There is rarely a day that goes by that I do not receive a call or email from a customer inquiring about a Berks County, PA home that is for sale. It is especially interesting when the prospective home buyer is not from Berks County. The conversation often leads to a discussion about our property tax paradox.
Many inquiries are to confirm that the taxes listed online are correct and not a mistake. They cannot believe the taxes are really as high as stated in the information. They tell me about the property taxes in the area where they presently reside and I get jealous.
The median property tax in Pennsylvania is $2,223.00 per year for a home worth the median value of $164,700.00. Pennsylvania counties collect an average of 1.35% of a property’s estimated fair market value as property tax. This puts Pennsylvania at 13th highest in the United States.
The median property tax in Berks County, Pennsylvania is $3,014 per year for a home worth the median value of $170,400. Berks County collects, on average, 1.77% of a property’s estimated fair market value as property tax. Berks County has one of the highest median property taxes in the United States, and is ranked 154th of the 3143 counties in order of median property taxes. As a percentage of property value Berks County is 196th out of, yes, 3143 counties in the United States!
When someone calls from Delaware, North or South Carolina or one of the many other states with lower taxes they are stunned at our rates. Depending where they are from the property taxes on the $300,000 home they are living in are approximately $1,800 to $3,600. The property tax on the same priced home in Berks County is around $8,600. It is a shocker! They can afford the home but not the taxes.
So what do they do? They start considering our neighboring counties.
Lancaster County is ranked 532nd at 1.43% of property value; Lehigh County is ranked 476th at 1.48% of property value; Chester County is ranked 764th at 1.25% of property value; Lebanon County is ranked 751st at 1.27% of property value and Schuylkill County is ranked 384th at 1.57% of property value. Only Allegheny, Armstrong, Cameron & Erie Counties are ranked higher then Berks County. They are all at or below the $115,000 median home value mark.
Visit the following web site to preview the tax information listed here: http://home/jeffreyh/public_html.tax-rates.org/pennsylvania/property-tax
So what’s new? We all understand that Berks County property taxes are high right? There is a much more sinister issue at hand that is caused by high property taxes than many realize. Read on…
Home buyers from all over the world are empowered by the internet. They can access volumes of data on homes they are interested in like never before. This includes school district information, pricing information, location / mapping information, and much more. They can also acquire data on the cost of living, median incomes and the like. The role of the real estate agent has changed from information gatekeeper to trusted advisor.
Data mining is one of the fastest growing fields in technology. Every year these real estate syndications look for more ways to engage buyers. They do this by supplying more and more information to home buyers. The tax statistics I outlined earlier will more than likely find their way into mainstream home searches on Zillow.com, Trulia.com, Realtor.com & other real estate home search web sites. This does not bode well for areas with high taxation.
As I have stated in past articles, most people buy money not houses. Their home purchase is more likely connected to the monthly payment than the price of the home. $5.00 a month will buy you $1,000 of house (30 year mortgage @ 4.5% interest). If you mortgage $200,000 the principal and interest payment is $1,000.00…Simple. If someone lives in an area where their property taxes are $2,000 per year and decides to move to Berks County it is likely they will be paying about $3,000 more in property taxes per year for the same priced home. This means the buyer has increased their payment by $250 per month. This is equivalent to paying $50,000 more or $250,000 for the home!
Wonder why Berks County home values seem to be stuck? This may be a clue. I hope our lawmakers and representatives are listening.
Next week I will expose the property tax paradox and offer some solutions to the issue. Stay Tuned!
Knowledge is Power!