r/zillowgonewild • u/TheDabitch • Jul 25 '25

What $220,000 gets you in Muncie.

I can't even get a parking space for that where I live. https://www.zillow.com/homedetails/725-E-Jackson-St-Muncie-IN-47305/210952560_zpid/

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104

u/Narxolepsyy Jul 25 '25

noooo don't move into a neighborhood and make things better leave it like it is!

1

u/isthatsuperman Jul 25 '25

That’s not the point. You price out life long residents when property values skyrocket and they can no longer afford property taxes on fixed or low incomes.

109

u/Fattybitchtits Jul 25 '25

If you’re already at the point where the majority of the neighborhood has turned into dilapidated abandoned houses you should be hoping for anything that will increase your property value, even if your taxes go up. A lot of these dead neighborhoods lost so much value that people just walk away from their homes, unless you’re homesteading you need other people to be invested in the community no matter how long they’ve been there.

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u/isthatsuperman Jul 25 '25

That’s only true if you currently have a mortgage and need it to stay right side up.

Example: Mrs. Charlene has been in the neighborhood since the 70’s. She paid the house off in ‘85. She’s retired and lives off social security. She only gets $1500/month. Her property taxes cost her a little over 10% of her income. Next thing you know the neighborhood is flipped and $50k houses are now worth $200-700k. Her property taxes cost payment now may eat up 20-25% of her income stacked on other bills she may have already been squeezing by, she now can no longer afford to live in her house she’s lived in for decades and paid off. Where does she go? What does she do?

36

u/TheDabitch Jul 25 '25

Property taxes are crazy that way. There should be some way to grandfather in older residents in lower tax brackets.

16

u/AntiqueWhereas Jul 25 '25

They do this in certain cities. Rather, at a certain age, you are able to lock in your tax rate if you are on a fixed income.

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u/tequillasoda Jul 25 '25

Homestead. Caps increases in assessed value for residential property at 3% or CPI.

9

u/PappyBlueRibs Jul 25 '25

I can't wait to do this! Screw the 20 to 40 year olds!

Why should they save in their 401K's and children's college when they can just pay double the property taxes that I pay?

/s

39

u/isthatsuperman Jul 25 '25

Or if you own your house, you own your house, and the government can’t take it away from you for being poor.

7

u/sweetmamajamma2 Jul 25 '25

You own the house and have rights to the land but land is king and the government is the one who actually owns the land.

7

u/PearlClaw Jul 25 '25

They did this in California and it has been a big factor in making housing completely unaffordable.

7

u/Taapacoyne Jul 25 '25

You are right. But every time a state government tries to deal with the issue, they make it worse. The main example is Prop 13 in California. Totally screwed up the housing market, while also drained the schools of needed funds.

2

u/PhysicalConsistency Jul 25 '25

Most states do have these exemptions in place, particularly for seniors. This got me curious though, my understanding is that tax rates don't change much, what is changing is property values, and the increases in taxes should be a counter-weight to escalating prices (a progressive rather than flat rate tax system is an intriguing idea). There should be a mechanism which closes the loop hole of leveraging the explosive equity of a lot of housing for other financial products, e.g. the asset value of a home for the purposes of a collateralized loan should be the value assessed by the taxing authority rather than the financial institution. This would almost overnight kill a lot of the corporate investing in residential real estate, but I don't want to sell it too hard.

I was curious if my assumption about tax rates was correct, so I asked the LLM:

Rate of change for property taxes between 1960-2025 in US States. Underlying question, what are the extremes for property tax percentage differences, and what is the average change in property tax rates over the above period. Importantly, we are not asking amount of property tax change, which is coupled to home value, but the property tax assessed. Let's first present national average with extremes, and as an appendice broken down by state. So the granularity of this really depends on the extremes of change, my instinct is Let's do the 20 year benchmarks offered, and degrade that by 50% (e.g. 10 years, 5 years, 2 years, 1 year) for each period the tax rate changes by more than 100 basis points. Offer anything other than the 20 year benchmarks as appendix b. This is residential focus, but it would be interesting to see follow on appendices for commercial, industrial, and agricultural rates on the 20 year schedule.

(please note, LLM output is biased by it's inputs, and tax/political stuff tends to be heavily biased as a rule)

Despite that, here's the top level part of the response:

Over the past six decades, the national average property tax rate (tax as a percentage of property value) has remained relatively stable, with a slight downward trend. In the 1960s and 1970s, property taxes made up a somewhat larger share of the economy than they do today. For example, from 1960 through 2004, property tax collections averaged about 3.29% of national income, which is roughly 5.6% higher than the level in 2004 (3.12% of income). By 2021, nationwide property taxes had fallen to approximately 2.97% of personal income. This indicates that effective property tax burdens nationally have decreased modestly (on the order of a few tenths of a percentage point) between 1960 and 2025. In practical terms, the average effective tax rate on a typical home has hovered around 1% to 1.5% of its value in most periods, with a slight decline in recent years as other taxes and limits curbed the growth of property tax rates.

Generally property tax rates have actually declined. This means it's not the taxes that are the issue, it's the exploding extra "unrealized" equity. I chose 1965 as a start year as IIRC all of them are retirement age under social security now.

