Why Homeowners Win When Home Prices Drop

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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  1. Marlin says:

    They do not = lowwer taxs for most.

    The city/county still has their base bills so if house prices drop they just increase the tax rate.

    Of course many places under value homes so even if they do drop, the amount the house is taxed at is still at or below that number.

    • seth_lerman says:

      Came to say this same thing. An individuals property tax liability only gets lowered when they can demonstrate that their home value has gone down differently form their neighbors. If everyone goes down by the same amount, their “fair share” relative to each other has not changed and when applied to the entirety of the tax base share of the towns operating cost, the $$$ per year stays flat.

      Now when there is a reassessment, filing an appeal on your new assessment and showing how it is too high and your neighbors sail to do so causing you to get a lower appraisal while your neighbors stay as-is will lower your taxes.

      • Bibliovore says:

        I think this depends on the area. When we purchased our house about three and a half years ago, we did so for less than its assessed value. We submitted the purchase-price documentation to the county assessor board, and sure enough, they lowered their listing of the house’s value and our property taxes. (The house is in great shape; this was not a decline based on condition.)

    • Loias supports harsher punishments against corporations says:

      Came to say this. The article really seems inaccurate.

      Likely taxes only go down for you if a small area declines, but since things usually decline by district or state, this would never apply.

      • dangermike says:

        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.

    • McRib wants to know if you've been saved by the Holy Clown says:

      Exactly. The only way you ‘win’ is if your property values are declining faster than the average decline in the town.

      Which probably is a sign of very bad things for you.

    • Hoss says:

      Yup — unless the decline in value is due to the condition of the home like it’s sinking into the lake or glowing from toxic waste the decline generally will be made up be adjusting the tax rates upward. You’d think a money blogger would know this

      • dadelus says:

        Hmmm… You’ve given me an idea. I’m buying glow in the dark paint and painting my whole house under cover of darkness tonight!!!

      • MonkeyMonk says:

        The average money blogger is a joke with no actual financial education. Their biggest claim to expertise is often that they were once broke and somehow managed to save a few pennies.

        • Chris says:

          Read the original blog article. All it says is, “I received $1400 because I overpaid my property taxes.” It does not assume you will too. It says you might but it does not say decreasing equity is good.

    • Azagthoth says:

      Yeah, came to say same thing. My value went down this year and my taxes went up, along with every other house in my county.

    • bender123 says:

      Yep…decreased home value and my taxes go up an average of 5.5% per year for the past four years. i pay almost 20% more now that home is worth less.

      Whoever wrote this article is living in a fairy world.

      • dolemite says:

        You know what will REALLY suck? When your home value shoots back up 20% when the market recovers, and now you are paying 20% more after they raised the base rate to keep their tax base the same.

    • Ihmhi says:

      We had to take our city to tax court to get our bill lowered. While the proceedings are going on, our taxes have already been raised. The lowered rate will probably go into effect next quarter (and we got a nice refund check), but our lawyer advised us that if enough people take the city to tax court they’ll just raise the rates to compensate for the lost money.

      City inspectors had our home valued at $80,000 more than an independent inspector had it valued it. They’re purposefully overvaluing homes to bring in more revenue. =|

    • LabGnome says:

      In my wonderful area they are seeking to get the lost revenue out of renters. Must say, not a fan since I can not afford a home right now (even as cheap as they are). Oh well, everyone can rest assured that when I am ready to buy a home the housing market will be booming again. You can thank me then!

  2. donjumpsuit says:

    I was under the understanding that you would have your house reappraised for the taxes to be adjusted. Seems like a lot of effort, and expense to get that to happen.

    • Hoss says:

      No appraisal is needed for an abatement application. If you think your value has declined because the property has aged then you can have the town come to your home and adjust the listed condition. But in most cases your abatement request will be based on recent sales of similar property in terms of style, number of rooms, amenities, age and condition. This information (sales and property details) is available free from your town.

    • maruadventurer says:

      Hoss is correct. I filed a petition to reassess with the county tax assessor. Didn’t get quite the number I was looking for but I did claw back some on the valuation.

      There is however one factor to keep in mind. Filing for the assessment can impact your loan to value ratios. If you have PMI that may end up doing you a disfavor.

