That's a bit disingenous even if you missed my edit while you were composing your post. What are council rates if not property taxes? And where does stamp duty fit in?
Quote:
Are any other states in the USA making noises about copying Texas, or is this simply what Texas has to do to attract labour and capital to the state?
I'm not aware of any, but that does not mean that Texas is unique--others have similar arrangements of long standing. Alaska, Florida, Nevada, Washington, and Wyoming also have no state income tax, and New Hampshire and Tennessee charge it on dividend and interest income only.
That's a bit disingenous even if you missed my edit while you were composing your post. What are council rates if not property taxes? And where does stamp duty fit in?
Local council tax is calculated on the unimproved land value. At a guess the land value on a $200,000 house might be $120,000. Based on that the actual rateable value won't be high at all, but there is the added cost of sewerage and garbage collection which I believe are set costs rather than pro-rata costs. Maybe $800 pa - but it would be considerably less than 1.8% of the house value.
Stamp duty in Qld on a FTB is zip, and for others it is $2000 (1% as a one off cost)
By contrast the accumulated cost of the property tax in Texas over 50 years is approx $180,000 in todays dollars. But lets be generous and settle on $130,000 as the net difference (using a rates cost of $40K over 50 years in todays dollars and stamp duty costs of $10K as a once only cost)
If one moves in that period, it will only affect stamp duty, not tax or rates assuming a move to a house of similar value.
So a house costing $200K in Texas might be compared to one here costing $330,000. I'm sure we will still be uncompetitive, but perhaps the comparison is more realistic. I concede that I haven't factored in the opportunity cost on the extra paid upfront.
Please supply an alternative calculation if you think that I'm gaming the maths.
Quote:
I'm not aware of any, but that does not mean that Texas is unique--others have similar arrangements of long standing. Alaska, Florida, Nevada, Washington, and Wyoming also have no state income tax, and New Hampshire and Tennessee charge it on dividend and interest income only.
House prices in Florida are quite cheap, Alaska isn't, I don't believe Washington is either, but I don't know about Nevada and Wyoming.
To what do you attribute the wide variance in house prices to. Supply and demand, or are there other reasons?
Local council tax is calculated on the unimproved land value. At a guess the land value on a $200,000 house might be $120,000. Based on that the actual rateable value won't be high at all, but there is the added cost of sewerage and garbage collection which I believe are set costs rather than pro-rata costs. Maybe $800 pa - but it would be considerably less than 1.8% of the house value.
Stamp duty in Qld on a FTB is zip, and for others it is $2000 (1% as a one off cost)
By contrast the accumulated cost of the property tax in Texas over 50 years is approx $180,000 in todays dollars. But lets be generous and settle on $130,000 as the net difference (using a rates cost of $40K over 50 years in todays dollars and stamp duty costs of $10K as a once only cost)
If one moves in that period, it will only affect stamp duty, not tax or rates assuming a move to a house of similar value.
So a house costing $200K in Texas might be compared to one here costing $330,000. I'm sure we will still be uncompetitive, but perhaps the comparison is more realistic. I concede that I haven't factored in the opportunity cost on the extra paid upfront.
Please supply an alternative calculation if you think that I'm gaming the maths.
I'm not quibbling about the exact numbers, though I'd observe again that $200K buys considerably more in Houston (median sale price of $88,750, per Trulia) than it does in, say, Brisbane (median price $400K-ish taking houses and units together). If you redo your property tax sums based on median prices, how do the two stack up then?
But really I was commenting on the idea that there is no property tax on PPoRs in Australia. Compared to Houston, it is collected at different rates: lower on an annual basis (council rates), and higher--except for the first time--on a transactional one (stamp duty). And as you observe, there is a different basis for calculating the tax base, in the case of Australian council rates.
But in the end, both jurisdictions impose taxes on residential property that are more-or-less hypothecated to the delivery of local government services.
