Reasons You’ll Hate Living in the Suburbs: Property Taxes

September 13, 2012 by

No one who’s trying to get you to move to the suburbs tells you about the property taxes.  Oh, it’s so great living out here in the suburbs!  Look at the trees!  Look at my big house! Look at my closet!  Look at how my kid isn’t sleeping in that closet!  ALL THIS SPACE!

And all that’s true.  Pound for pound, living in the suburbs is a lot cheaper than living in the city.  Food is cheaper.  Clothes are cheaper. The dry cleaning is cheaper.  In particular, the housing is cheaper – generally running about $300-$400 a square foot, when pricing in the city is more like $1,200 a square foot.  So from a raw pricing perspective, housing in the suburbs is way cheaper than the city.

Except for the property taxes.  Property taxes in the suburbs are MURDER.  And the problem is that you don’t really pay attention to that when you’re looking for a new home in the suburbs. You’re looking at houses online, and all you see are these high-res pictures of giant houses with big lawns and actual foyeurs and humongous kitchens and OMIGOD LOOK AT THAT WALK IN CLOSET!  And then you realize that for the same price as your tiny 1,000 square foot two bedroom in the city, you could get a 4,000 square foot colonial in some tony Westchester suburb.  You figure out the down payment, you figure out your monthly mortgage payment, and you’re ready to go make an offer.

Not so fast.  Check out the taxes.  They’re on that listing somewhere, not all that prominent, buried deep in the fine print, and sometimes the real estate agent doesn’t even list them.  So keep looking…..looking……and….

WHAT THE EFF!  FIFTY EFFING THOUSAND DOLLARS IN TAXES!!!!  CAN THAT BE RIGHT????

It’s right.  Lucky you, if you’re looking to move to the New York City suburbs, you’re going to be paying the highest property taxes anywhere in the country.  Indeed, the local suburbs make up like three of the top ten highest-taxed counties in the nation.

Here’s the weird thing about property taxes in the suburbs. It’s not that they’re so high, it’s that property taxes in the city are ridiculously cheap.  I don’t actually know why, but it’s probably based on the density – there are so many people living vertically on every square plot of Manhattan soil that the property taxes don’t need to be high in order to fund what is, after all, a pretty expensive local government.

Put it this way – I used to live in a two-bedroom brownstone apartment on the upper west side, in a building that had four total apartments totaling probably about 6,000 total square feet of living space. All four apartments together are probably worth about $7 million today.  And the taxes on the building?  About $30,000.  Now, I live in a condo, about 4,500 square feet, worth probably about $1 million in today’s market, and I’m paying that same $30,000 in taxes.  It’s crazy.

In fact, I’d argue that housing prices in Manhattan are so ridiculously high precisely because the taxes are so low.  Think of it this way.  At today’s rates, you can borrow $100,000 for about $400 per month, or $4,800 per year.  If we round that up to $5,000, you can figure that for every $5,000 in taxes, you lose about $100,000 in property value.  So if you have a Manhattan apartment that costs $1.5 million, and has $25,000 in yearly property taxes, and on the other side you have a Westchester home that costs $1,000,000, but has $50,000 in property taxes, the yearly cost of owning those homes is roughly comparable.

That said, before you decide that your kid is fine sleeping in a doggie bed in your hall closet, let’s remember a few things.

First, even with the property taxes, you still get a lot more space for the money.  That apartment in the city costing $1.5 million?  It’s got about 1,200 square feet.  The house in the suburbs? More like 3,000 square feet. So you’re getting about three times the living space for the price.

Second, property taxes are deductible, so about a third of those taxes are coming back to you in tax savings.  That evens the playing field a little.

Third, you have to THINK OF THE CHILDREN!  Don’t forget that one of the reasons you’re probably moving to the suburbs is that you have kids, and you want them to go to good schools, and those good schools, with all the fancy computers and well-paid teachers and massive educational bureaucracy – all that costs money.  So maybe if you have school-age kids you can take comfort in knowing that your property taxes are going toward their fancy Ivy-League baiting education.

That said, when you’re like me, and you don’t have kids in school yet, it does make you wonder.  Like, can’t those little snots can get by with whatever text books they’ve been using all those year?   I mean, seriously, have there been so many advances in the arts and sciences that ten- or twenty-year old textbooks aren’t good enough for these kids?  What, has Nathanial Hawthorne come out with some new books recently?

