David Saks: Do High Property Taxes Reduce the Risk of Price Decline ?

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Do High Property Taxes Reduce the Risk of Price Decline ?


                      tennessee map

Could it actually be that there is a low risk of home price decline in Chattanooga, or other Tennessee towns and cities, because, like Memphis and Shelby County, they have high property taxes ?

In other words, could high property taxes make it more difficult to stay in step with appreciation and create some unbeknownst condition of equalization?

Other factors such as foreclosure, tax liens, divorce, bankruptcy and crime influence price decline. High property taxes seem to keep prices stable, to a degree.

I'd like to see a nationwide study or moratorium on the impact of ad valorem assessment and it's affect on market conditions, especially in a reassessment year.

What are your thoughts? Thanks.

David Saks

Time&Temp Memphis

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Comment balloon 2 commentsDavid Saks • March 30 2008 12:12PM


I can't speak for Tennessee, but in Florida our high property taxes are having the exact opposite effect.  The high taxes have increased people's monthly payments and thus decreased demand dramatically.  It used to be if you could buy a house for the tax assessed value you were getting a good deal.  Now a days you can find all sorts of deals for $50,000-$100,000 under the assessed value.  This causes the assessed value to be readjusted and thus lowers the property taxes.  The cities and counties are sitting there like deers in the headlights as there revenue is vaporizing before their eyes.
Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) almost 12 years ago
I believe, Rob, that property tax reassessment scheduling, at county and city rates, combined with income tax schedules and property tax increases, will create additional burdens for taxpayers, buyers and sellers. Debt to income ratio calculation and borrowing becomes more complicated when qualifying a buyer. Debt is increased by the taxation schedules when an income shift, possibly negative, occurs on the eve of new property assessment values for any municipality, creating additional tax burdens for our commercial and residential property owners. That was then; and still is, here and there. With price declines the trend should experience some reversals, such as your community. Since the sellers have to cope with the declines versus assessed value, the appeals are usually off the chart when this happens. Pity the hard working employees at the board of equalization...whoa, they have their hands full ! Many thanks for your thought.
Posted by David Saks ((retired)) almost 12 years ago

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