And in any reasonable 50-year tax load model, which to my mind would take into account both median market-value differences and a certain amount of moving around, the local government burden imposed in these two markets would be comparable in magnitude, and perhaps even to Houston's advantage.
House prices in Florida are quite cheap, Alaska isn't, I don't believe Washington is either, but I don't know about Nevada and Wyoming.
To what do you attribute the wide variance in house prices to. Supply and demand, or are there other reasons?
The glib answer, as per foxbat101, is that supply and demand explains everything everywhere.
A more informative, fully justified answer would take a book, or a doctoral thesis (neither of which i've written on the topic )
But to offer up something, I'll make some anecdotal observations; if you want to pursue any of them in detail, I'll try to supply more backup later:
- Collectively, U.S. states exhibit a far wider variety of economic, political and demographic profiles than Australian ones do. That's partially because they're more finely divided across the national geography, and therefore more economically specialised, and partially from their political history: Australia never had a war of independence, nor a civil war, nor a frontier-development mentality quite comparable to the US version, nor a next-door neighbour sending it millions of illegal immigrants. It's more of a political patchwork than Australia.
- So New Hampshire, one of the (almost) no-income-tax states, with a right-wing slant (state motto: "Live Free or Die") is right next door to Massachusetts, a high-tax state with a liberal electorate and a jobs-for-the-boys attitude in state and local politics.
- Texas--in its own estimation at least--was briefly a nation in its own right, wrested away from Mexico before it was (more-or-less-willingly) absorbed into the US. Before Alaska gained statehood, Texas was the biggest US state by geography, and one of the richest per capita (though on average rather than median grounds) after massive oil discoveries beginning in 1901. The oil industry made Houston a city, and its boom/bust economics, and associated political ethos, created/perpetuated the city's no-planning-controls bias to the present day, and the state's no income tax bias, a touchstone of both political parties.
- Alaska is the last of the true frontier states, in a more profound sense than Australia's WA, even though the economic basis for each is similar. Alaska is the most remote state from the mainstream US, is the most resource-dependent for its state income, and faces the most extreme climactic conditions. In some senses it is similar to Texas (resource-dependent), but in others it is profoundly different. It taxes the oil industry heavily, with a net result that there is no state income or sales tax, and further yet, also funds an annual state "dividend" to each resident. Despite producing Tea Party-style politicians like Sarah Palin, it actually boasts the second lowest Gini coefficient of any US state, and its senators have traditionally been masters at securing federal pork-barrel funding.
- Florida is the land of the "snow-birds", a huge annual migration of East Coast US (and Canadian) retirees in search of cheap sunshine and warmth in winter months. It is also, in Miami, America's Hispanic capital, the commercial and cultural nexus of US connections to the Caribbean (notably Cuba) and South America. (In pure Hispanic population terms, arguably Texas and California compete, but Miami is the place where the Hispanic-American population is most conspicuously successful and politically influential (perhaps because they're almost all US citizens).
I don't know the early history of Florida's no-state-income tax stance, but it is now thoroughly ingrained in both major demographic streams, even though they're quite dissimilar politically: the snow-birds tend to be from politically "liberal" states (in the US sense of the term), but as many eventually settle full time in the state as retirees, they lose their appetite for extra expenses. The Hispanics, especially the ex-Cubans, have a somewhat right-wing bias, complete with a traditional Republican anti-tax viewpoint.
I'm not quibbling about the exact numbers, though I'd observe again that $200K buys considerably more in Houston (median sale price of $88,750, per Trulia) than it does in, say, Brisbane (median price $400K-ish taking houses and units together). If you redo your property tax sums based on median prices, how do the two stack up then?
Not as well as you think. I've never been to Houston but I have looked at homes on the Trulia site. Not knowing the suburbs is a big problem, but if I look at the first $200K house I find this home - 3 bed approx 150 Sqm house on about 900 Sqm land View House here
That house was built in 1955 and it's not bad, well looked after. Probably similar to average 3 bed homes in a number of average outer ring suburbs in Brisbane (but not in the sticks) and you would get that for about $200K - annual tax $2323 assessed 2012 In Brisbane that house would be in the $380K to $500K depending on the suburb.
