How many times do big money developers sell homes in Orange County? MANY times.

Face it–the county needs money. A transfer tax, at only 4% would raise the price of a $250,000 home by $1000. The cost of a $100,000 home would raise by $400. That’s peanuts!

As for low-income families, adding $400 to a 30 year or even 20 year mortgage is negligible at best. This tax wouldn’t hurt low-income families trying to purchase a home. However, adding a sales tax would add to every purchase made by everyone–not just low income families.

Let’s stop all the silliness here. The ones that will be hardest hit are the big money developers–not the average citizen selling a home. As we have seen, they are spending a LOT of money to stop this tax. There are signs and ads everywhere, and they’re using the pity-factor card with how it will affect low-income families.

Additional taxes affect everyone. Chosing a tax that will affect you as little as possible, like the transfer tax, is certainly the way to go.

Vote YES on the Transfer Tax! Don’t let your opinion be swayed by the people that have the most to lose–and the ones with the most money!

Best,

David

The salient point is homeowners pay annual property tax every year for their public services. Should they have to pay again – essentially pay twice – when they are leaving? The only question is this tax a fair one and does it hurt low income home owners. Even if realtors went away (and many folks don’t use them) people would still have to pay this tax, and the bill would still be a doozy. Mr. Zimmerman makes many good points that Mr. Flynn just chooses to ignore. Comparing this cost to other costs is just a diversion.

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 infrastructure 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.

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.

If that home appreciates in value, say 5% every year, after 30 years the home will have a value of $1,029,034. If the same home is sold every 5 years, with 6% going to realtors every time, the total amount spent on realtor commissions over 30 years will be $234,224 for a house that originally sold for $250,000.

Over the same period just $15,615 would represent the amount going to a transfer tax of 0.4%. Over the 30 year history of the house 23% of the final value of the house will have gone to realtors while just 1.5% would have gone towards transfer tax for public services essential to maintaining the value of a home.

Or to put it another way, Over the 30 year history of the house 94% of the original value of the house will have gone to realtors while just 6% would have gone towards transfer tax for public services essential to maintaining and increasing the value of a home, over 30 years.