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While I was thinking it's a good thing, I just remembered of a tangential question -- home ownership. Do you think it's fair when someone bought a house long t

While I was thinking it's a good thing, I just remembered of a tangential question -- home ownership. Do you think it's fair when someone bought a house long time ago, and hence pay just a small fraction of the property taxes of what newcomers pay, but get the same services (roads, schools, utilities etc) that are paid by property taxes?

silisili 2y ago
That's not how property taxes typically work in most places. An assessor updates the values on some period, taxes go up, and they pay their share. That actually became a huge issue in El Paso. Their property taxes range 2 - 3% of home value, which was fine when everything was worth 150k 5 years ago. Today it's nearly tripled, and some got tax bills in the 5 digits for homes they've had forever. Some states, like FL, prevent that from happening, which sounds nice on paper but is essentially what you describe. I'm not sure how I feel about that, but it was intended for retirees so I kinda get it. If your question is, is it fair people who bought before 2020 have an awesome interest rate and pay way less than newcomers, I'd say no, only because I'm angry I sold in 2019 and regret it!
- throw__away7391 2y ago
  In most places geographically speaking no, but a number of US states including California and Florida which account for a disproportionate number of homes have passed laws protecting existing homeowners from property tax increases by capping the rate taxes can be raised to well below the rate of housing price inflation. So as a new buyer you're paying not only a higher price and higher interest rate, but also higher taxes than the people you bought it from.
  - silisili 2y ago
    I actually like how FL handles this. They don't stop it from increasing, they just slow the rate of increase. I'd say it's not fair for someone who budgeted appropriately to get forced out of their home for something out of their control, like the historic explosion of house prices. In time it'll work itself out, assuming they stay long enough, as it still allows increases in a falling or stagnant market.
    - kmonsen 2y ago
      That’s also what CA does
      - silisili 2y ago
        Interesting, seems CA is 2% and FL is 3%. Both should probably be pegged to the inflation rate nationally each year, which would probably bring them up a few ticks, but otherwise seems reasonable to me. For owner occupied of course, -not- landlords.
        throw__away7391 2y ago
        > Both should probably be pegged to the inflation rate Yes I agree...but not the CPI, it should be tied specifically to housing prices. You could even have the state hire appraises to figure out the value of each specific property and peg the rate of increase to that for each property owner.
        silisili 2y ago
        I know this comment is tongue in cheek, but I still disagree. When you purchase a house, you look at principal, taxes, PMI, and insurance before making a decision. If you're responsible, I guess. If your little city blows up, and your property value in the market is now 3x what it was, why should you be punished and even forced out if you can't afford the new taxes? New buyers do the same math, and decide they can afford it.. Yes they're paying more, but voluntarily on a likely overpriced asset. I'm not saying the original owners should just pay less and that's fair, screw the new buyers. I just think the increase should be capped realistically.
        throw__away7391 2y ago
        The fair way to handle this would be to reduce the tax rate across the board in response to housing inflation. Somehow. Governments around the world are more than happy to see housing prices rise, as are existing property owners, so I am not exactly holding my breath for this to happen.
  - bestnameever 2y ago
    Higher property taxes generally would lead to lower home prices. But really, this applies with anything that you purchase. If the sales tax inceases, you may be taxed more for an identical item that was purchased prior to the sales tax increase. States and cities have a variety of ways to tax people. They don't need to rely on property tax.
    - bryanrasmussen 2y ago
      >Higher property taxes generally would lead to lower home prices. this is not my experience - since property taxes are generally related to the desirability of the house and updated periodically (so often years after a price rise in area)
      - mitchdoogle 2y ago
        It's definitely influencing my home buying decision. In Philadelphia area, Delaware County property taxes are a significant amount higher than neighboring Montgomery county. I am looking in both, but my budget is about $30k higher in Montgomery county because of the taxes. I would venture a guess that similar houses in Montgomery county generally sell for more than their counterparts in Delaware county.
        bryanrasmussen 2y ago
        the claim as I understand it is that the higher taxed houses will decrease in price in order to attract buyers, but property taxes are generally determined by prices, this would mean that house value should increase in Montgomery because lower taxes, and prices should decrease in Delaware because higher prices, and then in a few years the property taxes in Montgomery should increase and the taxes in Delaware should decrease. I of course am aware that property taxes change over time, but I don't think this kind of strongly observable see-sawing of the property taxes actually exists - so probably more data than just guessing would be useful.
    - nijave 2y ago
      Iirc housing is pretty inelastic
r00fus 2y ago
Tmobile is not a representative government. It is a highly profitable company that arguably acts in a cartel fashion with the other two national providers.
TeMPOraL 2y ago
Interesting example. But I can't help to think that, if that was to be the case, but in place of homes appreciating in value to the point they're primarily used as investment vehicle, then local community might be better off with such deal.

