Yearly property taxes never made sense to me. So you supposedly bought and own something, except if you don’t pay the government then they can just take it away.
Taxes are the price of civilization. You pay taxes on your land, because if you don’t, a gang of armed thugs will come and steal it from you and bury you under it.
I see your point for general taxes, but if the federal and state government are already taking your income and many other things how come they’re also taking so much in property tax? Many other countries seem to be able to protect you and give you what you need without property tax.
Most modern nations have higher taxes especially on the rich
Because collecting only one type of taxes would cause massive economic distortion and would inevitably burden people unequally. Different taxes have different properties. Some hit certain groups harder than others. Some hit certain types of businesses harder than others. Far better to have a whole series of modest taxes than one form of ruinous taxation. Do some countries not have property taxes? Yes, but they’re small tax havens that aren’t really a good model for the vast majority of nations.
But as far as optimization, consider some examples.
Property taxes also work best at the local level because the spending needs of municipalities don’t swing heavily with economic conditions. The federal government has spending needs that vary wildly with the economic cycle. During a recession, the federal government needs to massively ramp up its spending. But at a local level, a recession doesn’t mean you suddenly need twice the number of firefighters. Property taxes are pretty steady over time, so they’re a good match for the needs of local government. The federal government’s income tax revenue goes down during a recession, but that’s ultimately fine, as the federal government controls the currency. They can afford to sustain massive deficits during bad years and make it up with surpluses in the good years. (Well, if the federal government was functioning as designed.)
Income taxes also make more sense for government entities whose jurisdictions are difficult to avoid. If you fund your city entirely with income tax and no property taxes, you may find your community completely overrun by retirees who want services like anyone else, but don’t actually earn much taxable income to pay for them. If you fund your city entirely through a large sales tax, people can just drive and shop outside of city limits. It’s much harder for people to avoid federal income tax simply by moving house. Unless you’re leaving the country entirely, you’re not avoiding the reach of federal income taxes. (And sometimes even that doesn’t cut it!)
But property taxes? The only way to avoid those is to not live in the city at all. Which, from the city’s perspective, is fine. If you don’t live in the city, then you’re not putting much burden on the city’s infrastructure and services. But if you want to live in the city and enjoy all the benefits that come with living in a city, you have to pay the city’s property taxes.
In short, different taxes have different properties, different benefits and drawbacks. Funding a society through a diverse arrangement of taxes allows much more efficient optimization of these taxes. It’s a much more intelligent system than just trying to fund it all with one big dumb tax of a single type. That’s more the way of Medieval head taxes, not modern nation states. We used to have simple tax systems. We stopped using them because we realized there were better ways to do it.
China is a small tax haven?
I suppose they haven’t. But they are planning on doing so. And their lack of a property tax is a major reason their cities struggle financially.
Also, the key context here is that land in China is technically owned by the state. It’s leased out on very long term ground leases, but it’s all still owned by the state. In principle, the government doesn’t need to add another property tax, as it’s already leasing out the land. It would be like if a landlord also charged property tax to their tenants.
Like almost every issue, property taxes aren’t a binary issue - it’s not a matter of either having them or not having them. There’s the sub-issue of how the rates are set. Simply tying property taxes to home value isn’t fair, because the burden a person puts on city services doesn’t increase just because the perceived value of their home rises. You don’t actually receive any of that value until you sell your house and leave, but you’re taxed on it anyway. Being taxed when you sell the house would make perfect sense to me, because that’s when you actually reap the benefits.
The argument that people in high-priced neighborhoods are rich and can afford or deserve to pay higher property taxes is unrealistic. Recent newcomers, yes, but not people who bought homes when they were still cheap because the area wasn’t so desirable. Those people are no different from people who buy cheap houses today, they just did it a long time ago. But they get charged premium rates because the perceived value of their home increased. That way of assessing property taxes isn’t fair, it’s just bureaucratically easy.
I think property tax should be heavily weighted by the original price you paid for your house, and should go up with inflation and the cost of services. It should not be flatly tied to the price you would get for your house if you hypothetically sold it.
I think property tax should be heavily weighted by the original price you paid for your house, and should go up with inflation and the cost of services. It should not be flatly tied to the price you would get for your house if you hypothetically sold it.
