FREE NEWSLETTER
Go to main Forum page »
I paid the property taxes on my vacation home the other day. That got me thinking about the reality and impact I have on the local area and the ongoing debate around property prices.
I suspected property prices in the small coastal village where I have a vacation home were inflated, partly because of owners like myself buying in the area. But I recently discovered just how bad things have become. The village has the largest disconnect between median wages and median house prices in my entire region: properties cost 11.3 times the median annual wage. Only a few extremely wealthy areas around the capital city are worse. The report’s authors described it as “critically unaffordable for the local population.”
I don’t know how to process this information. Selling up wouldn’t help, another outsider like myself would just buy the property, probably turning it into a short-term vacation rental. That’s another area the report highlighted as placing extreme stress on local residents, with median rental costs exceeding 50% of median income.
I’m maybe not the worst vacation owner. I spent all of last summer at the property and plan to be there even longer this year. I make a point of using local businesses and contribute generously to charity events. I’ve helped fund a Halloween festival and fireworks display for the whole community. But it’s just a sticking plaster, it’s certainly not going to help a local find a home in the place where they played as children.
The council is currently drafting legislation for a 100% property tax increase on vacation homes and short-term rentals. The funds would be restricted to purchasing land for affordable housing—both for sale and rent—for local residents. I’m generally against targeted tax rises, but this one, as long as it’s targeted at affordable housing, I’d pay without complaint if it becomes law.
Last summer, the council canvassed opinions from all residents and property owners in the region. I drafted and sent a letter of support to the local council board considering the property tax change. From what I’ve learned from my neighbors, I’m in the minority, most second-home owners don’t see themselves as part of the problem. I do, and I’m happy to be part of the solution. It’s the least I can do for the local population of the area I love.
I want to be more than just a seasonal visitor; I want to be a neighbor who recognizes that for my coastal retreat to remain a home for me, it must remain a home for those who were born here…who would ever have believed I’d be advocating for a tax rise? It’s a strange old world!
Article in today’s NY times:
https://www.nytimes.com/2026/01/28/realestate/property-tax-second-homes-massachusetts.html?unlocked_article_code=1.IVA.NgUk.xDuEl8w4Tv5Q&smid=url-share
NB I already posted this link in this thread.
We regularly donate to our vacation towns library, food pantry, police and fire associations and other one off requests. When we are there we spend thousands of dollars in the town, especially when our children are there too.
Even their large supermarket would not be there if it weren’t for non-residents and residents would be forced to pay higher prices in local markets or drive 20 miles to a larger town.
The town survives on vacationers, including non-resident homeowners. In reality, even if non-resident homeowners caused higher house prices, without them incomes of locals would be lower and jobs would disappear.
You simply can’t live in a resort town and compare it to other locations.
The area used to thrive on fishing and making salt. That life is long gone. A train used to run the length of Cape Cod bringing vacationers. That too is long gone, but where the tracks were has been turned into miles of bike paths – for vacationers, not locals.
I wish the simpler life had stayed. I wish there were less building, but every time we visit another piece of land has been lost to new construction.
Our property tax bill contains an extra charge for land conservation and I’m happy to pay it, but it has limited impact. And guess what, less land to build on drives housing prices higher.
For any bikers on HD I highly recommend the Cape Cod Rail Trail. It is just over 25 miles of flat, paved trail. For series bikers if you go early before casual bikers are there you can really air it out.
All this simply says that seasonal residents need services like supermarkets, restaurants, fire and police protection etc. All of those services require people to provide them, But the increasing number of non residents pressures the housing supply and prices out lower income service workers. Your summer spending and library and food bank donations aren’t sufficient to allow the workers to live in the area,
All those services require people to use them. The retailers and restaurants survive on income generated during four months of the year – guess who by.
Exactly’. Could you live on four months of steady income?
Many places, and restaurants close afterThanksgiving or a bit before, so yes people do live on what they earn from the vacation season.
The town does everything it can to attract non residents from weekly band concerts in season to first night on New Years, the Turkey 5k at Thanksgiving and an old fashioned parade on July 4th. The town sponsors a team in the nationally known Cape Cod Baseball League each summer.
All for the benefit of non-residents, all possible because of non-residents.
Even the churches depend on non-residents.
I use a local landscaper to care for the property. I pay a service to visit our house weekly when we are not there.
There were a lot fewer houses in the town when we bought in 1987. The townspeople allowed that to happen and still do. They are happy to make a living from vacationers and non-resident homeowners.
You can’t create an atmosphere to attract people, benefit from it and then complain about one of the consequences.
