Local Government Assessments Rising As Home Values Crash

By James Donahue

We have all seen the headlines about the housing crisis . . . how banks and home mortgage lending companies are in big trouble largely because of the fast falling value of U.S. real-estate.

We also are seeing stories about the subsequent rise in foreclosures because balloon payments jumped higher than expected and buyers can no longer make their house payments.

One recent report by the National League of Cities noted there has been a 33 percent increase in abandoned or vacant properties, a 22 percent increase in homeless people, and a 33 percent decrease in city revenue.

We must wonder where the latter figure was obtained, other than from speculation as to what might be expected in adjusted property assessments based upon the decline in actual home values.

In truth, we are only now receiving our assessments for the current tax year and can say from personal experience that the assessor in our community appears unaware of any housing crisis. We are taking a $5000 hike in assessed valuation, which in our state means that the true cash value of the house is estimated to have increased by double this amount, or $10,000.

While we admit to some home improvements, including exterior paint, insulation blown in the walls and attic, we must question such an increase at this time.

If our assessment increase is the norm, we suspect that assessors across the land are spiking property values as city, village and county governments scramble to find badly needed tax revenues to cover rising operating costs. The property tax has long been the primary source of operating money for local governments, which adds yet another wrinkle to the housing crisis in America.

This last-ditch move to hike assessments for tax purposes, however, also is helping to spike a financial crisis developing within more and more American homes. Note the increase number of foreclosures and homeless folks in the above statistics.

When banks foreclose on homes and people are forced into the street, many have no place to go. While some may find temporary havens with friends or relatives, this may not be a permanent solution. And others are left living with the growing number of American homeless under highway bridges, in abandoned buildings and where ever they can erect some cardboard or tin to shield them from the weather.

That this condition should exist in a nation once as great and wealthy as the United States is reprehensible. Instead of using our great wealth to provide for our own, including badly needed housing, reconstruction of a decaying infrastructure and providing socialized health care for all, we are pouring trillions of dollars in two senseless wars in the Middle East.

President George W. Bush, Vice-President Richard Cheney, and all of the cronies riding the wave in this corrupt administration since 2001 need to be held accountable for this mess. The housing slump does not appear to have been directly caused by this administration. But this government made sub-prime interest loans available, thus setting up a trap for middle and low-income families to fall into a financial trap from which there was no escape. Thus we witnessed a rush by a lot of people anxious to capitalize on a last-ditch chance to experience "the American dream" of home ownership.

The flaw in those sub-prime loans was that they offered a temporary low-interest rate on very costly real estate, but only for a short period of time. Now that the interest rates on these loans has risen, house payments have jumped above the ability of these families to meet. Thus we have a mass of bank foreclosures and they are creating market chaos. The value of real estate is plunging all across the land as homes sit empty and in foreclosure.

This mess couldn't have happened at a worse time. Rising oil prices caused by a rising demand for crude oil and a discovery that we have reached the peak of this resource, is now driving the cost of food, travel and just staying alive through the roof.

We strongly urge local assessors and government officials to reconsider any major hikes in real estate assessments at this time. It will be far better to help local homeowners stay in their homes and keep up their mortgage payments during these hard times, than allowing the property to go into foreclosure and deal with more homeless souls on the streets. 

Even though we are on a fixed income, we plan to tighten our belt and cut spending in other areas to cover the extra tax payment. For some the hike we are taking might mean the difference between keeping and losing the home.