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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 gi

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
[deleted]
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.
      - foota 5y ago
        Not one to one though, it sounds like you know what you're talking about but the markets are of course decoupled. Home owners would like to pass along the entirety of their property tax, but whether they can or not will depend on the rental market, possibly renters can't afford the extra amount of the property tax and so adding it all makes the rentals unattractive and so the homeowner can only pass on some of the 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.

deleted 5y ago

[deleted]

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.
    - foota 5y ago
      Not one to one though, it sounds like you know what you're talking about but the markets are of course decoupled. Home owners would like to pass along the entirety of their property tax, but whether they can or not will depend on the rental market, possibly renters can't afford the extra amount of the property tax and so adding it all makes the rentals unattractive and so the homeowner can only pass on some of the 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.