Absolutely true that resort areas totally depend on non residents, I support the same kinds of activities that you do. The kind of tax system Massachusetts has established for vacation areas hasn’t reached upstate NY yet, but the Adirondacks are about 50 miles from the Berkshires. I feel very sure the property tax breaks will rapidly spread to us. I also know that the locals really don’t have opportunities for good paying jobs, So I’ll accept the higher tax on second homes owners when it arrives, And there’s self interest attached. I want to be able to go to a restaurant, have the lawn mowed, have our boat cared for, etc.
If the non-resident property owners do not represent any extra cost burden to the city above those of the full-time residents (of course the opposite is true), then it would be blatantly unfair to charge them a higher property tax rate.
I think non-resident owners do represent a cost burden. That burden is large increases in property costs, making living in the local area next to impossible.
I don’t get your reasoning here. Why would non-resident owners cause that? The desirability of the area and the demand for houses and the supply causes that.
The entire economy also drives prices as do interest rates.
If all the holiday homes disappeared the prices of resident homes would be driven even higher. Not to mention a decline in the local economy.
The bigger picture is what would the economy of the town be like if there were no vacationers to support it.
There are other factors too. When we bought our house in 1987 it was at the peak of a real estate market. Then it collapsed. It took ten years before our house was worth what we paid for it.
I can only speak of my local coastal village. We haven’t seen new housing development in maybe twenty years. During that time, the village has become increasingly popular with affluent outsiders seeking vacation homes—they’re drawn to our outstanding natural beauty and the fact we’re not overrun like other tourist towns. This has created a local housing bubble. These affluent buyers bid up prices on any properties that hit the market, pushing the median house price to 11.3 times the local median wage. That puts homeownership completely out of reach for locals. Without this outside influence, property prices would be much lower and aligned with what people here can actually afford. So to my mind, there’s definitely a clear correlation…no new housing stock causing existing stock to be priced out of reach for the local population.
But it is locals who are selling and benefit from those higher prices isn’t it?
It is supply and demand. Wouldn’t the same thing eventually happen? Forget outsiders, if a local wanted to buy a house or their children with no new building limited supply would cause prices to climb.
What you describe is not unique to small villages. When big cities are revitalized the same thing happens.
I live in Northern Ireland’s most expensive city, yet median property prices here are 40% cheaper than in my vacation home village on the north coast. A claim that coastal village prices would have naturally reached these levels without external pressure—rather than being driven by second homes and wealthy outsiders—simply doesn’t reflect reality. I acknowledge that in your local area the reality might be different and local workers may be in a position to pay over 11 times the median wage to acquire property; I guess your banking sector lends higher multiples of income than the UK.
Our banking system isn’t the reason some full time residents own homes in resort areas. It’s because the locals bought before second homes demand exploded and many live in less desirable — not lake front— areas. What you say about the Irish situation closely tracks what’s happening in the US,
Incentives drive behavior. The powerful live in tony neighborhoods of London and it’s quite shocking to read stats like this:
You should be commended for taking a stance in helping your community and be a part of the solution!
It’s interesting that here in NH (in which property taxes are the main revenue generator (as there is no income nor sales tax, and state support for education is ridiculously low) those towns that have lakes and ocean front vacation properties have the lowest real estate taxes, and the highest property values. This is due to the high property values combined with the fact that vacation homes don’t house children that attend the town’s school.
Short term rentals in vacation spots are a huge problem because they decrease the number, but increase the prices of homes for year round residents. This is the case in the tourist town he lives in in the White Mountains of NH
“…those towns that have lakes and ocean front vacation properties have the lowest real estate taxes”:
In California, property taxes are proportional to the assessed value of the property, hence more expensive properties automatically pay higher property taxes. Isn’t that the logical (and fair) way to address the revenue needs of the expensive real estate vacation towns discussed in this article?
“The funds would be restricted to purchasing land for affordable housing”
I get it, I really do. This is a sprawling, perhaps misdirected response to your thoughts.
I’d pay higher taxes in return for a specific benefit for the greater good. Sometimes that’s what bond referendums are for. My hesitancy is (or would be) what happens when the next group of officials are elected? Will they agree to abide by the rules originally defined? In my view, politicians – even the good and honest ones – don’t think like engineers, business owners, hourly workers, etc. Who defines what’s affordable? What building practices are required?
I volunteer with Habitat for Humanity. But Raleigh is in a relatively high cost of living area compared to most of North Carolina. I’m not pretending that helping to build these homes will clear the nearby homeless camps.
I know you get my point. A decision made today may be overruled tomorrow. What if you don’t like how the result changes?
