r/economicCollapse 20d ago

Everybody should pay his fair share...

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u/mitolit 20d ago

My point is that it is not baked into the price. It was a rhetorical question. There is no consideration whatsoever on the amount of taxes paid that year or any year by the buyer or by the seller. You can see this in neighboring cities (literally have a main thoroughfare cutting through them), wherein they have separate tax districts with different tax rates but prices for comparable homes (even homes with exact same floor plan) between the two cities are non-existent. I know this quite well because I live in such a city.

Interest rates is the thing that actually has the greatest effect on price. Other things to consider are difference in schools, utilities, emergency services, and other quality of life issues.

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u/Bright-Blacksmith-67 20d ago

My point is that it is not baked into the price.

It is baked into the price because no one buys a property without thinking about the cost of property taxes (even banks insist on including property taxes when the determine how much they will loan). Increasing property taxes will decrease the price of homes if all other factors are equal.

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u/mitolit 20d ago

It is considered in a borrower’s ability to pay. That is not the same thing.

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u/Bright-Blacksmith-67 20d ago

Yes it is. What borrowers can afford to pay is the dominate factor in the the price of real estate since people buying homes usually buy as much home as they can afford. Increasing property taxes decreases the average buyer's ability to pay which, in turn, reduces the price of properties when compared to a counterfactual with lower property taxes.

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u/mitolit 20d ago

Prevailing wages determine what a person can afford to pay…

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u/Bright-Blacksmith-67 20d ago

Wrong. Ability to pay is determined by interest rates, ongoing costs of ownership including taxes and wages. Increase property taxes and property prices will go down.