silisili 2y ago

That's not how property taxes typically work in most places. An assessor updates the values on some period, taxes go up, and they pay their share. That actually became a huge issue in El Paso. Their property taxes range 2 - 3% of home value, which was fine when everything was worth 150k 5 years ago. Today it's nearly tripled, and some got tax bills in the 5 digits for homes they've had forever. Some states, like FL, prevent that from happening, which sounds nice on paper but is essentially what you describe. I'm not sure how I feel about that, but it was intended for retirees so I kinda get it. If your question is, is it fair people who bought before 2020 have an awesome interest rate and pay way less than newcomers, I'd say no, only because I'm angry I sold in 2019 and regret it!

throw__away7391 2y ago
In most places geographically speaking no, but a number of US states including California and Florida which account for a disproportionate number of homes have passed laws protecting existing homeowners from property tax increases by capping the rate taxes can be raised to well below the rate of housing price inflation. So as a new buyer you're paying not only a higher price and higher interest rate, but also higher taxes than the people you bought it from.
- silisili 2y ago
  I actually like how FL handles this. They don't stop it from increasing, they just slow the rate of increase. I'd say it's not fair for someone who budgeted appropriately to get forced out of their home for something out of their control, like the historic explosion of house prices. In time it'll work itself out, assuming they stay long enough, as it still allows increases in a falling or stagnant market.
  - kmonsen 2y ago
    That’s also what CA does
    - silisili 2y ago
      Interesting, seems CA is 2% and FL is 3%. Both should probably be pegged to the inflation rate nationally each year, which would probably bring them up a few ticks, but otherwise seems reasonable to me. For owner occupied of course, -not- landlords.
      - throw__away7391 2y ago
        > Both should probably be pegged to the inflation rate Yes I agree...but not the CPI, it should be tied specifically to housing prices. You could even have the state hire appraises to figure out the value of each specific property and peg the rate of increase to that for each property owner.
        silisili 2y ago
        I know this comment is tongue in cheek, but I still disagree. When you purchase a house, you look at principal, taxes, PMI, and insurance before making a decision. If you're responsible, I guess. If your little city blows up, and your property value in the market is now 3x what it was, why should you be punished and even forced out if you can't afford the new taxes? New buyers do the same math, and decide they can afford it.. Yes they're paying more, but voluntarily on a likely overpriced asset. I'm not saying the original owners should just pay less and that's fair, screw the new buyers. I just think the increase should be capped realistically.
        throw__away7391 2y ago
        The fair way to handle this would be to reduce the tax rate across the board in response to housing inflation. Somehow. Governments around the world are more than happy to see housing prices rise, as are existing property owners, so I am not exactly holding my breath for this to happen.
- bestnameever 2y ago
  Higher property taxes generally would lead to lower home prices. But really, this applies with anything that you purchase. If the sales tax inceases, you may be taxed more for an identical item that was purchased prior to the sales tax increase. States and cities have a variety of ways to tax people. They don't need to rely on property tax.
  - bryanrasmussen 2y ago
    >Higher property taxes generally would lead to lower home prices. this is not my experience - since property taxes are generally related to the desirability of the house and updated periodically (so often years after a price rise in area)
    - mitchdoogle 2y ago
      It's definitely influencing my home buying decision. In Philadelphia area, Delaware County property taxes are a significant amount higher than neighboring Montgomery county. I am looking in both, but my budget is about $30k higher in Montgomery county because of the taxes. I would venture a guess that similar houses in Montgomery county generally sell for more than their counterparts in Delaware county.
      - bryanrasmussen 2y ago
        the claim as I understand it is that the higher taxed houses will decrease in price in order to attract buyers, but property taxes are generally determined by prices, this would mean that house value should increase in Montgomery because lower taxes, and prices should decrease in Delaware because higher prices, and then in a few years the property taxes in Montgomery should increase and the taxes in Delaware should decrease. I of course am aware that property taxes change over time, but I don't think this kind of strongly observable see-sawing of the property taxes actually exists - so probably more data than just guessing would be useful.
  - nijave 2y ago
    Iirc housing is pretty inelastic

r00fus 2y ago

Tmobile is not a representative government. It is a highly profitable company that arguably acts in a cartel fashion with the other two national providers.

TeMPOraL 2y ago

Interesting example. But I can't help to think that, if that was to be the case, but in place of homes appreciating in value to the point they're primarily used as investment vehicle, then local community might be better off with such deal.