You have a very fair point. Politicians, no matter what nation, have a habit of moving the goalposts. Unfortunately, not being a permanent resident, I wouldn’t even have a say in any changes if they happened.
Mark, I can relate to your story. We are seeing something similar in our vacation home town as well.
The town is the most desirable on Cape Cod. The median household income is $87,368, but housing prices have skyrocketed. We bought our house in 1987 for $159,000. Today it would sell for around $900,000 and our house is modest by town standards, many are in the millions.
Affordability is an issue for residents. Affordable housing is being built and changing the nature of the town.
The town just voted to lower property tax assessments for residents andshift taxes to non-resident owners.
Penalizing non-residents in a town virtually relying on tourism may be a mistake.
I wrote my concerns to the local paper. See if it makes sense.
To the Editor:
The recent decision by the Town of Chatham to lower property tax assessments for resident homeowners at the expense of non-residents is both short-sighted and illogical.
Logic would say that residents who use the great majority of town services should pay higher taxes than non-residents.
I have owned a home in Chatham since 1987 and, like everyone, have paid property taxes all those years. Those taxes, as do all other non-resident taxes, subsidize many services and facilities enjoyed by residents-schools being the most obvious. But also other physical facilities.
However, our street is designated “private way” whatever that means. As such we can’t even get potholes filled or other road maintenance even though there are residents on the street.
The dual tax structure will disrupt the housing market as well, with the possibility of making housing less affordable for residents.
The reality is Chatham residents and its merchants depend of non-resident tax dollars and more important their seasonal spending, even those who rent their properties.
I am not suggesting residents pay more, just that the assessments should have remained equal recognizing the needs of all homeowners and the contributions non-residents make to the lifestyle residents are accustomed to in a summer vacation town. A lifestyle that would cost more without non-resident homeowners.
It’s a complex, nuanced topic. In your case, I don’t think simply shifting the tax burden onto vacation homeowners is a good or fair idea. It doesn’t really solve the housing cost problem, it’s more of a tactic to keep local voters happy. Would you be more open to a model like we’re considering in my area, where vacation homes are taxed at a higher rate specifically to fund land banks for affordable housing for local residents?
I realize property taxes are a major revenue source for US towns and are much higher to start with. In our situation, rates are quite low by comparison, so we’re looking at a 100% surcharge, which sounds dramatic but translates to a modest increase in actual cost. For your area, maybe a 5% increase on vacation homes could generate meaningful funding without being punitive, especially given your higher tax base?
The town depends on vacationers for its survival, every business needs tourists and then locals complain about them.
The town draws most of the local revenue from a few months a year and a few holidays. Compared to NJ their taxes are low, very low, but they don’t think so.
If you live in a town on the water, a top summer location containing one of the top ranked resorts in the USA, it’s not hard to imagine house prices will be high especially when land is scarce.
I don’t have the answer, but I’m pretty sure it doesn’t involve killing the golden goose that drives your economy.
Are you planning to put your house on the market to avoid the tax? I very much doubt it.
My husband and I own a house on a pristine lake in the Adirondack Mts in upstate NY. The local /nonresident friction you mention exists there too. But the major cause is also the same— the income differences between the two groups. And things got worse during Covid—the rundown properties that locals lived in were bought by people— many from n’ern NJ— who ripped down the shacks and built mega mansions. The locals were displaced. No effort to date has yet happened to have the non residents pay more tax, but it’s just a matter of time. And I do accept the need for people like my husband and me to pay more. I won’t like doing it— but I am not willing to free ride people who have less.
i see a parallel between this and my Medicare costs. Because of our retirement income, I pay far more than most for Medicare. I have no complaints about doing that. So if I have a lakefront house as my SECOND home where many residents have lesser housing options, I should be willing to correct that imbalance.
The way I see it at least in our case is the local town enacted zoning laws and allowed extensive building of vacation homes, local builders built the houses, local workers built the houses.
A few years ago a builder bought three acres of property behind us, got a zoning exception because one of the eight houses he jammed in was designated affordable to buy.
I protested and met with him. His reply was he was creating jobs. He has done the same thing in other areas of the town building scores perhaps hundreds of houses.
Now the locals complain about what they created. What did they think would happen to prices in such an area?
They don’t complain about prices when they want to sell. They don’t complain when non-resident tax dollars helped paid for a new community center, senior center, police station, fire house, town offices. All in a town of 6600 year round residents.