  3. Rebecca K-S says:

    It would be nice if this were universally true, but it’s really not.

  4. Matthew PK says:

    Yes, the fact that I’ve lost $70,000 in equity in my house is washed by my $200/year savings in my property tax….

    • Nigerian prince looking for business partner says:

      Wow, and I thought I had low taxes. That would equal about $700/year in savings where I live.

      I can’t remember our exact rate but our taxes work out to be roughly 1% of the appraised value of a property. Our house was appraised at $95,000 and we pay about $900/year in property taxes.

      • Rebecca K-S says:

        Wow, nice. It’s like 3% here.

      • tbax929 says:

        I pay $600 per year on a house worth $160,000. That’s because my school district sucks. I don’t care that it sucks, since I have no kids. If I had kids, I’d live in our best school district, where the tax is 3-4 times what I pay where my house is.

        • justabunchofwords says:

          $600 a year??? I wish my taxes were that low. Heck, I’d even settle for $600 a month in taxes. My place is worth about $240K and I’m close to $9000 a year. Living in NJ is expensive!

          • Nobby says:

            Yes, but you get to live in NJ in exchange for paying higher taxes, so don’t act like you’re not benefitting from this arrangement.

    • EnergyStarr says:

      right on. My $40,000 of lost equity in 2011 equates to a big fat savings of $348. that’s great!

    • consumeristjohnny says:

      The “equity” in your house is not real money though. This is one of the fallacies of a declining stock market. You do not LOSE anything until you sell. If I buy at $100 and the current value is $1, I still have not lost a penny. It only turns into a loss once I sell it. If in 10 years it is now $200, that $1 price at one time means nothing. That is why those who obsess over their 401k/mutual fund portfolio for retirement that is over a decade away, are silly

      • hmburgers says:

        “The “equity” in your house is not real money though. This is one of the fallacies of a declining stock market. You do not LOSE anything until you sell.”

        What you’re saying is technically true, but you need to keep in mind that people have a need to gauge progress. If you pay $10,000 for an investment in stock and $100,000 for a home… then in 2 years you find the investment is worth $5,000 and the home is worth $70,000 you have the potential for a $35,000 loss–I agree that it’s not an actual loss until you sell, but since that paper loss may prevent you from selling, it can still be a loss even without a sale.

      • Matthew PK says:

        I put $70,000 in cash into the property. That money will be recoverable in 15 years or so.
        However, had I that $70,000 now I could be putting it to more effective use.

        Certainly it is an investment now caught in a long-term position. My point was to demonstrate the absurdity of this article.

  5. Wonderweasel says:

    I love this site, but this is one of the stupidest things I have ever read.

  6. Rachacha says:

    While the decreased property tax payments were nice, I was burned when trying to borrow against the equity I had built up in my home. The Appraisal came in very low (almost half of what the county assesment was, and almost half of what comperable homes were selling for on the open market (excluding foreclosures), and I was required to secure other loans to obtain the cash that I was hoping for.

    • azgirl says:

      Same here.. but as it turns out, a 401k loan was a much better deal than a home equity loan anyway.. so they lost in the end, and I won.. and the sun shines, and I make all the power to run my house.. HA!

  7. 5seconds says:

    What?

    Under revenue neutral tax schemes (which is what we have where I live, and in lots of places, if not everywhere) a drop in value only receives a drop in tax if the value of your home drops more than the average of the properties in the city.

    Even if the value on your house goes down, if your house devalues less than the average, you could still end up with a tax increase.

    • failurate says:

      That is what happened to me. The house’s assessed value is down about $20,000… taxes are up about $400.

  8. chiieddy says:

    When tax revenues drop, towns need to make up the lost revenue. They raise taxes. These do not go back down when prices increase again.

    • Marlin says:

      Yea its funny seeing towns and cities go crazy with all the new money during the housing boom.

      Where i live they put up new parks, librarys, and other goodies. But by the time the librarys opened they had to shut some down, one was open all 1 week before it was shut down.
      1 slab of land still has a “library coming soon…” sign. been there for 5+ years.

