Dolomiti, you and Brewster and I seem to agree on these things, so I hope it doesn’t sound like I’m arguing with either one of you. You guys have really put in some time trying to call out these folks claiming unfairness. It’s unreal.
I’m really disheartened by the greed and audacity of longtime downtowners who claim in one breath to have spent decades creating and building this city and in another breath claiming that they had no idea about the taxes or that it comes as a complete shock. It’s really something else.
I've got no dog in this fight, as I'm a renter. but I do feel for my long-time neighbors who planned on retiring here, and will now probably have to sell. good for them for getting squillions on a home they bought for very little, decades ago. but it's a big bummer to have to uproot yourself in your golden years, just because you are now sitting on a hot property.
likewise, if my landlord has to double my rent, he'll lose a known tenant who's been trouble-free for years. instead he'll have to deal with someone new, who might make extra demands in line with market-rate rent, yet he'll have no extra $$ in the bank in exchange for that headache.
yes, of course he can sell. but he too was planning on retiring here, so please refer to paragraph one of my post.
A couple of thoughts:
- the hypothetical owner of your post would have many more options than just “will have to sell”. Among them: reverse mortgage, HE loan, HE LOC, etc.
- no renter would see his rent double because his landlord's taxes have doubled. That’s sheer misunderstanding of the numbers involved. Take the extreme example of a homeowner going from 20K to 40K. If that landlord had a single tenant, and he wanted to pass on the entirety of the tax increase onto the tenant, that means charging an additional $1,666/month. That’s only a doubling if the tenant is only paying 1,666/mo today, which seems unlikely for that kind of property. That would be an easy one to fight in housing court.
$1666/month would not double my rent, it's true. but can you name anyone in your social circle who could handle that kind of increase, even if it's only 50%?
This is nonsense. A landlord's operating cost doesn't determine how much rent that can charged. The market does that.
Take for example a rental property in Greenville that will see their taxes halved from $6,000 a year to $3,000 a year thanks to the reval. The landlord isn't going to lower their rents and pass on the savings to their renters. They're going to continue to charge whatever the market is willing to bear. All else equal, the landlord will have an additional $3,000 a year in positive cash flow (less any state and federal taxes for the $3,000 in additional taxable income) thanks to the reval.
A leveraged property investor who recently bought a downtown property for rental purposes and will see their property taxes double can't just pass on the property tax increase to their renters. The renters will move out to other areas of town with more reasonable rents. The property will sit vacant if the rent is higher than what people are willing to pay. In other words, a landlord cannot charge more than what the market is willing to pay.
It's very possible recent investors that bought downtown may have to sell (possibly at a loss) or continue to eat the negative cash flow caused by the reval. I don't know how many years now people have been warning about the reval in the downtown market, and an investor that didn't due their due diligence deserves what's coming to them.
Economics 101 people.