Home : Blogs : Phyllis Lerner : Westchester County NY Real Estate Blog - Phyllis Lerner, Realtor

Prices & interest rates are down, inventory is plentiful, people are looking... but what about those taxes!!!

When people discuss the local real estate market they usually look at it from the view point of an owner or a buyer.

Three, four years back when the Westchester real estate market was flying high, we heard about what an "outstanding" real estate market it was. And of course, most people made a substantial profit when selling their home, or if they owned a home they were simply getting a thrill out of watching it appreciate, and in the end they were able to pull equity out of it and spend it on something fun. So it was perceived as a "great" real estate market.

Now, in today's real estate market we only hear about what a "terrible" real estate market this is, because prices declined, people are "upside down" on their mortgages, and quite a few are walking away from their homes. However for many people, especially the first time home buyers, this is an "outstanding" real estate market. Prices have come down, rates are very low, there are government incentives, like the $8,000.00 tax credit, and there is quite a good selection because inventory is usually rising in Spring.

So prices have come down by about 10-15 percent from their highs and people are looking, traffic is up a bit, and things seem to be improving. Things are "great" for buyers. But no, unfortunately there is still the sticker schock when it comes to property and school taxes. Westchester County is one of the highest taxed counties in the nation and first time home buyers cannot believe their eyes - their monthly tax burden will rival, and in some cases even exceed, their monthly mortgage payment!

What's my point?

Making home ownership truly affordable again in Westchester County requires actually one more thing besides lower real estate prices, interest rates and one time hand outs - you need to lower taxes permanently by reigning in the cost of local governments, schools and town services!

...are lower taxes here in Westchester on the horizon? Most likely not...

Posted by Phyllis Lerner on 04/19/2009 05:58 AM

Comments (42)

Prices & Interest Rates Are Down, but When Will Property Taxes Go Down? in the ActiveRain Channel

prices interest rates are down, inventory is plentiful, people are looking but what about those taxes

This post has been included in New York Information Westchester County, NY Information

42 Comments on Prices & interest rates are down, inventory is plentiful, people are looking... but what about those taxes!!!

APR

Mmmmm. Lowering the real estate taxes isn't likely to heppen as long as the property tax is the primary funding source for public schools that citizens want, parks that people love, trash pick-up, someone to fill the potholes in the roads, keeping the traffic lights working, etc., etc.

Those real estate taxes are not just a cost for real estate ownership. They are a reflection of the goods and services that municipalities enjoy and often demand.

Can't get stuff unless we're willing to pay the price.

Lenn is correct. Taxes are not about to go down anytime soon. During the boom years, many counties spent money like crazy and now they're having a very tough time paying for those programs. Don't look for any relief any time soon.

Phyllis, That would certainly be unique. I can't imagine the county or state voluntary reducing the property tax once they have their hooks into a taxpayer. Rich

Local and state governments are having budget issues and they need the tax revenue. We have seen some assessment reductions in Montgomery County MD. Senior home owners are in a bind with higher utilities and taxes and low interest rates on their savings accounts. Some seniors will need to refinance their homes with reverse mortgages in order to improve the quality of life.

Phyllis,

Great idea at first blush but Lenn is right. Not going to happen unless you are willing to find another way of funding for schools etc.

Phyllis,

I'll mimic all other coomments above by saying Lenn is indeed correct, but to expound a bit further...

Schools need to adjust their budgets and deal with the fact that the money isn't there and I hope the local governments can make this point and reality resonate soon.

Our area is building new schools while closing "antique" schools with horrible enrollment numbers.

I know my property taxes on my investments in Ohio are based on the top of the market appraisal, in fact, they are based on the price i paid for the property "POS" (point of sale)...

The interesting part of this, is my investment property in Manatee county florida hass already received a substantial property tax reduction due to the substantial drop in values. I found this exhaustingly funny as I can't get a break in slow moving, no boom all bust Ohio, but the user friendly Sarasota, Fl has already circumvented the current downturn...

Anyhow, good post. Thx

Sean

I agree that property taxes are needed t maintain our communities but in Texas the system is so flawed that the taxes are often so far off and a point of contingency every year! We swing back and forth and never really find balance here!

Phyllis,

I know every county across the country has their own tax issues to deal with, but I don't think lower property taxes would work as a housing stimulus. Housing affordability is literally off the charts going back to 1973; making housing more affordable is no longer the issue.

We are getting this question all the time. When we hit our peak rally, our local school districts appealed new buyers' taxes by the hundreds, each year, to raise them.

Now the question is, will they lower the taxes? Of course not!

I get the question about getting the taxes down all the time. Good luck with that.

Property taxes dropped in New Orleans 29% several years ago in order to compete for residents. Having a couple of local politicians under indictment will also help.

The schools are becoming much better as well as 80% are now Charter schools with no teachers unions.