  9. nearly_blind says:

    This post is probably dumbest I’ve seen on this site. Property taxes are generally local so it differs across the country by state and city so its possible that there’s some obsure town somewhere in Idaho where this is true, but I can say with some certanty that the source blogger is almost certainly a fool and the person from this site who reposted is a bigger fool. Property taxes are generally based on a rate times home value, e.g. 2.1% * value. When the value drops, the local goverment increase the rate to compensate. Sometimes you happen to be lucky and your house gets depreciated more than a neighbors so you come out ahead (sometimes you’re unlucky and it works the otherway), but on average across the whole town or city the drop in market values has NO effect on total property taxes. The only thing that can decrease total property taxes is if the local goverment cuts their budget.
    Unless the original blogger has a 1M+ home there’s no way his taxes dropped by $1400, most likely what happend is that the bank adjusted is escrow payments because he had been paying too much for a while. As I think has been posted on this site before, banks often screw up the escrow and collect more money than they need; the real story may be that the bank actually fixed it without the OP forcing them to.

    • Dr. Shrinker says:

      Well, in Southern California (population ~ 15 million) this is true, so I guess it might also be true in a small town in Idaho…

      • Dr. Shrinker says:

        Oops, forgot to add, my property tax has dropped twice in the last few years, saving me almost $2000/year. The first time, I had to fill out some paperwork with comps, the second time the county did it on their own. But keep ranting, it sounds great.

        • nearly_blind says:

          Sorry, I can admit that my generalization/rant was wrong, oops.
          After some digging I see that CA’s Prop 13 creates this interesting situation in that specific state; however, I’m not sure that my original assumption is actually true or not for most US homeowners or not. I was also able to find that the (source) linked blog owner/writer is in CA too. I do know that in my state (and a couple of other states I lived in the north-east) property taxes rise every year independently of lower assessments. I just received my new tax bill and it was higher even though the assement is down (the source of my anger). In my state there is limit on the annual increase of the absolute tax $, but nothing stopping cities from increasing the rate yearly to compensate for drops in house values such that your bill still rises.

  10. LanMan04 says:

    Um, yeah, my property taxes areas high as ever, even though I can’t sell my $200K house for $160K. >

  11. Cat says:

    Towns and counties just increase the tax rates and do not drop your assessed value to a price you can actually sell it for. Sure, you can appeal the assessment, but that requires me to take time off from work, an expensive appraisal, or a CMA showing several homes like yours nearby that sold for less than your assessment in the last 6 months. With homes nearby not selling, that data is impossible to come by.

    In the end, you wind up paying what they say to pay. After all, you really don’t own your home. Even after the mortgage is paid off. Just stop paying property taxes if you want to find out who really owns your home.

    • Hoss says:

      Ask your assessors office if they can email to you a spreadsheet showing sales over a three year period. I got one for the asking — the assessor was happy to prove the accuracy of his values. In no case should your listed value be higher than what you could get at market.

      • crispyduck13 says:

        For reals. Around my area it’s typical for assessment values to be over 25% lower than sale values.

    • Alliance to Restore the Republic of the United States of America says:

      “Just stop paying property taxes if you want to find out who really owns your home.”

      Thank you. I make this point all the time. The litmus test for owning anything is who or what can take it away from you. If they can show up on your doorstep pointing to some paper while a wrecking ball is being setup behind them on your lawn then, no, you really don’t own your home.

      • Cat says:

        Without being a government, is there really anyplace on earth where you can actually “own” real estate?

        • prizgrizbiz says:

          This fall the people of North Dakota will vote to abolish property taxes, so you can truly own here.
          And the land will either grow crops on top or have oil underneath, or both.

  12. agent 47 says:

    If this is true, then why does my payment keep going up every year?

  13. pecan 3.14159265 says:

    So judging by the comments, the post isn’t really correct. I have no experience owning a home so when I start looking for a home to buy, I guess I can’t rely on accurate secondary reporting.

    • crispyduck13 says:

      This post is hilariously inaccurate. Don’t even take it with a grain of salt, just keep on walkin.

      As an example, my county last did an assessment in 2006 when values were sky high. The reason they have not done another is:

      A. It’s an expensive endeavor.
      B. The county and school districts would then either lose an enormous amount of revenue from the lowered values or the legislature would be forced to pass a wildly unpopular tax hike to make up the deficit.

      It’s a lose/lose for everyone…except people like me still paying property tax based on a value that is loooong gone.

