A friend wrote me the following: I know you've been researching sales & home values all over the country. Have you done anything in terms of seeing if houses are harder to sell in areas where taxes are consistently high? I know that sounds like a no-brainer, but I'm curious if there are facts to prove it.
I'm convinced the taxes are by far the #1 reason for the high inventory of homes on the market here. It's a huge reason why people leave & it's a huge deterrent when they're thinking of moving in.
Actually, I have--it is a nationwide slump and taxes seem to have no strong correlation on a general basis. On an individual basis, two comparably priced homes in the same area will see the higher-taxed home lag considerably behind in time on the market, but the national issues are more based on the job market, proximity to transportation, surplus of inventory (over-building) and perceived value of municipal services (including schools). "Affordability" will always include taxes, and high taxes increase the perception that an area is not affordable.
Her response totally encapsulates the frustration, anger, and futility expressed by so many faced with yearly tax increases far above the rate of inflation:
I guess the national situation is far more complicated than what I see, which I guess isn't surprising since I haven't been researching it. But everyone I know here has one big complaint & that's taxes. Anyone who's been here 14 or 15 years has seen them double in that time, and taxes of $10K are a distant memory. I can easily see that in 5-10 years, my tax payment will surpass what I pay in principal & interest, which convinces me that if we're still here in 2018 to pay off the mortgage, it will be a hollow victory. I can't see any reason why anyone would buy into an area where you are relieved when your tax increase is "only" $500 for the year.
Of course, this is when the Kinks' “Sunny Afternoon” sprang to mind (and you thought I mostly just had show tunes running through my brain):
The tax man’s taken all my dough,
And left me in my stately home,
Lazing on a sunny afternoon.
And I can’t sail my yacht,
He’s taken everything I’ve got,
All I’ve got’s this sunny afternoon.