That is how you end up with California, where the old generations get wealthy, and the young generations are driven out of the state completely.
Yes, the economic conditions in a state with 40 million people are probably due to one specific factor. Classic meme-level thinking!
Prop 13 is real, yo
They are actually rich. They have earned in many cases more money in real estate than many people have earned working
Uhhh no… the value of your house is what somebody might buy it for IF YOU SOLD IT. Until you actually do sell it, you don’t get that money or “make money in real estate”. As I said, taxing you at the point where you sell the house would make sense to me - because that’s when you’re actually getting money. The way property taxes are now, people are being taxed on money they might hypothetically get in the future.
Now it’s true that you can borrow against your home value - this is known as a home equity loan or a line of credit. So you potentially have that available - but even that is not “making money in real estate”, it’s borrowing money that you have to pay back.
Srsly, what grade are you in?
They are paying money based on wealth they can obtain at any time directly by selling. So if you pay $50k and end with a 4M home you can sell it and live on the millions of dollars.
Now it’s true that you can borrow against your home value - this is known as a home equity loan or a line of credit.
That is literally how every billionaire funds their lifestyle, just borrowing against stocks instead of home equity. If people with $4 million homes are not rich, then neither are most billionaires.
Simply tying property taxes to home value isn’t fair, because the burden a person puts on city services doesn’t increase just because the perceived value of their home rises.
It depends how much home value correlates to house size and lot size. A $1M 1500 sqft bungalow on a 1/4 acre lot in a gentrified neighborhood may not burden city services more than a $100k 1500 sqft bungalow on a 1/4 acre lot in a bad neighborhood, but a $1M McMansion on a 2-acre lot on the edge of the city absolutely will. That’s because the cost of city services scales with things like increasing the length of pavement and sewer pipe across the lot frontage and decreasing the number of homes emergency services can reach within a reasonable distance/time from the station.
Yes, you an come up with edge cases like McMansions next to golf courses, but houses on identical lots right next to each other can have different values and pay different property taxes even though they take the same amount of city services. Remodeling a house, or even just painting it frequently and keeping the yard nicer than others, doesn’t make you consume more city services, but it will raise the home’s assessed value and property taxes. That’s a false link.
Putting a second story on likely includes increasing the number of bedrooms, which theoretically increases the number of people who could be living there and thus increase the burden on city services. Renovating for quality and building additions to the square footage aren’t equivalent.
I think lot sizes are still a much bigger factor, though: a house renovated/rebuilt to max out the allowed FAR (floor-area ratio) on a 1/4 acre lot still ought to get taxed less than a modest-sized house on a 2-acre lot.
Taxes are, but not necessarily property taxes - they’re just one of the many possible ways to tax people.
Lol
In China 70% of the population pays no income tax, a very small sales tax, and there’s no property taxes at all. Who you tax is just as important as how much you tax. It is not necessary to tax everyone in a society to maintain a modern civilization.
Your leaving out a critical piece of information…
That you can own the building, but the property is on a 75 year lease that can be extended two times for under a hundred dollars for a total of 225 years of that home being in your family for less than the cost of a single years property tax anywhere in the US?
Uh, yeah, that was on the tip of my tongue. That’s exactly it.
The alternative is much higher income tax.
The alternative is banks hoarding real state without any need to rent it out or sell it soon. They can just wait until prices get higher.
That’s why in most countries people pay way less property taxes in the house they live in.
maybe there is a middle ground? tax for the 3rd owned land, and increasing for any additional ones?
House tax I understand, there is a finite limited of land.
Vehicle tax however can go fuck itself.
This is what is needed.
Gotta maintain the roads somehow. Vehicle and gas taxes mean that only those using the are paying.
I disagree, mostly due to i pay vehicle registration and tax when I buy it. VA does vehicle property tax, MD does not. How are they surviving?
update: so I just checked Virginia’s property tax rates and apparently we are one of the lowest in the country at like .76%. so maybe the vehicle property tax makes up for that since most states are just a bit under 1% at around .9. MD is higher, 1.02%
I think it would help if they called it something else also just to clear it up.
