The value of their homes is a major point of pride for many owners, who use the figure to prop up their net worth and justify the money they’ve poured into their dwellings. When the price declines, as it has been doing for most homeowners for years, they tend to overlook the positive side of the drop — one that affects them more immediately.
As Budgets Are Sexy points out, lower home values means lower property taxes, which are typically added to monthly mortgage payments. Homeowners with sinking property values have lower payments and more money in their pockets than they would if the market remained steady.
There are other drawbacks to declining home values, such as less equity to borrow against and the possibility of a heavy loss if you’re forced to sell. But all things being equal, your depreciating home is making you richer.
A Perk of The Crap Economy? [Budgets Are Sexy]
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In my county, home prices dropped an average of 13%. The assessed value of my home stayed the same so I set up an appointment with the assessors office within the 10-day window allowed. After appealing with the assessor, the assessment was lowered about 10%. Funny thing though, my tax bill went up!!!! Turns out, the overspenders at the fire district and school district raised their tax rates to compensate for the lower assessments. I am all for paying for the roads, the police, the schools and the fire trucks to make our community a quality of life place to live. The problem is the overspenders who think government employees should make more than 50% salary than their private sector peers. It is disgusting to watch the government carelessly spend tax revenue on such silly things that have little or no bearing on health safety and welfare. I have to go now, they are having a movie night social up at city hall….you guessed it, paid for by our precious tax dollars, too bad they don’t provide a shuttle bus to pick me up.
Um, yeah. Sure. My home has dropped from $120k down to about $60k in value. Yet my taxes have only gone down about $400/year. Don’t know about you guys, but it’s not something to get excited about. Especially when I’m going to have to sell soon and still have no idea what I’m going to do about that $60k price differential.
We have a tax levy – there is no drop. We just pay a higher rate. Honestly, don’t these articles get researched?
It’s applicable to California. Other than a few specific exclusions, property taxes are set to 1% of the purchase price of the property at the time of purchase, and then may not be increased by more than 2% per year. In neighborhoods like where I grew up, it’s not uncommon for people who have owned for 30-35 years to be paying around $1300-1400 in annual property taxes while recent purchasers will be socked for over $6000.
oops, this was meant to be a reply to thread above where people were saying that such reassessments wouldn’t work since everybody’s taxes were essentially equal since property values move together. In Ca, tax assessor values are very different from real estate appraisals due to prop 13, resulting in very different tax rates from one lot to the next.
Ah yes and I too have been getting those checks. Now if we could just lower government employees salaries so we can improve education…
‘Fraid we have to blame this one on Consumerist.
If you read the Budgets are Sexy blog post, you’ll see its really about what to do if you get a large windfall. In the bloggers case, he got $1,400 from his mortgage company because they were buildilng up his escrow for taxes, then this one homeowner’s tax rate drop. But nowhere does the BAS poster suggest that we all are in for a big tax cut as our property values drop.
In fact: My Florida property’s value pretty much has been cut in half in two years. My taxes now are $100 a year more. Take that.
Still luv ya, Consumerist.
Borrowing against the equity in your home is a weird concept to me. People shouldn’t be using their house like a bank.
Well, since no homes sold in my neighborhood in the 6 months before my property evaluation last year, the tax authorities decided they could just make up a 14% increase in values, so I won 1)house dropping in value and unable to sell if I wanted to PLUS 2) 14% increase in property taxes!!! When I pointed out there was ample evidence of the state of the market, they blew me off because I had no comps in my neighborhood to prove that the value was down, so they were free to use old comps from when the homebuyer credit was still in effect. Comps from nearby neighborhoods do not count. I am still pissed about this.
Until the town hikes the tax rate to make up for the lost property values…
I lost money on stocks last year. Yay! Lower taxes!!!!!
Like others here, I presume the author is not a homeowner. Property taxes never go down — not in my 50 years of paying them — despite the fact that my house has lost 35% of its real value since 2009. They’ve gone up since then because there are fewer homeowners left to support the schools, the cops, the fire department, the road maintenance, etc., locally.
This sounds like Consumer Reports is having an effect on Consumerist – now they are both living in “upside down” world.
This isn’t the case. In many or most places, the levies are “guaranteed revenue” levies, which means the school district or library (or whatever) gets the same budget every year for as long as the levy lasts.
The result is your home’s value is a proportion of the taxes paid in the county toward that levy. If every single property in the county were to increase in value by 6%, or even all decrease by 10%, everyone would still be paying the same amount each year.
Even if you don’t have guaranteed revenue levies, you still would have to get an appraisal and/or submit area sales of similar houses to the county auditor to get the valuation adjusted, and that is a long, arduous process in many places.
Whoever came up with this doesn’t know how property taxes are calculated.
If your property value drops 10% and everyone else’s property value also drops 10% and the municipality’s budget stays the same, your taxes are going to stay the same.
My home fell about 10% in value after FEMA decided to redraw flood maps to put us into a flood zone. Yay for lower property taxes?
Naw, just F you, FEMA.
This will only work if no one else in your town does the same thing. When a large enough of tax revenue is reduced, the town is going to increase taxes. Along with that, the town may need to spend money with an assessment of all of the properties in that town.Those assessments cost the town a large chunk of money and it will just leave taxpayers paying the same amount unless they went down the path you suggested.