    • sponica says:

      my town publishes the tax rate history….I think right now we’re at about 2.3%. b/c NH is wacky when it comes to education funding (I don’t know the status of the perpetual lawsuits) my town was historically a “donor” town, our residents paid higher taxes to fund the education of poorer towns and the tax rate was well over 3% in the 1990s

  14. Michael Lehet says:

    I just bought a condo this past summer and paid significantly less than the prior appraised value. Using the sales contract and other documents from the sale i was able to petition the local tax authority to have the taxable value of the condo lowered.

    It only took a few minutes for me to file the paperwork online and then mail in the supporting documents.

  15. Extended-Warranty says:

    Noooo. The second your home value drops too much, you walk away from it. Everyone knows that.

  16. crispyduck13 says:

    Well ‘Budgets Are Sexy’, unfortunately for all of us on planet Earth assessments are not done on a daily basis.

    I’m really holding back here.

  17. smartmuffin says:

    Obviously written by somebody who is only theorizing and has never actually paid property tax in their life…

    • Dr. Shrinker says:

      Or someone who lives in the most populated state in the country and is over-generalizing their experience.

      • Chris says:

        Did you guys read the original article? The Consumerist twisted the initial article. The original article boils down to, “I got $1400 back because I overpaid my property taxes. ” It does not assume everyone else will.

  18. menty666 says:

    Yeah right.

    My home’s being appraised by the county about 40k less than I bought it at, but my taxes are higher now than when I bought it. The death of so many local businesses has shifted the burden more towards the property taxes.

  19. eeelaine says:

    Um…no. The conclusion that lowered home prices = lowered taxes is almost always false. Home prices are lowered due in part to neighborhood foreclosures and other factors that mean that less people are paying on their homes. This means that the city/county has a lower tax base, and often times will respond by INCREASING taxes.

    This article has such a naive and incorrect grasp on economics that it blows my mind. Really, consumerist, really? I used to love your site, but lately your quality has significantly declined. Do you even read articles before you post them anymore?

  20. Alliance to Restore the Republic of the United States of America says:

    That’s like saying you’re better off being mugged because the thief relieved you of your 16oz wallet and you should be happy because you don’t have to carry around that extra pound anymore.

    Jeezus, Phil.

  21. tundey says:

    This is nonsense. Property taxes usually don’t reduce as fast as home prices have been. Usually it takes a few year before you get a slight decrease in your property taxes. At least that’s been my experience.

    Also, my mortgage company doesn’t send me refunds from my escrow. They just keep it and apply it to pay future bills. I did notice that they’ve started paying me interest on it, so that’s a slim plus.

  22. rpm773 says:

    Hmmm. My home has probably dropped about 25% in value in 4.5 years, yet my property and school taxes have increased by about 50%. What am I doing wrong?

    Nice grasp of 3rd grade math, though, Mr Budgets are Sexy

    • Dr. Shrinker says:

      What are you doing wrong?

      You don’t live in California, where our property taxes can only go up a very limited amount, and if value drops, they have to drop your bill commensurately.

      I really hope that’s a word, because it sounds great.

      Of course, if you DO live in California, you paid 3-4 times as much for a comparable home, so there ya go.

  23. Warren - aka The Piddler on the Roof says:

    Property taxes.

    Because when you own a home, you still don’t really own it.

    • smartmuffin says:

      You don’t own anything if the government can regulate it.

      Homes, land, businesses, even your own body…

  24. RevancheRM says:

    As stated to death by those posters above me, taxes don’t necessarily (or even presumably) go down with lower house value.

    What does go down is the owner’s equity, which is a real killer when trying to refinance the mortgage, which is what I’m running up against. The closing costs alone are high, but when I find out I’m now required to have 30% equity to refinance and when I used to have almost 40% and am now solidly at 20% because of the value of my home dropping (only as a result of the bubble bursting affecting /everyone/, not because I overbought), I’m really pinching pennies to get early payments in to increase my equity.

    • rpm773 says:

      That’s what keeps me from refinancing – paying more against the principal. We started out with 20% equity, and now we’re somewhere between 5% and 0%, I’d reckon.

      With a refi, we could probably save about $500-$600/month on payments, but I’m not willing to put any more against the principal in this market. I’d rather spend the money on adding more value to the house (for our family, not potential buyers), since it looks like we’ll be here for a long time.

