First, I should say, I am a licensed real estate agent in both Tennessee and Kentucky!
As if your preferred sports team determines your state of residence… HA! But being that time of year, I couldn’t resist:
Ok, time to get serious! Clarksville, Tennessee borders Kentucky to the south. Fort Campbell, Kentucky and Oak Grove, Kentucky border Tennessee to the north. So another of the top questions I receive; where is the best place to purchase a home? And which is right for your family? It took some statistical digging, but as a Realtor I can offer you personal insight along with some important data, that may aid in your decision making.
The most common concern that I hear voiced by the families I work with is that Tennessee has a higher sales tax. That is true. Tennessee has a 9.5% sales tax, while Kentucky has a 6% sales tax, so we are talking about a 3.5% difference. If you buy something that costs $10.00, in Tennessee your sales tax will be 95 cents, and in Kentucky it will be 60 cents. However, Tennessee has no income tax, while Kentucky does tax income.
Kentucky collects income taxes from its residents at the following rates:
- 2 percent on the first $3,000 of taxable income.
- 3 percent on taxable income between $3,001 and $4,000.
- 4 percent on taxable income between $4,001 and $5,000.
- 5 percent on taxable income between $5,001 and $8,000.
- 5.8 percent on taxable income between $8,001 and $75,000.
- 6 percent on taxable income of $75,001 and above.
Property tax is another factor to consider. Property tax rates in Oak Grove, Kentucky are less than Clarksville, Tennessee tax rates with an average of $754 per year in Oak Gove, and $1298 per year in Clarksville according to city-data.com. It is important to understand that some of this discrepancy can be attributed to lower property values. According to the Middle Tennessee Multiple Listing Service (MLS), so far the average sale price for Clarksville is $163,335 and the average for Oak Grove is $111,663. The prices of homes are lower in Oak Grove, which may initially seem advantageous, but over the long term property values rise at a much slower rate. This can be especially detrimental to a military family who may need to sell their home within a few years due to permanent change of station orders. Which brings me to the next point… foreclosures.
Sales prices in Oak Grove may be negatively impacted by the high number of foreclosures in the area. As of the end of August 2013, 4.78% of Christian County homes listed on the MLS were foreclosures (6.83% if we include foreclosed homes under contract currently). Montgomery County has a significantly lower foreclosure rate at 2.99%. As I browsed the listings for one Oak Grove neighborhood alone, 7 out of the 12 listings were foreclosures! Foreclosures bring down home values, they harm the economy on a larger scale, and they create significant cost for local governments. It is estimated that 2/3 of local government revenue comes from property taxes. When foreclosures are rampant, property values decrease, which causes a loss in revenue for the local government. Over time, this creates a need to increase property taxes, sales taxes, and income taxes to cover the deficit. Foreclosures also create drops in consumer purchases as well as investments, both of which are directly correlated with job loss and rates of unemployment. When people lose their jobs and become unemployed, they are at a higher risk of foreclosure… Can you see the vicious cycle created? Bottom line is… foreclosures are bad! They are bad for you as an individual consumer, as a homeowner, and have a negative effect on the economy as a whole.
Read more on that here: We All Pay a Price For the Foreclosure Crisis
Some other economic characteristics that may eventually or currently effect property values:
- Median age of the population is 28 years in Clarksville, versus 24 years in Oak Grove
- Median yearly income for Clarksville residents is $42,237 and Oak Grove residents is $31,221
- 59% of the Oak Grove population are renters, while 42% of the Clarksville population rent their homes
- Oak Grove rate of unemployment is approximately 11.5% while Clarksville is 8.1%
- There are more jobs and industry in Clarksville than in Oak Grove
- Drive time may or may not be less in Oak Grove versus Clarksville
- More store and restaurant selections available in Clarksville versus Oak Grove
- Clarksville is closer to a major city (Nashville) than Oak Grove
Finally, from a personal perspective, consider the following: Kentucky is in the top 5 in the country for highest car insurance rates, so be sure to check with your individual insurance provider for details on how living in Kentucky versus Tennessee may effect your vehicle coverage and costs. Be sure to check with the local DMV for information regarding vehicle registration in Clarksville versus Oak Grove. I called them myself and got a straight forward flat-fee from the Clarksville office, but the Oak Grove office was based on the make, model, and year of the vehicle… An Ad Valorem Tax I believe is what they called it. I had one homeowner tell me he could registers 3 vehicles and a boat in TN cheaper than he could register one of his vehicles in KY! I encourage you to investigate what your individual vehicles may cost you in registration by living on the KY side.
Additionally, I frequently hear that utility costs are higher in Kentucky than on the Tennessee side. You can view a chart of the different utility companies as well as their connection fees and deposits required here (courtesy of the Fort Campbell, Kentucky official website): Utility Providers
So what works best for you and yours? Are you a Kentucky kind of family? Or look forward to calling Tennessee your home? Be sure to comment with any additional questions or points to consider, and you could be featured in an upcoming blog!