Recognize This House?
Where: somewhere in Minneapolis.
What: a classic, older home with 4 BR/3 BA and over 3,000 square feet. Features gorgeous mill work, built-in’s galore, hardwood floors, beamed ceilings — and on and on.
How much: list price now $989k, down from $1.395 two-plus(!) years ago.
Property taxes: a gazillion dollars per year.
Recognize this house?
I’ve probably seen two dozen this Spring already.
And while the property taxes may not actually be a gazillion dollars, to prospective Buyers, they certainly look that way.
That’s because the move-up Buyer for such homes is likely coming from a home that’s worth $500k-$650k (down from $600k-$800k), and is accustomed to paying, say, $8,000 a year in taxes now.
In many cases, the reason they need a bigger home in the first place is that their family grew — which means their overhead did, too.
To suddenly jump from $8,000 to $20,000 (or more) in annual property taxes and contemplate updating an older home is a non-starter.
Hello, Edina! (or Minnetonka, or Tyrol Hills, or ???).
Don’t Raise the Bar, Lower It
Instead of raising the bar to buy such homes, Minneapolis should be lowering it.
Here’s my three-part, guaranteed-to-work plan:
One. Re-set the home’s property taxes to the current list price — while the home is on the market — instead of making prospective Buyers wait — and guess — what they’ll pay once they own it.
Should the home implausibly sell above list price after years of market time, the property taxes can always be raised. I believe the government knows how to do that. 🙂
Two. Cap property tax rates at 1% of assessed value for three years — no playing games with mill rates; and
Three. Limit annual property taxes on any one, existing single family home to $20,000, maximum.
When Minneapolis’ inventory of unsold upper bracket homes is absorbed, revisit said policy.
Whaddya say, Minneapolis City Council?