I’m surrounded by multimillion dollar homes and $100,000 cars on the road. Just feel like you’re getting fucked left and right all the time.
I disagree, mostly due to i pay vehicle registration and tax when I buy it.
then exactly that is what needs to go away, not vehicle tax, because this won’t fund road maintenance for however many years
It’s depressing that we can never truly own even the land we live on. How many seniors lose it all over property taxes? FFS, we have auctions to rape these poor people.
I don’t know about where you live, but here the property taxes pay for the locality’s services: streets, parks, city employes salaries, snow removal, garbage removal, summer camp, community center, etc. So this taxe is very useful. Now, it needs to be well managed and it’s a whole other topic.
My property taxes, largely, go to support public schools.
I’m fine with that.
Doesn’t mean I should be exorbitantly overcharged.
Yeah some serious boomer logic going on here.
“We thought that if we kept the foundation and the outer walls of the house and we just took the roof off, it was our understanding that we were going to preserve our Save Our Homes and our homestead,” says Debbie.”
“the renovations—removing the roof, adding a second floor —ultimately triggered a full reassessment of the home’s value. Under Florida law, once a property is deemed substantially improved, it can be treated as new construction, removing the protections that had capped the home’s assessed value for years.”
I’m sure it’s possible to achieve those things if you know the right people.
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lol, a basic slab on grade with edge thickeners with 2x4 walls can handle 3 story buildings.
Probably should add 3 hurricane clips, because it’s florida.
At the same time, that absolutely is a life altering change. Even the biggest idiots don’t deserve to get their life upended. I don’t know what the right solution is, but I can extend significant empathy to “I did a dumb thing and I don’t know how to keep my home now without uprooting it”.
I’ve only bought one home and it was recently. It was every bit as aweful as I expected but having seen what they are in for, they might not have the cash around nessicary to sell the home without getting scammed by predatory buyers.
The entirety of real estate is so fucked
A professional tax attorney built a $4.4M home and expected to keep their original valuation?
That’s not a big idiot, that’s attempted tax fraud.
They were trying to cheat their taxes and failed. Fuck em.
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If you’re old and no longer have much of an income, you still have your home. If you become disabled,
We already have this is many states in the USA. Its called the “Homestead Exemption”. Here’s an example from Ohio:
“This is a statewide program, administered by County Auditors under rules established by the Ohio Legislature and the Ohio Department of Taxation. This allows senior citizens (65 or older) as well as permanently and totally disabled homeowners to reduce their real estate taxes by the amount equal to the taxes that would otherwise be charged on $25,000 of the market value of an eligible taxpayer’s homestead or residence. The homestead may include up to one acre of land. Under the changes made by the Ohio Legislature and beginning with applications for tax year 2014, new participants in the program will be subject to an income test to be eligible.”
So matter how big your house is (as long as its on one acre of land or less and you have an income $$75k/year or below) you only get charged as though the house is worth $25k, which I think would obviously be a very low tax bill.
They qualify under the local homestead law.
But because that limits year over year increases (which I consider reasonable) and is reassessed after mayor upgrades (which they did) they now have a huge jump in taxes.
Even reading the summary - yes they had the Homestead Exemption to do exactlyy that. However they completely rebuilt their home to a much nicer one and thought they’d keep the Homestead Exemption. This worked correctly. In phase no sympathy for trying to cheat taxes
It would help if I’d actually read the article.
A full night’s sleep, and I’m rethinking my comment. I was hasty.
This is incorrect. In China nobody owns a home. They get a lease on it from the government. For wealthy urban Chinese this has meant they get lifetime ownership so far, but this is not guaranteed.
Also if you are not born with the correct hukou then you are not allowed to purchase any valuable property at all.
Ok, so, apparently, I don’t know what I’m talking about. I did watch one YouTube video though, and suddenly I felt like an expert on China.
I agree, we should replace property taxes with very large income and wealth taxes. First we can end property taxes and then we can implement guaranteed income so people who become disabled can afford to maintain their homes.
The thing about yearly property taxes is they often go to the city/municipality and that’s how they pay for things.
The city doesn’t charge income tax, that’s a state/province/fed level type thing.
We’d need a new way for cities to collect taxes themselves, or a new system to properly and fairly distribute taxes from the incomes to the cities/municipalities where they live.
