There is an old saying that there are only two things you can count on in life – death and taxes. Apparently homeowners in Westchester now have a third thing they can count on – exponentially increasing property taxes. Homeowners in New York are up in arms over property taxes. For those who don’t know the region, New Yorkers enjoy just about the highest property tax rate in the country. Westchester has some of the highest taxes in the state – so you get the picture…..In many areas of Westchester, the taxes actually exceed assessed values.
White Plains NY is a case in point. Taxes have been marching to new heights each year. Year after year, the city, schools and county come with their hands out expecting homeowners already reeling from the worst recession since the Great Depression to fork over more in property taxes. Many are hanging onto their homes by their fingernails. And as more and more homeowners feel the squeeze – many will find they can no longer afford to stay in a community that just a few short years ago was quite reasonable and affordable.
Traditionally, White Plains enjoyed significantly lower property taxes then the rest of the county thanks mostly to our large commercial and retail base. But even though that base has increased, the number successful certioari actions has also increased. The net result has been a shrinking tax base in the commercial/retail sector pushing the lions share of the burden onto homeowners. Most notably: owners of single family homes.
Homeowners and city officials in White Plains need look no further than Sleepy Hollow to see what happens to home prices when the homeowners are saddled with an ever more onerous tax burden. This burgeoning problem needs to be nipped in the bud or home values could well suffer.
I chose Sleepy Hollow for a comparison because it is an analogous community in many ways to White Plains. Although city officials and union leaders prefer to liken White Plains to Scarsdale and Larchmont where high taxes are better tolerated, our community profile is in truth more like that of Sleepy Hollow. The commute to Manhattan is similar the two neighborhoods I chose to focus in are are quite comparable in terms of home size, amenities and lifestyle.
Gedney Farms is an established upscale neighborhood in White Plains. Over the past ear the average sales price in Gedney was $993,000 – just shy of $1 million dollars. The average tax bite in these sold home was slightly more than $16,000 per year.
Philipse Manor in Sleepy Hollow is quite similar in many ways to Gedney Farms. However, Sleepy Hollow is a village with relatively little commercial activity resulting in a higher tax burden on the homeowner. Over the past year the average sales price in Philipse Manor was $847,000 – a significant 15% drop from the prices enjoyed by Gedney residents. That’s a difference of $147,000 – not exactly chump change. When you look at the tax bite that Sleepy Hollow extracts from Manor residents, one can see why. Its enough to make your head spin. The average tax on the homes sold that year was a crushing $22,500 or 29% higher than what is seen in White Plains.
Does the tax rate account for the price difference? Uh….ya think? Think of it this way….taxes that high are like another mortgage payment. For Gedney residents its about $1333.00 a month, but that goes up almost $550 a month for Sleepy Hollow residents. Assuming a 6% mortgage rate (assuming they have enough cash to not need a jumbo loan) that translates to a drop of over $90,000 in buying power. If you don’t believe me – the charts below tell the story.
City, county and school officials take note. I know you have turned a deaf ear to the voters on this issue for many a year. Your special interest groups have drowned out the silent majority. But now you are looking off the cliff and into the abyss. Single-family home values could easily implode. Here is the scenario that I fear the most.
Raising the taxes the proposed 19% will make homes in surrounding areas such as Scarsdale, Larchmont, & Rye – more attractive to buyers. Many single family home buyers preferred these areas over White Plains, but high home values put them out of reach. Now that home prices have declined and taxes in White Plains have risen, the trend has been towards these higher-end areas and away from White Plains. Fewer buyers means lower prices.
As taxes rise, those who were hoping to retire (or simply age) “in place” will realize that this is no longer possible. The increase in taxes will be just that extra shove off the cliff that will force many homeowner’s hands. They will have to sell in a bad market. This will push additional inventory onto an already weak market. More homes for sale = more downward pressure on home values.
Further, as home values decline, more homeowners will be able to successfully grieve their taxes. Thereby further eroding the tax base. And the merry-go-round keeps going round and round.
In the past, home owners were just giant money cows to be squeezed to the heart’s content of public officials, educators and unions. But declining home prices translates into lower property values and lower assessed values – and that should put the fear of God into you. The message is loud and clear! Keephiking taxes and you erode home values AND your tax base.
Certioraris a Taxing Situation for New York Homeowners
© 2010 Ruthmarie Hicks, https://thewestchesterview.com. All rights reserved.
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