Think Property Taxes Are High Now? Just Wait…

If you think your property taxes are high now, just wait, because “you ain’t seen nuttin’ yet.”

That is what some city and county assessors have been thinking lately, although you won’t find many who are willing to say it loud enough to be quoted.

Your local assessor did not have to raise property taxes during the recent real estate boom because the spiraling home values did it for him. A $50,000 or $100,000 average increase in property values translated into a similar increase in property taxes too. Your local county or municipality had more than enough cash coming in, thank you.

But now that property values in many locales are heading south, some homeowners are contesting the value that the assessor has placed on their homes. And it is not just a few homeowners filing to contest their valuation. They are filing in droves, by the tens of thousands per county.

It makes perfect sense. As property values decline, so should assessor valuations. If the assessor does not re-assess your home, you might consider drawing his attention to the lower valuation of your home in order to obtain a tax reduction.

But the cost of services that the county provides to you is not decreasing. Those costs continue to rise along with the price of other goods and services. Plus, since fewer homes are being sold, the counties are realizing far less income from transfer fees and deed and mortgage registration taxes. In many cases it is millions of dollars less.

If your local government does not cut its services, it will be forced to raise the tax rate to pay for those services that it provides, which means that your annual property taxes increase right along with the tax rate.


In areas like Cleveland, where foreclosures are spreading as quickly as a winter cold, a lot of those boarded up homes are being bulldozed. Such demolition results in further erosion of the tax base because a vacant lot produces far less tax revenue than an occupied home.

If the city’s foreclosure rate is harsh enough, lenders with foreclosures in the most severely blighted neighborhoods will give up trying to sell them and begin walking away from them instead. As you can probably guess, an abandoned home produces no revenue for city coffers.

County assessors nationwide are bracing themselves for an expected glut of abandoned properties to head their way.

Those abandoned homes require city services to mow lawns, cut weeds, and board up windows. It all costs money, and somebody has to pay for it. The county won’t be reimbursed for those funds until that boarded up shell sells to someone willing to rehab it.

And that may take years in the most blighted neighborhoods. All of that culminates in higher taxes for the remaining homeowners who have not lost or abandoned their homes.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota
Real Estate News