How slumping home prices impact property taxes…
Now, as we all know, Solano isn’t part of The Real Bay Area(TM), but I thought this was an interesting story:
cbs5.com – Property Tax Deadline Puts A Pinch On Homeowners
Solano County has one of the highest foreclosure rates in California. Home values are on the decline. The troubles in the real estate market have a ripple effect on consumers and the pain can really be felt at the Solano County tax collector’s office.That’s where Rosie Santos lined up to fork over $4,000 in property taxes.
“We had to cut back on everything. We can’t take second jobs because of our son,” said Santos. “We just cut back on stuff . This Christmas we are picking names and giving adults only one gift. Of course, the kids won’t have limits, but it saves.”
What makes things worse for Santos and hundreds of other homeowners is her new home has declined in value because homes around her are selling for less.
This is a great example of why falling home prices are bad for everyone. You see, when home prices fall, people can’t pay their property tax – because home prices are what enable people to pay property taxes.
Perhaps the solution is to spend tax money to do something – anything – to help shore up home prices.
Makes sense to me. Doesn’t it to you?
December 12th, 2007 at 11:39 am
4 words: Squatters Don’t Pay Taxes.
That sucking sound you’ll hear is a good part of the population going down to Mexico where there are at least still agricultural jobs.
December 12th, 2007 at 12:31 pm
What in the fuck? Isn’t this what Prop 13 was supposed to prevent?
December 12th, 2007 at 12:53 pm
Prop 13 was about keeping property tax increases low as an incentive to stay in the same place for a long time. That has also helped to stoke property values by keeping inventory levels low. But on the flip side, people who have earned some equity and sell their homes find it difficult, or at least less attractive, to buy again because they’ll be paying much higher property tax rates. So they move out of the area, and as a result the demand for homes remains, all other things being equal, exactly the same.
Also. Someone buys a condo in San Francisco, where he works. After a few years, it surges in value by 25%. So he sells and moves into a small house in El Cerrito, and commutes to San Francisco. A few more years pass, and he sees the same results in El Cerrito. So he moves into a large house in Vallejo, where he is now stuck.
December 12th, 2007 at 1:34 pm
@hedda
I think the problem is that they can’t get home equity loans as they originally planned to pay the property tax.
December 12th, 2007 at 1:41 pm
Why doesn’t Rosie Santos have her property value re-assessed and get her property taxes lowered?
December 12th, 2007 at 1:44 pm
See Comment #4
December 12th, 2007 at 2:11 pm
Since she blames her Son for not allowing her to work a second job (to pay her taxes, boo hoo hoo), maybe she should make a decision to either raise her child or get out of a house she shouldn’t have bought on a gamble of ever-higher prices and now cannot afford to keep?
or
Keep the house and get rid of the children?
Chicken or Egg First?
No $ Downers ARE DOOMED. GIVE UP THE KEYS NOW. TURN OFF THE LIGHTS. GET OUT. TRY AGAIN NEXT CYCLE. YOU LOSE FOR NOW. You WILL HAVE ANOTHER CHANCE, DO NOT WORRY. AMERICA IS FUNNY THAT WAY.
Call El Presidente Jorge Bushco (use the correted HOPE #). He loves stories like this. Maybe he will personally cut you a check? He could pretend to be Santa Claus when he is through pretending to be President.
NO MERCY. DAY OF RECKONING COMING SOON.
December 12th, 2007 at 3:20 pm
How sad is your life when you have to take out home equity loans to pay your property tax. Isn’t that one of the great indicators that you’re in too much home for your income?
December 12th, 2007 at 3:47 pm
Well, the premise of this thread is that lower property tax revenues are bad, because city/county/state spending has been calculated based on the property tax as it was: On inflated and rapidly inflating property.
But with house values going down something like 20% a year, the things the taxes were going for are going to feel a pinch.
My own point is: But wait, it gets WORSE – that house that used to generate $1000 a month or more in taxes is now paying nothing, since it’s abandoned and full of squatters.
December 12th, 2007 at 4:09 pm
I was under the impression that Prop 13 was passed, in part, because richer towns with more property tax revenue had an “unfair advantage” than poorer towns with regards to public services, schools, roads, utilities, etc. Prop 13, I thought, diverted the property tax income to the state instead of the local communities, so your argument doesn’t really stand up there, esr.
December 12th, 2007 at 6:33 pm
I was told what’s probably the Official Party Line on Prop. 13, which was that it was an awful crying shame that little old grandmothers in California were ending up having to sell because they could not afford the taxes on their little old grandmother houses. So the nice politicians passed Prop 13 so little old grandmothers in California could keep their homes.
how true this is, I don’t know.
I think there were a lot of people who’d bought their houses long before, and the tax-reevaluations were coming up with in some cases more in taxes than the houses originally had cost.
It could have also made it a lot more profitable for little old grandmothers to sell their California houses and go back to Davenport, Iowa, because the new buyer would know their tax would remain fixed. In fact, now that I think about it, Prop 13 may have done a lot to encourage this RE bubble in California.
December 12th, 2007 at 8:02 pm
The New US (citizens only) National Anthem titled:
“I’m a Viiictiim”
Benjamin Franklin was right. The emblem of the US should NOT be the Eagle it SHOULD be the Turkey…
Exerpted from Housing Panic Blog: (I couldn’t make this stuff up)
“Martinez said struggling borrowers have flocked to his office asking for help. ‘They can’t read English. Whatever people told them, they believed,’ he said. ‘They were misled to think they would be able to refinance. When they go to refinance, they find out about the prepayment penalty.’”
(Fu*king Illiterate Idiots, they signed, they responsible)
“One case involves people who make $40,000 a year making sandwiches at Togo’s. They bought a $680,000 home and can’t afford it.”
(Arrest everyone associated with the transaction for felony fraud and freeze their assets until trial, revoke passports)concurrent IRS punitive examination.
“He advises borrowers to stay in their homes even if they can’t make payments. ‘I know a house in Hollister where three families are living together, 20 people in one house,’ he said.”
(Place Martinez under arrest and freeze assets, revoke passport (make something up – the Feds do it all the time) Immediately investigate claim of Hollister crash pad and business.)
December 13, 2007 1:20 AM
Have a Wonderful Depression year in 2008. We deserve everything that is coming, and MORE.
December 12th, 2007 at 10:34 pm
All you needed to know about Prop 13 here:
http://en.wikipedia.org/wiki/California_Proposition_13_(1978)#Aftermath_in_California
BTW, did you notice that even Togo employees make $40k a year?
December 13th, 2007 at 9:59 am
Hey, you’re right! You California folks should RAISE property taxes (screw Prop 13). Use the extra tax funds to disrtibute to homeowners to make sure that investing in California remains “special.”
Although, I have to admit, it would be doubly ironic if, instead of property taxes, California raised income taxes on renters to pay to make sure property owners are covered.
December 13th, 2007 at 3:24 pm
3rd Generation – It’s native speakers of English who can’t read English, I’d even go so far as to say most of the non-native speakers are reading things more carefully!
2 people working at Togo’s can make $40k a year, no problem. $10 an hour base pay, or $11 an hour, which I remember was just a hair under $20k, times 2, = $40k.
Anyway those people living 20 to a house in Hollister are just as likely white native-born as anyone, I saw this in Orange County the last recession, 4 living in one shoebox studio, living all poor and crammed together is not something immigrants have all to themselves you know.