Code Orange
Submitted by gregflynn on Wed, 03/05/2008 - 7:43pm.
They're baaaack, realtor astroturf in Orange County:
As with the previous similar groups in other counties, the "Custodian of Books" is William DePriest of the NC Association of Realtors (NCAR) in Greensboro with a local Treasurer signing. In this case it's Tom Holt a Chapel Hill attorney who is an "associate" of the Greater Chapel Hill Association of Realtors.
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Thanks, Greg.
I'm sharing this with my friends, who may or may not vote in May.
Why is a transfer tax on real estate a good idea?
Is it a predictable source of revenue? No, real estate is cyclical and subject to above-average volatility (as if you hadn't noticed).
Does the tax correlate with demand for public services? No, just because you buy and/or sell a home doesn't mean that you're consuming more public resources. We already have our share of impact fees and property taxes.
And what happens when folks caught in the housing crunch try to escape by selling, instead of just walking away? Do we really want to add insult to injury and take more money out of their pockets?
BJ
William (B.J.) Lawson
Congressional Candidate, North Carolina's 4th District
Now or later
A transfer tax is less volatile and more predictable than sales tax which supplements property tax, the primary source of local revenue for public services. Impact fees are spotty across the state as local governments have to get legislation passed in the general assembly for specific use of fees. Local communities should be allowed to decide for themselves how best to pay for their services.
If correlation were the rule, childless adults and empty nesters would pay less property tax and commercial property tax would not subsidize residential services. Buying a hamburger is not a good predictor of the use of public services. Even if it were, you often pay for a hamburger before you get it, sometimes after you get it, sometimes after you eat it, but the obligation to pay does not vary.
If a home is sold for $250,000 a realtor commission is 6% or $15,000. A transfer tax of 0.4% would be $1,000 or 1/15th of a realtor fee which we don't flinch at because it is paid when the assets are liquid. When there is a "crunch" it is usually because there is no liquidity, credit or income to address rising costs.
Rising annual expenses such as property taxes and user fees can trigger mortgage defaults which, in a rising market, can be resolved by sales or refinance. In a declining market foreclosures become more likely. Housing prices are quite sensitive to job growth and to basic quality of life factors like schools and infrastructure. When costs for infrastucture are not collected up front the pressure on the housing market is deferred, not eliminated. Need will manifest itself later either as increased taxation leading to defaults and/or reduced levels of service contributing to price depreciation and foreclosures.
What he said.
That was the most articulate argument
in favor of "home rule" and local fiscal self-determination that I've heard in a while. We're in complete agreement.
Good tax = gas tax. You can't even consider it a tax, really, it's actually a usage fee. The more you drive, the more you pay. Assuming we use the money collected for roads, it's actually a rational system.
Bad tax = pretty much everything else. Why can't our municipalities fund the services provided through usage fees, with some nominal sales tax revenue for appropriately transparent and accountable safety nets?
Your assertions don't seem to support the transfer tax, since it doesn't correlate with anything either. Why don't we tax cats, dogs, and ferrets?
I disagree with your assertion that the transfer tax is acceptable relative to realtor commissions. My wife and I have moved twice since we've been married, and sold two houses in the process. We've sold both of them by owner, and paid zero realtor commission. No one is forcing you to pay 6%, 3%, or even $500 to list with a discount MLS provider. You have the *choice* to pay a realtor what he or she is worth. You are proposing to take a portion of our equity when (and if) we sell, which would then NOT be available to purchase our next home. Does that seem right?
OK...
That's a powerful argument for carefully managing those infrastructure costs -- look at what's at stake with respect to people's homes!
Do you have data to support the assertion that increased taxation leads to defaults, and reduced levels of service contribute to foreclosures? In my experience, defaults and foreclosures correlate with the borrower's ability to service the mortgage (i.e., job security and strength of the household balance sheet). I haven't seen many people with equity in their home give up that equity through default or foreclosure just because of higher taxes or reduced services. They may sell, but why would they walk?
Ultimately, though I think your opening paragraph is critical:
Bingo. What will it take for us to get local fiscal self-determination, so that our municipalities can decide how to fund their services without running to Raleigh to beg for favors?
BJ
William (B.J.) Lawson
Congressional Candidate, North Carolina's 4th District
Cash Flow
Cash flow problems lead to mortgage defaults. Increased property taxes are reflected in increased escrow portions of mortgage payments. People can respond to their cash flow problems by decreasing consumption or increasing revenue. When that becomes too "painful" and people default. If their home has lost value it is likely to go into foreclosure. It is more likely to lose value when there has been a decline in public services like schools, roads, emergency services, public appearance.
It is possible to sell without a realtor if you are willing and able to wait and have that "choice". I don't have a problem with realtors or the services they provide. I have a problem with the arrogance and hypocrisy of their organization that exerts a virtual monopoly on the housing market. A few owners are smart enough to price a house low enough to sell fast without a realtor. My observation has been that owner sold houses are either overpriced and/or sit on the market longer often reverting to a realtor sale.
Impact fees are a good response to rapid growth. The are not a universal solution and, as we have both noted, not universally available. The transfer tax option is available, sort of. The tax on gas is becoming less useful. With increased fuel efficiency roads are being used more per gallon of gas. In addition infrastructure construction has experienced double digit inflation mainly due to material costs.