Who benefits when housing prices rise? The sellers, of course… But also the local governments though increased property tax revenue. The Seattle PI has an article on how the mayor of Seattle has $15 million to spread around thanks to rising home prices:
In 2000 the average value of a residence in Seattle was $232,800, on which the property tax paid to state and local government was just under $2,832, according to the King County Department of Assessments. In 2005 the average home value had gone up to $368,700 with a property tax bill of just over $3,765.19.
The Seattle general fund budget proposed by Nickels for 2006 is $760 million, up from $717 million last year. It includes more money for street resurfacing and more money for sidewalks, police and firefighters.
“Thanks to a strong local economy, we can expect significantly more sales and business tax revenue,” Nickels said in his budget address Monday. “Strong real estate sales will also provide much more revenue for the city than initially forecast.”
I find the similarities interesting between this article and my post from Monday, where I note that the Federal government (IRS) benefits when flippers don’t pay attention to tax laws.