Do Better, Coatesville

How a 3.5% Transfer Tax Makes Homeownership Harder for First-Time Buyers

For many families, buying a home in the City of Coatesville has represented one of the few remaining opportunities to achieve homeownership in Chester County. Home prices have historically been more attainable, neighborhoods are walkable, and proximity to jobs, rail, and schools makes the city appealing—especially for first-time buyers.

That’s exactly why Coatesville’s recent decision to increase its local real estate transfer tax deserves closer scrutiny.

As of January 1, 2026, the total transfer tax in Coatesville will increase from 3.0% to 3.5%. While that may sound modest on paper, the real-world impact on affordability—especially for first-time buyers—is anything but small.

What Changed: Understanding the Transfer Tax Increase

In Pennsylvania, every real estate transaction is subject to a 1% state realty transfer tax. Municipalities may add their own local transfer tax on top of that.

• Previous total transfer tax in Coatesville: 3.0%
• New total transfer tax: 3.5%

This places Coatesville among the highest total transfer tax cities in Pennsylvania, behind only a small handful of municipalities such as Philadelphia and Reading.

Transfer tax is paid at closing and does not build equity. It’s pure transaction cost—cash that buyers must bring to the table or negotiate for in seller concessions.

The Hidden Affordability Problem No One Is Talking About

Let’s put real numbers behind the policy.

Example: $225,000 Home Purchase in Coatesville

• 3.0% transfer tax: $6,750
• 3.5% transfer tax: $7,875
• Additional cost: $1,125
• Lower cost: Generally can be split between sellers and buyers.

For many first-time buyers, $1,000–$1,500 is not “small money.” It can represent:

• Months of savings
• The difference between qualifying for assistance programs
• The ability to keep emergency reserves after closing

And unlike interest rates—which fluctuate—or home prices—which can be negotiated—transfer tax is fixed and unavoidable.

Why First-Time Buyers Feel This More Than Investors

This is where the policy disconnect becomes clear.

First-Time Home Buyers:

• Are already saving for down payment + inspections + appraisal + closing costs
• Are often constrained by cash to close, not monthly payment
• Compete with limited financial flexibility

Real Estate Investors:

• Often purchase with cash
• Spread costs across multiple properties
• Can raise rents to offset acquisition expenses
• Are far less sensitive to upfront transactional costs

In markets like Coatesville—where prices are lower relative to surrounding areas—higher transaction costs tend to favor investors over owner-occupants, whether that is the intention or not.

Coatesville’s Homeownership Reality

This matters even more when you look at Coatesville’s ownership profile.

• Only about 36% of housing units in Coatesville are owner-occupied
• That is significantly lower than Chester County overall
• The city already struggles with transitioning renters into homeowners

Policies that increase the cost of entry to ownership risk reinforcing this imbalance—making it easier to buy investment property than a primary residence.

The Long-Term Consequences

Raising transfer taxes may generate short-term revenue, but the long-term costs are harder to see on a balance sheet:

• Fewer first-time buyers entering the market
• More investor-owned properties
• Less neighborhood stability
• Reduced opportunity for wealth-building through homeownership

If the goal is stronger neighborhoods, higher ownership rates, and long-term community investment, pricing residents out at the closing table works against that goal.

A Better Path Forward for Coatesville

No one disputes the need for municipal revenue. But there are smarter, more equitable ways to raise it—ways that don’t disproportionately penalize first-time buyers trying to put down roots.

At a minimum, policymakers should be asking:

• How does this impact first-time and moderate-income buyers?
• Does this shift more housing stock toward investors?
• Are there exemptions or offsets that could protect owner-occupants?

Because when affordability is already stretched, every additional dollar matters.

Final Thought: Do Better, Coatesville

Coatesville has real potential. It should be a place where renters can become homeowners—not a market where rising transaction costs quietly push them out.

If we want stronger communities, we need policies that lower barriers to ownership—not raise them.

Do better, Coatesville. Homeownership should be encouraged, not taxed out of reach.