In Oklahoma City the property tax rate is ususally about 1.1%. Our taxes are balanced with state income tax and sales tax. Many times investors buy Oklahoma investment properties instead of Texas because their property taxes are much higher because of no state income tax. In that respect our lower taxes do make a difference.

In northern Calif the property tax rate is about 1.1% to 1.2 % of the purchase price. Our property tax as dropped as home value dropped. We pay property to the Santa Clara county. We pay sales tax to local city but our governer sitll cannot balance out budget.

Grace Keng, Silicon Valley realtor, California www.gracekeng.com

Lowering taxes would be great - but I doubt that will ever happen.

Phyllis, The same thing is happening here in the Carson Valley Nevada Real Estate market. You'd be shocked to find out that in October 2005 the Board of Commissioners "decided" that anything built after that date would essentially be taxed at 1% of selling price as opposed to 0.5%. (Our taxes to do not readjust after sale, it is the initial sale only that affects these numbers.) So - you can imagine the fury of people living right next door to one another - one pays $XXXX and the other pays $XXXX times 2! For no other reason than date of construction.

I have been sitting on the fence watching this and I happen to own a new home. I am hesitant to speak up for fear that I would anger many in the community and it may hurt my business, but isn't this unconstitutional?

I think it's the same all over, especially those homes that were priced over $500,000. Even thoughthey have come down to where more people can afford them, they don't consider them because of the taxes.

My property accessed value decreased but my taxes went up - lol! They always know how to figure it out!

Our taxes must be lower than other states. I don't ever hear that as a reason not to buy. What I am seeing is that individual home owners are petitioning to lower their taxes based on current values. AZ state is in a budget crisis (liek many other states) and I have a feeeling taxes may go up on other items...we've got lot of that going on here. We need taxes to pay for all the stuff we say we want to provide. Paying taxes....is a good think. I hope to pay much more this year......which means sales are up.

No governmental entity is likely to lower taxes. Spending is contagious and their needs are more than what is in their pocketbook so the answer is taxes! For some reasons, those who set the taxes do not have much insight into the future! They are the 'now' guys!

Mary

Phyllis: Our taxes are fairly reasonable here in Colorado so we don't have the same issues you face. Good luck!

You nailed it right on. I was telling someone yesterday that I am more afraid of taxes than anything in the economy. We, as homeowners and workers, are at the mercy of those who have the authority to tax!

Great Post Phyllis.

1.Here is my 2 sence. If people factor in Property taxes when they are buying a house it shouldn't be an issue. Unlike in the past when you didn't have to prove income people had the unfortunate luxury of not looking at taxes.

2. local property taxes are deductable at the federal tax level so the fed is chipping in

3. Rates are so low, that despite the high tax many still can qualify. What really needs to be restored for this market to take off, is jumbo loans especially in the market you are operating out of. Since the only jumbo widely available is only the conforming jumbo which is maximum $729,000 for a 1 family.

I appreciate your post

Keep it up

Joel SIlberstein

So how much are the taxes in your area. In our area, they're not that bad but they seem bad to people with low incomes. I can always tell someone coming from up north. The first question is "How much are the taxes." When I say what they are, they may reply that theirs are that much PER month.

Phyllis,

For some reason in nearby Baldwin County, most folks property taxes went up because county tax assessor's office says property values increased. The appeal process is very cumbersome and unfortunately most people just pay the increase.

Government entities are going to get their money somehow someway. If property tax revenue would have decreased, some other tax would have increased.

Steve

Here in California, properties are reassessed at change of ownership--state rate is 1% of the appraised value at time of transfer of ownership (generally the purchase price) PLUS whatever bonds, special assessments, etc. have been voted in in a specific area. I tell purchasers to budget for taxes being 1.25% of the purchase price, although they are generally less than that.

However, since property values in many areas here are back down to around 2005 levels, I advise clients whose homes are now valued lower than their purchase price, to request a reduction in property taxes which county assessor's offices usually accept, which they must do by law.

This helps individual homeowners, but adds to the state, county and city budget woes.

Phyllis,

I feel your pain! I sell in northern New Jersey. Here a home just under $400k could have property taxes in excess of $10K. Unfortunately I can not boast goods and services, we live off the land, have no complimentary trash pick-up, no commuter access and very little in the way of recreation programs, senior or otherwise. I won't even get into our school situation. My saving grace is that our county qualifies for USDA financing which gives us a 100% financing opportunity. That and the first time hombuyer tax credit has created some momentum over the last few months.

Good Luck!

You said it, Lenn. And what a sticker shock it is! I've had people who've bought homes 2 years ago just not able to cope with increased taxes. Then there are the older citizens - their investments have dwindled and they can't afford their homes.

And this is South Carolina!

Then there is the unbelieveable taxation of investment properties.

Yes, we need roads and lights and all of that. I'm sorry, but after the tax increase, we still need roads and street lights and all of that!

And have our schools improved? Ha!