Smaller house of 113 Sqm on a tiny block of just 290 Sqm and the tax is $2595 per annum assessed in 2009. The only comparable homes in Brisbane that I know well are the newish cottages in Centenary Village (part of Darra) that sell under $300K such as this -house here for $269K
Overall impressions are it's much better buying in Houston, but to get something close to a Brisbane Median I would have to spend much more than the median value in Houston - probably above $200K, and then I will have to pay property tax of $2300 to $3300 annually forever.
To perform an accurate comparison, we would need to be very familiar with both cities and appreciate the nuances of the location and the market. I have never pretended that houses in Brisbane are better priced that Houston, quite the opposite, but I'm still unconvinced that the comparison is as stark as many pro Texas people make out. In the end we all have to pay tax, and governments may have different ways of enforcing that payment, but it still gets paid.
I think that the distinct disadvantage our system has is that the tax usually needs to be financed, so it ends up a much larger cost to the home buyer, unless they can pay cash.
Not as well as you think. I've never been to Houston but I have looked at homes on the Trulia site. Not knowing the suburbs is a big problem, but if I look at the first $200K house I find this home - 3 bed approx 150 Sqm house on about 900 Sqm land View House here
That house was built in 1955 and it's not bad, well looked after. Probably similar to average 3 bed homes in a number of average outer ring suburbs in Brisbane (but not in the sticks) and you would get that for about $200K - annual tax $2323 assessed 2012
[Sorry, I'm a bit confused by some apparent late edits here, but you can sort me out later.]
"Average outer ring suburbs"?? It's 10 km from the Houston city centre, with the neighbourhood first established in the 1930s.
In Brisbane terms it should be comparable to Sunnybank or Wavell Heights. On 900 m2 that would go for >$600K...
BS Houston has grown 20% in the last 10 years and house prices have not raised above inflation. Makes a mockery of your point. Please do not use examples from your cherry picked past. Maybe you just are not typical.
Oh you are the Houston guy. Mate, Houston has got problems for sure,it seems that no one wants to buy houses there. Do you have any idea why? I don't. Why don't you go live there then you u can find out why no-one wants to live there or at least no-one with any money. Maybe it is not the Utopia for home ownership that you think it is.
Why is San Fransisco so much more expensive and desirable than Houston, why cannot that city have affordable housing like Houston.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Sorry, I'm a bit confused by some apparent late edits here, but you can sort me out later.]
"Average outer ring suburbs"?? It's 10 km from the Houston city centre, with the neighbourhood first established in the 1930s.
In Brisbane terms it should be comparable to Sunnybank or Wavell Heights. On 900 m2 that would go for >$600K...
Fair enough, I know that they pump out new land at very low cost, even lower than our developer contributions in many cases. However I'm still of the opinion that there is a downside to liberal growth/development policies and the post purchase land tax is still higher than our rates.
Your choice of Wavell Hts and Sunnybank are probably above the median on a suburb wide basis. What happened to Moorooka at 7 Klm to the city centre, or Salisbury?
Quote:
The glib answer, as per foxbat101, is that supply and demand explains everything everywhere
Ssshhhh - he's a Canadian, what would you expect?
Any expressed market opinion is my own and is not to be taken as financial advice
Your choice of Wavell Hts and Sunnybank are probably above the median on a suburb wide basis. What happened to Moorooka at 7 Klm to the city centre, or Salisbury?
Just the look of the individual house--how many of those would you find in Salisbury or Moorooka, really?--and a detailed demographic breakdown on the suburb that I found online.
That, and a brief scan on StreetView: the neighbourhood looks pleasant and well kept, though the property itself is closer than one might like to a major artery on W 34th St.
But I'd readily confess that though I've been to Houston a couple of times, and always play the "where would I live if I lived here" game in every city I visit, I don't know it well.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy
)