The Hidden Cost of Poughkeepsie's High Property Taxes

It doesn’t take a degree in economics to know that rising property taxes put a strain on homeowner’s budgets. What is not as well understood is the effect high taxes have on the value of homes when the owner sells.  In high taxed areas like the Town of Poughkeepsie the cost to the homeowner is measured in tens of thousands of dollars.

Let’s consider two houses – one in LaGrange and one in Poughkeepsie. These houses share the same schools, shopping conveniences, and commutes.  If both houses were for sale, the same buyers would look at each as they offer similar utility.  In fact, the assessors for both homes have assessed them exactly the same - $369,500.

There is one difference however – the property tax bill.   The Poughkeepsie house has a tax bill of $14,763 while the LaGrange house tax bill is $12,024.  That means the Poughkeepsie homeowner is paying $228 per month more than the LaGrange owner.

The higher taxes affects homeowners in two ways.  The first is obvious.  If you are paying an extra $228/month to the town, that’s money you are not spending in your community or investing for your future.    It’s an additional expense, like a car payment, but without the car. 

The second cost is far greater.  It is the effect the higher tax burden has on the price a buyer will pay for the house.

There are three variable costs that affect a buyer’s ability to pay – the price of the house, the mortgage interest rate, and the taxes.  These costs are interrelated.  Because most buyers are limited in what they can afford to pay for housing each month, an increase in one reduces the amount available for the other two.  

So how does this affect Poughkeepsie homeowners?

Because of the higher taxes, buyers are not able to pay as much for the house in Poughkeepsie as they could pay for a similar house in LaGrange.  The extra money being paid in taxes reduces buyers buying power.  To have the same monthly payment as the $369,500 LaGrange house, a buyer would only be able to pay $323,500 for the house in Poughkeepsie – a difference of $46,000!

Incredibly, a buyer could offer the LaGrange owner $23,000 more than they would pay the Poughkeepsie seller and still have a monthly payment $114 less.  That’s a win for the LaGrange seller as well as the buyer.  The loser is the Poughkeepsie homeowner.

When inventories are low the effect of high taxes on house prices may not be apparent. But it’s not always going to be a seller’s market.  The time will come when sellers will have to compete for buyers.  When that time comes, homeowners in Poughkeepsie will be at a severe disadvantage because due to high taxes, a homebuyer’s dollar in Poughkeepsie is worth less than a dollar anywhere else.

My New Book 'The 30-Second Time Out '- Available FREE June 14-15

The most effective action a real estate agent can take to increase their listings, sales, and income is to create and then put into action an effective business plan.    If you took the time to put a plan together for 2019, congratulations!

The unfortunate reality however, is even agents that have plans often wander from them and don’t realize the benefits plans provide.

The reason is the real estate sales business is full of distractions.   These distractions often come disguised as opportunities so the agent doesn’t recognize them as something harmful.  But they are harmful because they rob the agent of their most precious resource . . . time.

  

I’ve written two books on business planning (‘Planning For Success in Real Estate Sales’ and ‘Business Planning For Real Estate Agents’).  These books have sold well, been enthusiastically reviewed, and helped hundreds of agents around the country.  But making plans is only half the battle.  The other half is implementing that plan.

My latest book teaches how to do just that.  Using a process that I developed more than 20 years ago and have used successfully with dozens of agents, ‘The 30 -Second Time Out’ is an effective method for ensuring you stay on track.  It costs nothing and takes only minutes.

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I’ve arranged with Amazon to make the Kindle version free for the next two days (June 14 and 15). Just click here.

We are fast approaching the mid-point of 2019.  It’s natural that you would want to assess your business to see if you are on track. This book will help you.