Definitely doable, but it’s a bit different than just raising income taxes.
Some municipalities may also have an income tax (completely separate from state or federal income taxes). Other states have much larger sales taxes.
Interesting, I’ve never personally seen that.
Where I am we have fairly low property tax and a small municipal income tax. So it splits the burden equally. If you live outside of a municipality, there will be a small income tax to support your public school district. This is also on top of State taxes income taxes and Federal income taxes. Sales taxes are also a thing at the state and city level. Honestly, I don’t feel overly taxed with the total amount of money I pay in taxes. I receive the benefits of society. This is even for services I don’t consume, but I want the services available to my neighbors that may need them, such as housing assistance, elder care, supplemental nutrition, etc.
I pay a 1% income tax to my local government.
My city charges income tax. As does the locality I actually live in. Plus property tax. Plus a School income tax on top of it…
Property tax is a wealth tax
I’ve only bought one home and it was recently. It was every bit as aweful as I expected
I’ve now bought two in my lifetime. I wouldn’t call either awful for my experience.
What was bad about yours?
Every home purchase I’ve ever made was a terrible experience. I’m glad you had a better time.
Lots of back and forth on inspection items. We wanted a lot fixed that should be fixed and they did do it as well as a lot of consolations, but if we had to sell this house right now, as I lost my job yesterday, I wouldn’t have the cash to be able to fix stuff that needs it for another inspection
Lots of back and forth on inspection items. We wanted a lot fixed that should be fixed and they did do it as well as a lot of consolations,
That’s fair. That’s pretty common, and it usually sounds worse than it is. I think its also about setting expectations. If you have the expectation that you’ll be looking at a perfect house and simply agree to the sale price, then you’ll be surprised/frustrated. If you’re prepared for that back and forth with the horse trading on what you’ll fix vs what you won’t (similar to buying a used car), then its not too bad.
but if we had to sell this house right now, as I lost my job yesterday, I wouldn’t have the cash to be able to fix stuff that needs it for another inspection
You aren’t required to fix anything as the seller, however your buyer can walk away if it doesn’t pass inspection. If you have lots of buyers, this can be the right choice sometimes. However, if you only have one buyer you’re going to have to compromise. The middle ground here is that you can lower the cost of the house to cover the costs of the items needed to pass inspection. Buyers will usually go for that. So even if you don’t have cash in hand to fix things, you can still sell.
Won’t someone think of the poor multimillionaires?
They tried to apply the building code laws. In Florida, if you do a renovation and keep the foundation and one wall, you can build to the code at the time of construction. These “protections” never applied to assessment and tax.
Many houses in that exact area have been bought for cheap and flipped using this work around. They end up with a modern house but can avoid having to spend extra for upgraded storm mitigation, plumbing, and electric.
Yeah that’s the same rule up here in Jersey. You can use it to maintain a structure that goes against the current building codes (say the ordinance makes it so you can have as much, you still can). To think that a tax collector wouldn’t be like “Hey, there’s an extra 1500 square feet, two bedrooms, and another bathroom on this house” is foolish though. And you presumably pulled permits for it all and put it right on their radar.
The way to do it is piecemeal over several decades. Nobody is none the wiser.
Can’t imagine adding a floor piecemeal.
Boomer logic … “I want all the benefits, entitlements and supports of society and none of the responsibilities.”
Trumper logic, you don’t own what you own, and you need to either pay more or give it up., and fuck you us wanting nice things
This is the type of shit destroying us as well.
See? Both sides are idiots( talking about political parties, not class)…
We have people who want to take too much from us and people who don’t want to give, and both sides downvote truth.
If we want a better country, we have to be honest, not selfish
Alright, so you’re a young gen z family and you buy your first home, which is all you can afford right now, you’re young and you’re starting your careers and your family.
In 10 years, property values have increased dramatically, and you’ve had a child and you’re thinking about your second. Your careers are going well, and you think we should maybe get a bigger place for our expanding family. But oh no, there’s an unsustainable housing marketing bubble that refuses to burst, so you can’t afford a bigger place anywhere near your job. So you build UP, like they do in every multi-generational home culture, you expand your living space as your family expands.
