20Tax.pdf https://www.maxwell.syr.edu/uploadedFiles/cpr/efap/Notes%20o...
    - mullingitover 5y ago
      I don't think I made up the idea that landlords generally don't lose money renting their property. Higher taxes might reduce their profits in a competitive market, but renters are still paying the property tax for the landlord. Tax incidence theory also leans pretty heavily on the assumption that there's healthy competition in the rental market. In most major cities that's a very unsafe assumption.
    - etchalon 5y ago
      I'd be careful about drawing the conclusion about rent shifting on that paper you linked, which really just says Carroll and Yinger's 1994 paper was right. Carroll and Yinger's paper is not unchallenged in economics (there are so very, very many papers on the problem), and it's entire line of reasoning is basically: 1. Property owners make a lot of money and own a lot of property. 2. When you increase property taxes, people who own a lot of property pay a majority of that increase. 3. Rent prices don't immediately increase 1:1 when property taxes rise, based on one data set. Basically, property taxes are mostly paid by people who own property. Most property is lived in by the owner. So property taxes aren't regressive, since rich people end up paying the majority share. People have been trying to create a model for the impact of rent shifting since the 60s. No one has a good model yet. It's hard to model. If I sign a lease for 2000/mo, and the state increases property tax on the owner, the owner can't immediately increase my rent. Rents increases are generally governed by local laws. But over time, they can raise it, and it can be reset when the current occupants leave. So an owner's profit margin takes a hit when property taxes rise, and renters bare a smaller percent of the burden of the new tax than the absolute amount raised in the short term. Long term, renter's are still covering the owner's total cost of that property, otherwise the owner would be losing money on the property – which, if that were prevalent business practice, we wouldn't have that many landlords. So yes, renter's pay property tax.
neilparikh 5y ago
> I'd be careful about directly comparing prices, real estate taxes (by rate) in Texas are significantly higher than in California. The two are directly linked, so this makes sense. A higher property tax means that the future annual rent (real rent if you're a landlord, imputed rent if you're a owner-occupier) you get from property will be reduced, so the capitalized present value will decrease correspondingly.
bcrosby95 5y ago
"Effective" rates. It accounts for prop 13, so you aren't getting .7% if you're buying a brand new home. My mom has a million dollar home in California and pays around 1.5k/year in property taxes because she's owned it since the 70s.
- bradknowles 5y ago
  Whereas we paid about eight times that last year, and our house isn’t valued as high. EDIT: and we’ve owned this house since 2008.
  - bradknowles 5y ago
    And we’ve owned this house since 2008.

thebradbain 5y ago

Taxes for that home in TX would be equivalent to a $1.8M+ home in CA, though (and raise every year with the market), so it's not as simple as comparison. The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA.

AlbertCory 5y ago
Indeed, I've also checked it out. No income tax, but property taxes are at least 2% of the assessed value, and sometimes 3. You'll see that on the Zillow listing.
- hnburnsy 5y ago
  It is nice though that you can control your taxes via choice on a property tax, not much with an income tax. But ultimately it seems like they get you one way or another, through sales, Income, and or property tax.
deleted 5y ago
[deleted]
kelnos 5y ago
> The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA. Are you talking about paying property taxes via an escrow account that your mortgage lender takes care of for you? That's not your "mortgage payment", which is a function of your loan size, interest rate, and term, and nothing more. The monthly mortgage payment (assuming same term and interest rate) is the same in CA and TX for the same amount of loan. (I guess we could also talk about things like PMI, but that won't raise your payment by all that much.) Property taxes might be quite a bit higher in TX, but I'm not convinced a $900k home in TX is the equivalent to a $1.2-1.3M home in CA. I would expect that's closer to $1.7-2M, and then the property tax amounts end up being not that different.
- pandaman 5y ago
  Not to mention that the property taxes in TX are not charged on the price but on the assessed value. It's same in CA, I imagine, but the assessed value in CA is >= price, while in TX the price is not disclosed to the government and the assessment lags the market price by quite a lot.