I have marketed assessment appeal services for yours, look at my site: www.LowTaxRate.com

Good for you ...... In Texas we are also stricken with unrealistic real estate property taxes to support our schools and we also passed legislation that does not allow CAD access to MLS info. They (CAD) spanked us by using NY data and our values are all over the place. I just put up a new website www.PropertyTaxesInElPaso.com. Hopes that individuals will protest their taxes, question the elected officials on use of funds and rally the State Officials to solcve this. Residential is horrible and Commercial taxes are almost are illegal.

Come on everyone lets share what we do in our communities to help one another. This is more than the cost of real estate, we have folks loosing homes and businesses over this.

I think eveyone is responding as to WHY we have property taxes, but not why the taxes in Westchester County are so HIGH. I'll explain.

I live one town north of Phyllis' company. As I read the comments from our colleagues, I see them coming from places where the taxes on a home like mine might be $3,000 per year, $6,000 annually, and maybe even as high as $10,000. But the taxes on my home in Westchester County, an almost 50-year old medium -sized home, are $16,000. $16,000!!!

I have 4 children. I want them to go to good schools. I want the roads plowed. I need clean water. I'm willing to pay taxes for all those things. But why does a good school, decent (ahem) roads and clean water in Westchester cost 2-3 times what it costs elsewhere?

Waste and inefficiency. If my school taxes are $10,000 and your school taxes are $4,000, are my children getting 2.5 times better educated than yours? This county has school districts with fewer than 1000 students from k-12. There are dozens of highs chools with fewer than 600 students. It seems like every zip code has to have their own police, public works, and school system. The County government is larger and worse than the municpalities. Next door in Connecticut, there is no county government. Somehow they get by in Ridgefield and Greenwich.

Services need to be consolidated and waste needs to be acknowledged and cut or we'll be paying $30,000 for modest home's taxes soon.

Great Point, Right now is the best time to buy!

Hi Phyllis, Here in Ann Arbor, MI voters passed Proposal A back in 1993. That put a cap on how much the taxes (via the Taxable Value) could rise each year. Before proposal A the taxes were rising quite dramatically, often 10% or more each year. It was out of control. Anyway, with the passage of this proposal the taxable value was tied to the CPI (consumer price index). It could only go up as much as the cpi. The school millage was removed from taxes. The sales tax went from .04% to .06% of sales. Additonally, when a property is sold .75% of sales price is paid to the state as a transfer tax. That goes towards running the schools.

Our property taxes are set to rise next month. Of course our market values didn't plung either

Hi Phyllis -- The positive realities of today's real estate market, especially at a local level, can never be stressed enough and you pointout plenty of great reasons to buy today. If I were in the market to buy today, I would dive in wholeheartedly.

APR

In Florida, property taxes are definately an issue. Home prices inflated so quickly over the three year period between 2003 and 2006, assessments were rapidly increased. Every time a home sells it is reassessed so that some homes in a sub-division are paying 3 or 4 times the taxes of other homes. It is difficult to make people understand that even if the taxes for the current year are low, purchasing that home will prompt a reassessment, and even if the value of the home has deteriorated from 3 year old values, the rate of taxation will probably increase if the home is in an older subdivision and has not resold for a period of time.

We've been teaching our clients how to appeal their taxes. I even went to the board of review re: the taxes on my rental property. It's definitely time consuming though and not enough people do it. In Michigan the TV automatically jumps up the AV at point of sale due to Proposal A passed in 1994- it makes things a nightmare sometimes. Too many lenders calculate on TV and cause shortages for buyers. Anyway, I agree with you! The tax authorities need to rethink things.

One nice thing about lower home prices across the country is that in most cases, property taxes will be lower too. :-)

Phyllis ... Thanks for your article here. Helping our customers and clients know about home affordability and ownership is what we as Realtors do, here at Orange County, CA, and everywhere in the US.

We understand the pain about possible property taxes and help you can assist your clients at Westchester County with the best possible information for their choices, lower real estate prices, great interest rates and buyer income tax credits.

I do not know the specifics of your area. In CA property taxes are generally not the issue (every other tax is). In general they have gotten out of hand. As the lady from New Orleans mentioned above, promoting charter schools and getting rid of teaches unions would lower everyones tax burden. And generally the teachers that are still working would still be paid well, the schools would be better, and life in general would improve.

My kids are in a Charter Home Study School.

The Final thing is Go to a TEA Party. Reform Government from top to bottom.

Totally agree - when should they start? I say right now, but it doesn't seem the assessor in my area thinks it's necessary. Totally ridiculous taxing on a homes value that was 2 even 3 years ago depending on the reassessment was done in your area.

Good post & congrats on your feature in the newsletter.

This is what we are seeing with the taxes on the homes in our area as well. We just saw a REO home that was 399K but the taxes on it for the year were for a home that was in the 550K range. They should pay the tax based on the purchase price.

APR

They are all components of buying a home. The PITI payment T is for taxes.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?