It’s not a crime or a moral failure to upgrade your home, and you shouldn’t jump at the opportunity to beat someone when they’re down just because you don’t empathize with this particular boomer homeowner.
This Boomer homeowner is why those Gen Z families can’t find homes. If your single family home is worth $4 million, that is the market telling you that that single family home should not exist. The land is too in demand, too close to jobs, too close to amenities etc. to have that lot hoarded by a single selfish person. You want to live in a single family home on a quarter acre lot? Fine. Do it on the edge of the city where the land is cheap. This women’s lost could provide homes for a dozen families, at prices that would be affordable to Gen Z families. Instead people like her vote to prevent such redevelopment.
Are you okay?
If your single family home is worth $4 million, that is the market telling you that that single family home should not exist.
Right, an unsustainable bubble, I said that. This boomer family bought a reasonably sized and priced house that’s on the edge of the city, and now they’re forced to sell it and not be able to replace it with a bigger home on their budget in the same part of town, they didn’t fuck things up Zillow did!
The gen z family who buys today won’t be about to upsize tomorrow, and you’re gonna blame them.
The fuck-up was by the city, which failed to abolish the single-family zoning in order to allow the land to be developed to its highest and best use.
Based on the backstory, they kind of did what you said, bought it in a relatively more affordable context, and then the world changed their minds around them and retroactively declared it a multi million dollar property. Well at least for tax purposes and likely insurance, but not necessarily market rate (tax assessments commonly lag the market, so a market downturn could leave them with a multi-million dollar house that no one will pay the stated value for
Well at least for tax purposes and likely insurance, but not necessarily market rate (tax assessments commonly lag the market, so a market downturn could leave them with a multi-million dollar house that no one will pay the stated value for
More like the house is likely worth even more than the $4.4M it was assessed at. But nice try trying to spin your point to fit your narrative.
Can you imagine the pain of having to pay fairly for what you own… Disgusting.
I mean, bullshit strategies and apparent entitled attitude aside, she does have a point. $90k is an absurd property tax rate for a single family home.
So is a single family home worth 4mil
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Did you see the photo in the article? It’s a ‘single-family home’ in the way a Mercedes SUV is a minivan.
I mean, yah, housing is way too fuckimg expensive. But that is very definitely not a no-frills family home.
The house is valued at $4.4 millions.
If it costs $90k for a $4 million home then a $1 million home would be taxed at $22.5k. That’s still half a years salary at median wages for an average priced home in many markets. Don’t let your hatred for rich people lead you to advocating for shitty policies.
a $1 million home [… is …] an average priced home in many markets
I’m going with this is the actual problem.
Also, your math assumes a flat tax rate, and any decent tax system is progressive. I don’t know how Florida’s works, but again, actual problems.
I don’t think it matters what the house looks like. That’s a ridiculous amount for any single home. I understand the desire to tax the rich but there are better ways to accomplish that than jacking up property taxes for everyone, especially when inflationary housing costs are a simultaneous concern.
The solution is to demolish the home and build multi-family housing there. Low density single family zoning has no place in an area where the land values are that expensive. Keep that kind of development on the urban fringe where it belongs.
Rich boomers who haven’t worked in 30 years want to keep property values high without paying the property tax to go with it
basically what happens when you create and support a housing system whose goal is to make profit. doesnt matter if you yourself plan on living in it, people voted for the system that approved the nonsense of longterm profiteering of a basic need.
They basically rebuilt their home and are sad it’s appraised at market value.
That’s at least what I got from it.
Yeah, not a lot of sympathy from me.
4.4 mil, wow.
If it’s that big of a problem for their life, why not just sell the house and be multi-millionaires? It’s a non-story. Maybe they should’ve taken that into consideration.
So, the house is now valued at 6x the original value? If they sold it at only 4-5x it would still be a huge win.
Their taxes were grandfathered in because they bought the property at a much lower value, the house was already worth a lot more than they paid for it.
Completely true, but not a loss.
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They wanted a new, two-story house, but with a tax loophole to save money.
Maybe it is different for me because I moved every couple years growing up. I have lived in 15 places in my life, and the most recent is a record of over a decade.
