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Dallas, Richardson, Garland, Plano and Sachse luxury homes for sale in Texas, real estate listings, new construction & relocation information.
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Greg Foster
Real Estate Services
469.358.8569
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The Michael Group
9669 N. Central Expressway, Ste 290
Dallas, Texas 75231
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Information on
Dallas, Richardson,
Garland, Plano and Sachse
Texas real estate.
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Texas Property & Transfer Taxes
Despite an improving economy, research conducted by the National Association of Realtors and reports by the 3 main organizations that track states' fiscal condition, the National Conference of State Legislatures, the National Association of State Budget Officers and the Center on Budget and Policy Priorities, we should expect continued budget shortfalls through 2011.
What is the likely result? Budget gaps will be closed by some combination of the following options; raising revenues through new taxes or tax increases, spending cuts, tapping into reserves or federal resources.
Impact of Property Taxes
Property taxes are a major source of funding for local governments and some states. As home values decline many localities may try to increase property tax rates or adjust assessed values in an effort to boost revenues. These efforts will only further depress the value of homes in the locality because tax increases will be capitalized in the value of the home. Estimated home values after a $1,000 annual increase in property taxes would mean a loss of $12,00 to $15,000. (assumes 32 yr. time horizon for capitalization of $1,000 annual payments @ 5.5% discount rate.)
Impact of Transfer Taxes
Many state legislatures turn to transfer taxes (sales tax on your home purchase) because they are easy to implement; a small group of people are taxed relatively infrequently. However, what is easy is not always best. Optimal tax theory suggests that taxing a broad based group at a low rate is the most efficient form of taxation because it does not distort market activity.
Possible distortions from transfer taxes include avoidance of the taxed activity___resulting in fewer transfers (sales of property) and decreased mobility. We can estimate the number of families that might be affected by a 1% transfer tax. The results tell us the number of potential households in Texas unable to purchase a home as a result of a transfer tax to be 47,426.
And when multiplied by the economic activity created with each home sale including additional consumer items such as furniture, appliances, improvements, greater spending at restaurants, entertainment events, charities, etc., an entire community can suffer significantly. 14 transfer tax proposals were defeated during the 2009 state legislative session thanks to the efforts of the Texas Association of Realtors and leading legislators, but some will sure to be trying again in 2011.
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Market News
The economy continues to improve and home sales continue to increase.
All of North Texas posted gains in single-family housing during May, seeing home sales of 7,119 compared with 6,046 in 2009. Though a certain percentage is attributable to the homebuyer tax credit that expired in May, expectations are high for the summer months as interest rates are at an all-time low, less than 5%. This is good news for move-up buyers , keeping first-time homebuyers active to buy their existing homes. There is some concern that interest rates will rise again in the fall but all-in-all we're slowly but surely regaining strength in our local economies with more businesses being attracted to Texas for its favorable tax climate.
While the average U.S. mortgage fell from $220,893 to $212,806, weekly mortgage activity surged 20% as of June 2 according to Mortech-MortgageDaily.com, also reporting the spread between the average 30 yr. conventional note and a 30 yr. jumbo mortgage narrowed, indicating improvement in jumbo markets.
As always, visit my site at www.GregFosterHomes.com for additional home information or give me a call for your neighborhood market stats.
Best Regards,
Greg Foster
469.358.8569
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