Take history, for example.  History hasn’t changed much, and you never get to modern history anyway.  Ten year old history books are just fine.  When I was a kid, we’d start American History every year with about a month on the explorers – “Ponce de Leon was looking for the fountain of youth” is among the useless facts that I can never forget.  Then we’d idle along so that we’d get to the colonial era around November, so we could have a reenactment of the First Thanksgiving and wear funny hats. But if you spend three months on the explorers and Pilgrims, you end up compacting about 300 years of history into five months – by the end of the year, we’d be lucky to get to World War I, much less the modern era. To this day, I feel much more comfortable with my knowledge about Pocahontas then I do about Harry Truman.  So I don’t see why these kids need new history books so long as the books they have get them through, say, the Korean War.

Of course, when my kids are old enough to go to school, it’s entirely possible I might be singing a different tune.  WE NEED NEW MACS!  That does sound like me.

Until that point, though, I’m going to continue hating that tax bill I get every year.

And so will you.

Filed Under: Humor, Living in Manhattan, Living in the Suburbs, Reasons You'll Hate Living in the Suburbs Tagged With: ,

Suburbs in the News: Is it Actually Cheaper to Live in the City Than in the Suburbs?

July 20, 2010 by

A really interesting article in the New York Times recently by Tara Siegel Bernard asking the question whether, contrary to popular perception, it’s actually cheaper to live in the city than in the suburbs.

The answer, of course, is that it is MUCH more expensive to live in the city.  There. Now you save a few minutes of your life, and you don’t have to go read the article.

But if you have some time, go check it out:

Here’s what we found: a suburban lifestyle costs about 18 percent more than living in the city. Even a house in the suburbs with a price tag substantially lower than an urban apartment will, on a monthly basis, often cost more to keep running. And then there’s the higher cost of commuting from the suburbs, or the expense of buying a car (or two) and paying the insurance.

The Times says the city is actually cheaper for a family making about $175,000 a year, mostly because people in the suburbs have two significant additional costs: property taxes and cars.  The only caveat was that if the couple is going to put their kids in private school in the city, then the suburbs start to become more competitive.

Now, a couple of things about that.  I absolutely agree with the point that sometimes people miscalculate the additional costs of living in the suburbs from needing a car, or multiple cars, and having to pay property taxes.  I’m not so sure that the average family taking a lot of cabs every month doesn’t narrow that gap, but I will absolutely agree that property taxes in the city are ridiculously low.  My brownstone in the city had four units, which altogether were probably worth about $7-8 million, and the property taxes on the building were about $25,000. In Westchester, you pay property taxes like that for a $1M house.  No question that’s an issue.  Property taxes are horrible.

But I think that the analysis in the article missed a couple of things.  First, the article cheats a little, because the theoretical couple in question ends up buying a median priced ($675,000) home in Park Slope.  I know that the people in Brooklyn might hunt me down and pelt me with artisanal cheeses, but let’s be honest — Park Slope is itself a suburb.

(Sounds of a fine handmade gouda hitting flesh).

Seriously?  We’re going to try to compare living in the city versus living in the suburbs, and the Times’s idea of “living in the city” is Park Slope?  Why not go out to Bay Ridge?  Or Flushing?  I’ll bet it’s even cheaper there. Sheesh.

Second, on the other side of the equation, I would have liked to see the Times look at some homes other than in South Orange, New Jersey, where the median price for a four bedroom home is apparently about $600,000.  For one thing, that’s a lot higher than the median price in a lot of the other suburbs of Manhattan.  For another, if the basic gist of the article is to make side-by-side comparisons, I’m not so sure that a two-bedroom, one-bath coop in Park Slope is the analogue to a four-bedroom, two-and-a-half bath house anywhere.  If you have two kids, that two-bedroom is going to be a wee cramped.  Forget it if you have three. You’ll have all that extra expense of defending yourself in court when you kill one of them, or your wife, or a hapless cabbie in a fit of parental rage.

So if you were to look at, say, a 3 bedroom coop or condo in Manhattan, a REAL city (ducking a handmade wheel of brie), against a four-bedroom home in some other counties ringing Manhattan, you’d have a much bigger spread.

Third, and most importantly, I don’t see anything in the Times’s analysis of the increased cost of everyday living in the city compared to the suburbs.  That’s the real savings that you get for foregoing all the wonderful things that the city has to offer.  Everything is cheaper. Everything. Your food, your drinks, your dry cleaning, your toilet paper.  Everything.  I would think that this would add up.

Listen, I love the city. I lived in the city for 17 years. I miss it, and would still live there if: (1) I didn’t actually work outside the city (which makes me different from most people making this decision), and (2) I wasn’t looking to raise a family and realizing that I really wanted the extra space.  I recognize all the drawbacks of living in the suburbs — hell, this blog is basically one long post about the drawbacks of living in the suburbs — but increased expenses are not one of them.

Filed Under: Best of, Living in Manhattan, Living in the Suburbs, News Tagged With: , , ,