Cambridge v. Somerville: Comparing Housing Costs with Property Taxes

Anyone shopping for a home in Cambridgeville knows that you generally get more bang for the buck when buying a home in Somerville than in Cambridge. For example, the average price of a Somerville condo last year was $518,875, while in Cambridge, the average price was $657,750.

On the other hand, Cambridge’s taxes are the lowest of any city in the state, at a rate of just $7.82 per $1,000 of a home’s assessed value, compared to Somerville’s rate of $12.61. Both cities have residential tax exemptions (a discount for owner occupants), and Somerville’s is in fact higher than Cambridge’s, at $2,498 compared to $1,873, but taxes are still effectively cheaper in Cambridge, as illustrated here:

Cambridge & Somerville 2015 Property Tax Comparison

Cambridge & Somerville 2015 Property Taxes

So let’s take a look at how this tax difference affects homeownership costs…

Let’s say you are considering two properties, both assessed at $500,000 — one in Cambridge and one in Somerville. Now, in real life, we know that assessed value is almost always significantly less than market value, but for the purposes of this comparison, let’s pretend that assessed value and your purchase price are the same.

If you’re putting 20% down and paying 4% interest on a 30-year loan, your monthly prinicple & interest payments will be $1,910. Forget about condo fees and insurance for now. Let’s just look at how taxes come into play: in Cambridge, your monthly tax cost will be $170, while in Somerville, it’s $317 a month. Therefore your monthly expenses on a $500,000 house in Somerville are $148 higher than a home of the same value in Cambridge — check it out:

Cambridge & Somerville Housing Cost Comparison

Another way to look at it is this… if your budget is $2,227 a month for housing costs, you can buy that $500,000 house in Somerville OR –assuming you have the extra cash for the downpayment– you could buy a $530,000 place in Cambridge and still save a little money, with your P+I and taxes coming in at just $2,213 per month.

Something to consider!

And in case you’re looking outside of Cambridge or Somerville, here’s a chart comparing FY 2015 taxes in some of our surrounding cities and towns too:

2015 Propert Taxes Greater Boston Area

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