Hahahahahahaha
Oh no, their taxes went up with the value of their property
🎻
Sure must be nice having a house to remodel.
How were they supposed to know real estate law being… checks notes…
a real estate attorney?
Reminds me of when some dumbass i worked with was ranting about owing the government too much money. Turns out he was borrowing from his 401k to do a home renovation. Which of the 1000 things you have to check as read and agreed didn’t clue you into the fact that you will be penalized for doing that?
Working for. That doesn’t mean paralegal. Reception, copy, courier, title clerk, mail room, etc
That’s a fair point. But at the very least it can be said she should have had the resources not to be surprised by this.
Maybe.
Not maybe. Definitely.
She “knew the taxes could go up some”, and they had the resources to basically build an entire house.
This is poor/no planning, and entitlement.
I was going to ask why they didn’t consult a real estate attorney. Apparently they didn’t have a good one…
You’d think a real estate attorney would know better.
Anyway, property –with the improvements they made, has appreciated over $163,000 on average every year since they bought it. Ya, $75k more than they planned on sucks, but they can take it from the value of the house no?
I don’t know. I mean, there’s a good chance that the original purchase price of the house is almost paid off, but having a sudden $76,000 increase in your bills is going to be tough on anybody. Unless they have made some very bad financial decisions outside of this, that probably is more than double their monthly mortgage.
And as somebody who has an inordinate amount of equity in a house they purchased far too recently for the amount of equity that I have, it is not exactly easy to pull money out of a house as a homeowner, And even if they do take loans to pay the tax burden, that doesn’t mean that the money has been handled. It just has taken today’s problem and pushed it off for tomorrow.
I’m not attempting to justify them. I’m just examining their side with the slightest benefit of the doubt.
They just did an expensive Reno…. None of your comment makes any logic given that they just did an expensive Reno, they could afford to throw money around.
Maybe, maybe not.
Renovation loans exist, and are often secured against the property (backed by the increased value or against equity).
So there’s a real possibility that they only increased their debt and monthly expenses without having the liquid capital for the unexpected tax payments
Sucks to suck if that’s the case. If they truly couldn’t afford this, they should have been more diligent about researching the potential ramifications of making these renovations. That goes even more so for someone with experience in the field of real property.
But they’re holding out hope that momentum around reform might arrive in time to help them stay in the home they’ve poured decades of love and savings into.
Yeah thats not going to happen
Fuck off and sell the home. Why is this a sob story.
Only if you’re a boomer.
Most people are echoing exactly what I would normally say so I’m going to say something that I don’t see so often, if it was me in that situation I would also be pissed, not because the evaluation made it too expensive but because the tax that would be given would just be sent over to the military and none of it would be of help to me, my kids, my neighbours and my allies
none of it would be of help to me, my kids, my neighbours and my allies
Huh? It’s property tax, that’s literally how public schools are funded. It’s how your local roads are maintained. It’s what pays for any local parks you may have. It’s what pays for the fire department, and you’re going to need them after this serious burn you absolute moron!
Dipshits with your opinion are the reason the US has a serious problem with crumbling infrastructure.
It’s how America funds it’s military and the bureaucratic inefficiency stemming from reliance on private companies, if it was my tax money then I would be sufficiently mad that it’s being used to only keep the status quo for education, which people decry as mediocre at best, and actively used to partake in Palestine, and provide money to the military Industrial complex instead of, say, construction of a railway or a new act to reform land zoning regulation, providing districts with better funding and reform of police to lessen the authority and increase the accountability.
Also, instantly assuming exactly what you hate onto me is crazy, the fuck are you doing?
The military is funded through the Congressional budgetary process, with funds the federal government receives from federal income tax and other sources.
Property taxes are remitted to the local government, and it’s possible a small portion may go to the state or federal government, but the majority stays at the county level. The county uses this to pay for public infrastructure, schools, etc. No portion of county funding is going to the military unless you count your local police force.
I’m not who you replied to, but I didn’t, don’t, think property taxes in general go towards the federal budget.
Property taxes aren’t federal, they’re local. They’re assessed at the county/township/city level. If you’re complaining about shitty education, lower property taxes won’t help that. They do fund local transit and and rail projects. They don’t fund the military, because again, property taxes are local. They do fund the police, that’s like the only thing you got right.