I hear what you’re saying, but I believe you have mentioned somewhere your property taxes on CC are in the $2000 range. That’s VERY LOW; what you originally paid for the house and how much you contribute to the summer economy are also pretty irrelevant. The bottom line is that the town needs more revenue and folks like you are going to provide the bucks.
Increasing the summer residents’ taxes isn’t going to drive anybody away. The summer people will complain over their lobster rolls, but they’ll pay the increase. The property in CC — and in most in most vacation areas-/ is a scarce resource. You can be sure demand will likely always outstrip supply. Thr town really can’t do an across the board increase— the workers you rely on to provide the services you need in the summer can’t afford the higher tax, THEY would be priced out,
This is best seen as a First World Problem. Nobody wants higher taxes, but the having the house far outweighs the higher taxes bill.
Yes by most standards property taxes are low, they are $2700 now,(nobody in the town has a clue about high property taxes) but that is because of the large number of non-resident homes using minimal services, the town consolidated schools with other towns. There are no town sewers, no garbage service, you pay and arrange your own, you get charged for a beach sticker and to recycle. You get charged higher water rates if you have an irrigation system.
They aren’t raising the overall revenue, just shifting more to the non-residents.
There’s an article in today’s New York Times (https://www.nytimes.com/2026/01/28/realestate/property-tax-second-homes-massachusetts.html?unlocked_article_code=1.IFA.HpoT.TAiCWbyMt2KA&smid=url-share) on this very issue on Cape Cod. You’re paying about 25% of the taxes I pay for my NH second home. Same lack of trash service, no sewers for miles, fees for this and that. I don’t like paying more taxes than my neighbors across the street, but all the points Marilyn makes above are valid, for me and for you. Why your enlightened view on IRMAA, but not here (given that no perfect solutions exist)?
Thanks for the link. I think the article does a good job of encapsulating the issue.
Thanks I read it. There is an interesting point. Those of us who are non residents have no right to vote. So any spending or tax action is beyond our control. That isn’t fair either.
The law that allows this says a town can lower assessments by up to 50% but must remain revenue neutral.
Property values have risen for all houses, not just non-residents.Everyone has benefited.
This is as silly as the movement to exempt seniors generally from property taxes just because the are retired or 65.
I can’t vote in the Adirondacks either. I don’t know any place second home owners have that option. And my property tax is a little more than $7000 a year — no water, but we do have weekly garbage pickup (necessary in an area with a large bear population!). We also make very large contributions to the local ambulance service that is staffed by local volunteer emts.
increased property values contribute to the wealth effect, but a local
will need to find another place to live if he/she sells. The only way a local in a place like CC could profit from a house sale is relocate.
I don’t support tax breaks for people just because they’re old. And there are no programs in WI that provide them.
Hardly the same thing in my view. Vacation homes are part of the community. The community allowed them to be built and benefits from them greatly.
The town could not survive as it does without them including the ones that rent out in the summer. Without them the resident tax would be much higher.
In addition, disrupting a uniform tax system thus artificially making some homes easier to afford also means higher demand hence higher prices.
Any residents truly burdened by property taxes should receive targeted relief the cost of which to be built into the entire tax base equally.
To me this is like charging vacationers a fee to come to your resort town and then complain when fewer come.
At a very fundamental level it is the same thing: Those who are well off (such as you and I) have access to what we want beyond our daily necessities (e.g., second homes), and the ability to pay for what we need (e.g., IRMAA) without sacrificing our wants. Those less fortunate do not have access to their wants to varying degrees, and increasingly in this country struggle to even maintain the ability to see to their basic needs. Whether your analysis of the situation in your vacation home town is accurate, I cannot judge, though I dare say the locals there would not take your description of the situation as an objective statement of conditions. What the most proper financial solution might be for popular second home areas I also cannot judge. It seems to me proper that local residents are first in line to make the determination, for good or for ill. What I do see given my property tax burden and yours is that you have a pretty sweet deal, at least at present, but that advantageous position might not be sustainable for the town population as a whole.
Good for you. Do your seasonal neighbors realize that if the locals can’t afford to live there, there will be no shops and no services? They might have to mow their own grass!
good post, Mark, as usual. I remember when we lived in a HCOL area for 12 years, we never made the median income for our county. It was hard to live there. When we moved to a LCOL area, it was like we got a huge raise, when in reality the actual raise was not much. Chris
Oh boy, Mark, you’d never make it as an American. Supporting a tax to pay for something good? What the heck is wrong with you? Someone must have slipped some sort of drug into your Guinness! Why would anyone support a tax, when the government can simply print some new money to pay for stuff?
Bravo, the world needs more Marks.
I thought that Guinness tasted a bit strange!