The number of US cities where first-time homebuyers are faced with at least a $1 million price tag on the average entry-level home has nearly tripled in the past five years, according to new research.
A Thursday report from Zillow indicates that a typical starter home is now worth $1 million or more in 237 cities, up from 84 cities in 2019, underscoring America’s ongoing home affordability crisis.
“Affordability has been strained across the board,” Orphe Divounguy, a senior economist at Zillow, said. “We see the largest number of million-dollar starter homes in expensive coastal markets. We see them in markets with very low homeownership rates and we see them in markets with more building regulations.”
A side effect of sky rocketing housing prices is the annual tax liability also goes up, so people on a low or fixed income may no longer be able to afford the home they’ve lived in for decades. It’s the same problem that happens when neighborhoods are gentrified.
Some localities limit the increase in taxable value to a fixed percentage, which can combat that. The taxable value of my home is something like 25% of the actual value.
What happens when you sell it?
New owner gets taxed based on what they pay for it, so they county will end up collecting more.
That’s just how life is in a society. Don’t fall for the stupid Prop 13 trap that ruined so much in California.
As long as people are selling and buying houses what’s the problem?
People aren’t selling, because their tax bill will 10x at whatever place they downsize to. The older generations are all living in 5+ bedroom homes with 1 or 2 people while young people are raising families in 1br apartments. It means that across the state communities are dying out and young people just aren’t having families anymore. On top of this, suburban sprawl is completely out of hand because all the people who bought before prop 13 was passed were living in the metropolises since they were working age. Now that they are retired they still live where the jobs are, and the young working people have to commute 2+hrs each way to get to their jobs.
The people with a 5 bedroom house could sell for so much money they wouldn’t care about the tax bill at the new place. Going from 5 bedrooms to two bedrooms means you could outright buy the new place and have 2 million dollars left over. At that point you’re crying into your Scrooge sized bank account about property taxes.
And if you’re worried about the people who bought condos or other small city homes staying there until they die, that’s the point. The entire point was to prevent people being pushed out of their homes.
It never stopped people from buying a smaller house or moving for new jobs. Not building enough housing to cover the natural rise in population is the reason we are here. Insisting that all new housing be single family detached housing in suburbs is why we’re here. Those are far more impactful things than the people who just never move.
Obviously it sucks if they have to move, but it’s hard to feel too sorry for people that have become incredibly wealthy…
Also, municipal expenses don’t scale directly with property values… So while local taxes are often based on home values, they are adjusted to the level that meets the municipal budget. If everyone’s house doubles in value one year, taxes stay the same, not double…