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 do.

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.

Move-Up Buyers

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.

Goodbye, Minneapolis! 

Hello, Edina! (or Minnetonka, or Tyrol Hills, or ???).  

Don’t Raise the Bar, Lower It

The solution?

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?

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

Leave a Reply