To the editor:

I’m not surprised that some might see a cut in the Little Compton Ag tax as a positive; lower taxes, who does not support the idea of lower taxes?  However, if we look deeper we see this is a flawed concept.  It is simple economics; supply and demand, lowering a small tax on the transfer of property will have absolutely no effect on home affordability.  Cutting the property transfer tax would likely increase the selling prices of property, wiping out any savings to the buyer.  

Here is why, Little Compton home prices are set by market forces.  Some of the market forces in play here are; 1) limited supply of mostly large homes, 2) large tracts of land per home, 3) among the lowest property taxes in New England, 4) small town charm at its finest.  

With these taken into account, let’s look at a few comps from other towns.  For example, a $250,000 home in Tiverton, Bristol, or Portsmouth has property taxes of around $3,000 to 4,000 more a year than Little Compton. That translates to over $300 a month in purchasing power for the buyer or more than a $60,000 increase in property value for a seller.  This is just from the year tax savings alone. 

Most buyers calculate monthly cost of ownership when determining home affordability.  Property taxes can be 20-30 percent of the total monthly payment in New England.  At the current disparity of property taxes between surrounding towns it only takes a few years to recover the cost of the LCACT.

Furthermore, a detailed look a property values yields the very obvious fact that a house sitting on 2 acres of land is worth about $75,000 more than a house on an acre or less.  Then add in our small town charm and home size — you don’t often put small homes on large tracks of land.

These facts add up to a perfect recipe for low home affordability.   The only way to reduce home prices is to increase the supply of smaller homes on smaller lots.  While I disagree with the proposed method, the motivation of Mr. Anderson’s proposal, to increase home affordability, is worthy of serious consideration.  

Andrew L. Rhyne, Ph.D.

Little Compton