  25. dmolavi says:

    I live in New Jersey. By definition, that means our property taxes will never go down. The politicos will just figure out some way to justify their insanely high tax rates, and ways to increase them even more.

    • vdestro says:

      I’m in NJ too. At this point I’m just glad Trenton hasn’t yet taken my house and given it to a developer crony to tear down and build luxury condos.

    • SteveHolt says:

      NJ survivor here. Our taxes tripled overnight thanks to the repealing of a law in our little village. We got the f*ck out post-haste.

  26. Applekid ┬──┬ ノ( ゜-゜ノ) says:

    It’s a great thing inflation isn’t in runaway so I can spend that money on–
    –wait, inflation is still crazy.

  27. chizu says:

    If it only works that way. Yes, the property value dropped — but so did state funding and various things. So my town actually had to increase tax to cover the gap in the budget. I honestly don’t really see a drop in my property tax. (I think that’s pretty true all across New Jersey…)

  28. Woodside Park Bob says:

    This story is nonsense. Governments have to pay for services. If property tax revenues go down, they have to raise the property tax rate or raise other taxes.

    Sure, the other alternative is to cut services — reduce the number of police, firemen, teachers, close libraries, cut road maintenance, etc., but doing these things only costs us more in the long run … when your house gets burgled or burns down, kids don’t learn as much, or you have to get your car repaired from pot hole damage.

    • Kate says:

      In the current climate of never allowing taxes to be raised a penny, you are most likely to end up with no police protection, little fire protection and forget about anything else.

  29. Emperor Norton I says:

    Not in C[r]ook County Illinois!

  30. Grungo says:

    Consumerist: just do yourself a favor and delete this article! No one will remember a few months from now.

  31. jeffbone says:

    Baloney. My local taxing authority has been raising mill rates to compensate for the drop in values, so my property taxes have remained the same or even gone up over the past 5 years.

  32. sadie kate says:

    Judging by the commenters here, I guess I am lucky, since my taxes are about a third of what they were when I bought the house 6 years ago. Of course, I paid $270,000 for it, and it’s now valued at $90,000, so I will take that with all of the grains of salt in the world.

  33. fearuncertaintydoubt says:

    I blame Phil for this, not Budgets are Sexy. In the original BAS post, nowhere does the blogger suggest that this applies for anyone else but him. He’s just excited because in his particular situation, that’s how it worked out. Phil somehow translated this into some kind of wider-application principle which is most assuredly is not.

    Phil, I think it would have been much better if you had simply pointed to the article and asked the community what their experience with declining home values was. My guess is that that 80% of people would have said their taxes were the same or went up. This would have been a much more illuminating discussion.

    • tskitty says:

      Absolutely right! The first paragraph implies that this might be a common situation and it is not.

  34. kathygnome says:

    Um no. The size of the pie is based on the municipality’s budget. Unless your municipality shut down the schools or laid off the police force, your taxes aren’t going to go down in dollar terms.

    The way your particular property value relates to taxes is mainly in how it compares to other properties in the same municipality. But if everyone’s values rise or fall equally, your property value won’t matter a bit.

  35. DrLumen says:

    It worked for me. I recently bought a house that the county still appraised at the pre-bubble amount. I took the appraisal down to the county and they decreased my taxes $2800. I didn’t lose anything on the house as I bought it at the then current market (post-bubble) amount. They tried to re-evaluate it higher for last year but a review got it lowered another $400. They didn’t argue the issue too much but I had the current market area research (public info published by Texas A&M) in the event they balked.

    Maybe I just hit things at the optimal time… I do know it likely has no where to go but up from here though.

  36. sadie kate says:

    Judging by the commenters here, I guess I am lucky, since my taxes are about a third of what they were when I bought the house 6 years ago. Of course, I paid $270,000 for it, and it’s now valued at $90,000, so I will take that with all of the grains of salt in the world.

  37. vdestro says:

    Not really. Property taxes are based on assessed value, not market. But even when the house is reassessed to a lower value, the city/county will just raise the tax rate so they don’t lose any money and the rate always goes up at least 2% every year regardless of home value.

