Realtor and Builders Oppose $3,000+ Hike in New Fees on Home Buyers for Mass Transit Purposes

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Pennsylvania Association of Realtors against taxes that could add more than $3,000 to home prices
Pennsylvania Association of Realtors against taxes that could add more than $3,000 to home prices

RISMEDIA, November 15, 2006?The Pennsylvania Association of Realtors(R) (PAR) and the Pennsylvania Builders Association (PBA) are opposing a proposed increase in realty transfer taxes that could add more than $3,000 to the cost of an average-price home.

Increases totaling 1.39 percent in realty transfer taxes by state and local governments were proposed today in a report by the Pennsylvania Transportation Funding and Reform Commission on mass transit funding and other transportation needs.

The increase would raise by 70 percent the existing two percent in realty transfer tax, one percent from the state and one percent from local governments, which already is one of the highest in the country.

This rate would add $3,358.24 to the cost of buying a home, based on the median price of $241,600 for an existing home in Pennsylvania at the end of the second quarter of this year, according to PAR economic information.

“This will create a huge barrier to home ownership at a time when there is already turbulence in the real estate market that can be expected to continue for some time,” commented Len Ferber of Strasburg, PAR President.

“Buyers of new homes could pay even more because prices for new houses tend to be somewhat higher than those of existing homes,” PBA President Brad Elliott said. “At a time that is a tremendous buyer’s market, this tax increase could really stall housing sales and hurt consumers, not to mention the state’s economy.

“It’s misguided economic policy to think that shifting the burden for transit funding onto the backs of a small segment of the population – just homebuyers – is a reasonable quick-fix for mass transit,” Elliott said.

“Additionally, this tax will provide an unreliable revenue stream given fluctuations in the housing market. As a result, our transit agencies will still be at risk for inadequate funding,” Ferber added.

Both associations noted that the Commission estimated revenues from the increased realty transfer taxes would create nearly the entire $760 million amount needed for mass transit.

“This is a totally unfair placement of this tax burden on home buyers,” Elliott said.

“The Commission also noted that the county-by-county proceeds from the realty transfer tax would “closely align with public transit ridership.”

“In some Pennsylvania counties, there essentially is no public transit, making it doubly unfair if rural home buyers pay for big city transit riders,” Ferber said.

Upgrading the Commonwealth’s transportation infrastructure and mass transit systems is supported by both associations, but they suggest broad-based solutions are more equitable than a levy on the housing industry and its consumers alone.

The Pennsylvania Builders Association’s 12,000 member firms include builders, remodelers, material suppliers, subcontractors, consultants, lending institutions, utilities and others involved in the housing industry. The PBA serves Pennsylvania communities and consumers through its steadfast efforts to protect homeownership rights and advocate for affordable housing.

Source: Pennsylvania Association of Realtors

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