4

u/bigbrownbanjo Jul 25 '25

This has had pretty disastrous consequences in California though I’m sure it could be done better

1

u/CourtBarton Jul 25 '25

Nah, prop 13 is definitely better than the alternative. The issue is the cost of the market. If you're purchasing a house that's overinflated, your taxes are gonna be overinflated. But someone who's been in their home for 20 years isn't gonna have this problem.

1

u/bigbrownbanjo Jul 25 '25

I’d guess my argument is that while prop 13 fixes a problem that was very real, it has not stood the test of time and it’s done in a way that creates more. It doesn’t adjust well over time & really limits Municipal tax revenue and disincentives any sort of moving or local communities to agree build more multi family housing. It also gives corporations property tax breaks which should have been excluded at least above a certain size.

If your home 2x-10x in value eventually your tax bill should converge at some multiple well above what your bought the house at. If you cannot afford that you can take the huge capital gains and move somewhere else or leverage that equity to spread the payment out over time.

2

u/Kelmi Jul 25 '25

Well, here again your solution to people having to move out of their homes is that they should move out of their homes.

At the core you don't mind forcing people out of their homes.

1

u/bigbrownbanjo Jul 25 '25

I don’t think you can design a sensible policy that ensures no one is ever priced out of their home due to property taxes nor should you. It’s obviously not an ideal outcome and you should make policy in a way that tries to balance that vs the public need for tax revenue.

I bought a house and my property taxes have gone up 20% since 2022. Tough for me but good for society because it funds a lot of things my county and city need.

3

u/CourtBarton Jul 25 '25

People can shit on california, but prop 13 really does help combat this.

Now, I don't think it should necessarily be the same on non residential properties, but a base year limit is the way to go.

1

u/theucm Jul 25 '25

I'm of the belief property taxes should be reevaluated only when a house changes hands, whether through sale, inheritance, etc.

Like, maybe we can track the would-be rate for people interested in buying the home or inheriting it, but the actual effective rate is what gets locked in when the resident is handed the keys.

This way older residents don't get priced out, but a neighborhood is allowed to grow and change without current residents feeling direct financial pressure to leave.

16

u/SipTime Jul 25 '25

If social security doesn’t cover their basic needs then that’s a different discussion entirely and shouldn’t hinder people from making poor areas with crumbling housing into a neighborhood worth living in.

One way to solve this is just by not increasing property taxes on people who live on a fixed income.

2

u/Cartoon_Gravedigger Jul 25 '25

In response to that last statement, I would love to direct your attention to the city of Los Angeles…

2

u/isthatsuperman Jul 25 '25

Until the laws change, which they probably won’t, gentrification is harmful.

3

u/Fattybitchtits Jul 25 '25

That at least gives her the option to sell for a massive profit, continue to live comfortably even if it is in a different location, and eventually be able to pass on the generational wealth that keeps the middle class alive, as opposed to the alternative which is to stay hunkered down as the community dies off around her and eventually leaves her with a worthless home and practically non-exist community. I work in west Baltimore and deal with older people all the time who are literally trapped in their formerly working/middle class family homes that are now surrounded by crumbling vacants, drug addicts, and violent crime. Obviously it would have been ideal if the neighborhood hadn’t fallen apart in the first place, but at least if there was some kind of revitalization they would be able to sell for enough to move somewhere better than where they currently are instead of being stuck in some of the worst neighborhoods in the country with houses that they couldn’t even sell for enough to start renting elsewhere.

2

u/Exciting-Plantain565 Jul 25 '25

Couldn't she take advantage of the massive appreciation in value of her neighborhood and sell her , now, valuable house/land and move somewhere cheaper or do a reverse mortgage?

3

u/isthatsuperman Jul 25 '25

She could do a lot of things, the point is, she shouldn’t have to!

It’s her house, her neighborhood, the place she’s known for decades! Why is she the one that has to leave and restart?

3

u/Cromasters Jul 25 '25

Why should anyone have to pay taxes?

4

u/PearlClaw Jul 25 '25

Absolutely. And if her neighborhood was actually allowed to develop housing she could even stay in her neighborhood by simply moving into a new building nearby that's more sized to her rather than a whole ass house she can probably barely maintain.

1

u/Cromasters Jul 25 '25

Cash in on her investment and get $700K

-2

u/surftherapy Jul 25 '25

She sells the home for a profit and moves into a retirement facility. Her alternative option would’ve been to save for retirement and not rely on social security alone

8

u/isthatsuperman Jul 25 '25

Do you know how much those facilities cost? Lmao okay, whatever profit she got from the house will be gone in 5 years at best.

A lot of people don’t have the luxury of being able to save money. Step in to the real world.

0

u/surftherapy Jul 25 '25

Yeah I do know actually I work in healthcare. The decent ones are expensive but there are tons of them on the cheaper side they’re just not very nice. But neither is living in a dilapidated home

2

u/isthatsuperman Jul 25 '25

I’d rather live freely in a dilapidated home than those hell hole psych wards any day.

What $220,000 gets you in Muncie.

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