“Weve just started looking for a home. I found out that some newer homes have that extra Mello-Roos fee that can cost several hundred dollars a month. I definitely wouldnt buy a home with Mello-Roos. Why would anyone buy one?”
***ANSWER:
Basic economics.
Assume you have two identical homes side by side. One has Mello-Roos and the other doesnt. The one with Mello-Roos is obviously less desirable, right?
The marketplace will take the Mello-Roos into account in the pricing and the Mello-Roos home will sell for less.
So instead of never buying a home with Mello-Roos, I suggest you be open to one provided you can get it at a lower price reflecting the Mello-Roos fee.
By the way, are you wondering, what the heck is Mello-Roos?
In California’s “taxpayer revolt” of 1978, voters passed Proposition 13 that:
1) limited property taxes to 1% of assessed value, + voter approved local bonds
2) limited the annual assessment increase to 2%
However, Prop 13 didn’t provide enough property tax revenue for infrastructure in new areas. So State Senator Henry Mello and Assemblyman Michael Roos introduced the Community Facilities Act of 1982, creating bonds and fees to pay for new schools, roads, fire stations, etc. “Mello-Roos” shows up on the tax bill in addition to the 1.2%.
Many newer areas like Carmel Valley, Eastlake, Aviara, and Sabre Springs have Mello-Roos. It typically ranges from $50 to $300 monthly and usually expires in 30-65 years.
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