Q: My house is currently for sale in Torresdale. Will the new city tax increase for the public schools dissuade buyers from looking for a home in Philadelphia and make it harder for me to sell my house?
A: There are people making an argument that the tax increase will hurt home sales. Another argument is it could drive prices down. But it will probably be hard to tell with the high amount of homes for sale in this market right now and the spring homebuyer market ending.
I personally don’t think this proposed 3.85 percent increase will send very many Philadelphia homebuyers screaming for the suburbs because, even with the increase, taxes are still lower in Philly.
Keep in mind that Philadelphia isn’t the only place raising taxes for schools. Suburban school districts are hiking taxes, too. New increases include Centennial with a 4.64 percent increase, Kennett’s 3.8 percent increase, Lower Merion’s 3.31 percent increase and Coatesville’s 3.51 increase. With higher home values in the suburbs, these increases can amount to a much higher out-of-pocket expense than Philadelphia’s increase. In Ridley an increase means a $146 more yearly on every $100,000.
When you’re talking about an increase to taxes in Torresdale, or even much of Northeast Philly, it amounts to less than $100 a year. And when we’re talking in terms of a buyer’s mortgage payment — including taxes, principal and interest — less than $8 more a month probably isn’t enough to push a prospective buyer into suburban taxes. If it does, then they were probably already considering the ‘burbs.
House prices and interest rates are low right now. Northeast Philly won’t be less affordable to potential Northeast Philly homebuyers. Maybe this tax increase may be enough to aggravate a few homeowners into selling, which could be detrimental to the already flooded housing market, but if the increase ends up helping the school district, it could be helpful to home values in the long run. We’ll just have to wait and see.
Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.