  38. JP says:

    Damn. I read this hoping that there would be an upside to my house losing value. Poster must live in a universe different from mine.

  39. prizgrizbiz says:

    The good news is, the government will now hire the author of this article to go to work protecting consumer finances! All right!!

  40. catastrophegirl chooses not to fly says:

    where i live the county only reassesses every 8 years. they did it the year before i bought my home. even though the sale value of the house went down, the county assessment was higher than the 8 years previous.

  41. There's room to move as a fry cook says:

    Assessed values are just relative values to other properties on your town. ie: your house is worth (& taxed at) 95% of your neighbor’s house. If property values in your city drop 25% across the board the city just raises the mill rate (tax rate) on the assessed values to achieve their overall revenue target.

  42. hmburgers says:

    Today, “Why Homeowners Win When Prices Drop”… think of all those tax savings!

    Tomorrow, “Why workers Win When They’re Laid Off”… think of all the money you save on commuting!

  43. maxhobbs says:

    I’m “lucky” as I built my home 16 years ago when it was “cheap” and even though it got way inflated it is still worth 100% more than I paid for it.

    And my county, for the life of me I have no idea why, has never reassessed the value so my taxes are still based on the price when I built it.

    The county just north of me contradicts this article, they not only reassessed people’s home values literally at the peak, they refused every single attempt at people trying to get a new assessment and lower bills. Every single one has been turned down.

    And as others said, the county gets their money regardless, if home values go down they will jack up rates. You have to pay for police, emergency, fire fighters, schools, etc…..

  44. tskitty says:

    Is the author kidding? My property taxes are going up 9 percent this year and have increased EVERY year. As the number of tax payers drop (along with the increase in foreclosed homes), the municipalities charge higher property taxes and fees for services like sewer and water.

  45. mikebw says:

    My property taxes actually have gone down to about half of what they were when I bought the house which is great, save for the fact that BOA is a$$hat central and cannot fathom why their automatic contributions (deductions from my mortgage payments) to the escrow account for making these payments should be changed. So what has really happened is that money that should be going to pay down my principle is sitting in an escrow account to pay for higher taxes that are no longer being assessed.

  46. Duke_Newcombe-Making children and adults as fat as pigs says:

    File with “and the company will pass the lower costs onto the consumer”.

  47. The_Fuzz_53 says:

    What a stupid article. Sure they can lower your assessed value, but they’ll just raise the rate. The government needs money, and they’ll get it one way or another.

  48. Buckus says:

    This should be called “One silver lining to an otherwise pretty bleak black cloud.”

  49. Black Knight Rebel says:

    Lower property taxes means less funding for local schools too, which can lead to under-served children, which in turn can lead to delinquency.

    Furthermore, property value is really only value once you sell. Yeah you need to gauge it somehow but still, it isn’t valued beyond shelter until you sell it, meanwhile the neighborhood kids suffer immediate and real consequences while you’re playing around with abstracts

    It’s a double-edged sword my friends.

  50. MaddenSci says:

    I’ve got to chime in that this article is totally inaccurate. While they SHOULD have to lower taxes, I’ve yet to see that happen in the 14 years that I’ve been in my home.

  51. waicool says:

    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.

  52. ned4spd8874 says:

    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.

  53. chicagojim says:

    We have a tax levy – there is no drop. We just pay a higher rate. Honestly, don’t these articles get researched?

  54. dangermike says:

    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.

    • dangermike says:

      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.

      • arcticJKL says:

        Ah yes and I too have been getting those checks. Now if we could just lower government employees salaries so we can improve education…

  55. Moongirl55 says:

    ‘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.

  56. Awesome McAwesomeness says:

    Borrowing against the equity in your home is a weird concept to me. People shouldn’t be using their house like a bank.

  57. Antigone says:

    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.

  58. JonBoy470 says:

    Until the town hikes the tax rate to make up for the lost property values…

  59. Caffinehog says:

    I lost money on stocks last year. Yay! Lower taxes!!!!!

  60. zonk3 says:

    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.

  61. ELC says:

    This sounds like Consumer Reports is having an effect on Consumerist – now they are both living in “upside down” world.

  62. rambo76098 says:

    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.

  63. prismatist says:

    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.

  64. Jim Fletcher says:

    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.

  65. soj4life says:

    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.