Debbie, who had worked for a real estate attorney for nearly 25 years
Lol, a real estate attorney didn’t see this coming? I feel sorry for any clients of hers.
She worked FOR a real estate attorney. And apparently learned nothing.
Fair enough, ya I misread that. But still!
That sucks, but I also think the era of the single family home is ending. No regular person can afford these home prices. Even if you can afford a one time renovation on your $650,000 house does not mean you can afford a $90,000/year tax bill. Single family home values have gone off the charts and regular people cannot afford them. We need to increase housing supply.
So many people are cheering but these are exactly the sort of costs that will lock them out of housing or prevent them from improving a property.
They’re artificially high because concentrated wealth is buying up the supply. As of 2024 as much as 25% of the supply is being purchased by institutional investors in some markets
This is it, and it’s been happening for years. I had a new home built in 2021 and it’s already appreciated by 25%, and periodically been valued even higher than that. I’m not selling, but that still seems crazy to me.
Bonus points for the fact the newly built home and land purchase were about the same cost as it would have been to buy an old run down home in the area that would have needed a ton of work and updates. Few people seem to be building new housing, which in conjunction with the corporate housing acquisitions is driving prices way up.
That’s just scapegoating bullshit temporarily-embarrassed NIMBYs like to tell themselves to avoid the hard truth that we have to fix the zoning code.
The fact is, plenty of houses exist at reasonable prices in rural areas and small towns. But you don’t want to live in those places, do you? You want to live in a big metro area, just like everybody else. Well, when everybody wants to live in the same place you have to build enough housing units for them all to fucking fit in the same place, or you end up playing musical chairs and the ones who aren’t rich lose. That’s just a fact of geometry and basic supply and demand, not the diabolical machinations of some villain.
I actually do live in a somewhat rural area down the street from a dairy farm. I’m not in the Midwest though, I’m a dirty coastal elite in PA
Institutional investors invest in rural real estate as well. It’s calmed down a bit since 2021 when they were really aggressive but they see farmland as a stable investment
https://investigatemidwest.org/2025/03/12/farmland-values-lose-steam-after-years-of-rapid-growth/
I do agree that zoning needs to be fixed and suburbia needs to end though
Spot on. Houses are cheap, though, but you’ll have to get something like sub 800 square feet and in the shitty part of town. A broken-down house for 120k isn’t the greatest investment unless you have a warchest or great job to improve it. Even then, you’ll be fighting comps around your house that aren’t improved.
Single income isn’t cutting it with anything of quality or merit. You’ll have a roof over your head, but the timer starts. Improve or take a loss down the road.
Tbh, concentrated wealth wouldn’t be able to squeeze the market if there was a healthy supply. There’s a lot of issues with single family homes, but the tl;Dr is that they’re expensive because they are by FAR the least efficient way to house people, and it’s basically the only kind of housing that most cities allow by zoning area.
It’s always funny when looking at the tax-system in the US from an EU perspective. Americans looking at any receipt they get in an EU country and immediately pointing out the huge VAT tariff.
Then one only needs to point to the property tax in the US.
America also has sales tax
Sales taxes are regressive. People who spend more money on services and less on goods are typically wealthier. Sales taxes hit the poor the hardest. Whereas the property tax on a multi unit building is typically a better rate for each family than a single family home.
If you read the article these people tried to abuse a loophole that had kept their propery taxes capped for years and they failed miserably. They tried to keep just enough of the home to avoid the value of the home being reassessed for taxes. But they added an entire second story and that triggered the reassessment. Essentially they thought they could cheat and build more home than they could afford to pay for.
True they abused the system. That wasn’t my point, which is that these high property taxes have a tendency to give high quality services to affluent neighbourhoods and low cost housing get low quality services.
Which country doesn’t charge VAT on services?
Some US states don’t have sales taxes
If you hire a nanny do you pay VAT?
Not sure over here in Germany. Plenty of services are exempted from VAT.
The EU has standardized what is tax exempt though. You can read everything which falls under VAT here. The word “service” appears 472 times by the way.
These states in the US have zero sales tax: NH, OR, AK, DE, MT
