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4 Responses to 'How do property taxes affect the value of houses?'

1. calif_forever - September 15th, 2009 at 6:36 pm

   Normally, the property value affects the property tax, not the other way around. The property tax = (assessed value x taxrate) Plus other local levies such as street lightning, garbage collection, etc…

2. dmb - September 18th, 2009 at 3:31 pm

   While it’s usually value that affects tax, all other things being equal, a home in a lower tax area will generally be more desirable than one in a higher tax area. More desireable homes usually sell for more. So to some extent, lower taxes will raise property values and higher taxes will lower them. You can see this sometimes in neighboring suburbs that have different tax rates. It’s usually a pretty minimal effect, though.

   EDIT — Reading your economics question a bit more closely, chances are the “short run” answer is basically what I just said. That is, raising the taxes will lower home values (slightly). However, the “long run” answer they’re probably going for is that home values will rise, because better schools will provide a more desireable community.

3. szydkids - September 21st, 2009 at 4:26 am

   The higher the tax rate, the more it will put downward pressure on value. Most people like the best services at the lowest rate. In the long run, the town that can provide the best education and town services at the lowest price will have the highest home values.

4. openheaven - September 22nd, 2009 at 8:16 pm

   Ask yourself:
   Would the taxes increase or decrease the value of the home?
   If the home now costs more and someone can only pay so much will that cause the house value to go down?

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