Homeowners across the country are finding a new way to combat sinking home values–voluntary reassessments.
According to The New York Times, homeowners can request downward assessments, which seem to be most pronounced in areas
where the housing decline has had the greatest affect.
Take, for example, Arizona. The state’s home market was one of the first to peak, with the Arizona Republic reporting building industry layoffs as early as May 2006. Housing prices in Phoenix dropped 8.8
percent in 2007, according to the S&P/Case-Shiller index.
As a result, in the state’s largest county, Maricopa County, a large amount of the 1
million single-family homeowners will see their homes reassessed to
lower rates in February, the Times says.
However–even in times when home values are decreasing–reassessments
don’t necessarily always reflect the fact your home may sell for less.
My parents were confused when they received an assessment this year
that raised their property taxes–until their city told them several
new homes in the neighborhood had pulled everyone’s taxes up in the
My mother glares at the rebuilt manse two streets over every time she
drives by it. But, while somewhat freeing, dirty looks weren’t going to
provide any kind of tax break, so they inquired about their options,
which included hiring a lawyer and filing a document to contest the
That’s an option many frustrated homeowners are choosing. Although Madison, Wis.–which, according to the Federal
Financial Institutions Examination Council, has one of the smallest
of subprime loans in the country–hasn’t seen an increase this year,
assessment challenges in 2006 shot up from 972 to 1,621, the Capital Times reports.
Homeowners in other cities are expressing their dissatisfaction differently. Residents in St. Louis burned fake tax bills two weeks ago to protest what one group estimated was a 22 percent tax hike, the Citizen Journal reported.
As the Times noted, cities have long depended on property tax revenue, so they aren’t likely to want to cut taxes or reassess to reflect the lower local home values. However, no matter how much a city may need the tax money, is it really fair to raise property taxes in areas like St. Louis when the St. Louis Association of Realtors recently reported that area home sales last month dropped 6.5 percent compared to November 2006?
“Citizens know the market is slow if not declining,” Anita Lopez, an
assessor in Lucas County, Ohio, which has seen 10 times the average
reassessment requests this year, told the Times. "They are informed and feel comfortable in challenging their county
values. People here can’t sell their homes, they have less money and
they don’t understand why the government is asking for more money in a
declining housing market.”
Raising taxes as home value declines is a dangerous situation for homeowners. If they can’t afford the higher taxes, they may need to sell–only with today’s sluggish market and housing climate, that’s not a great option, either. Losing money on your largest investment because your taxes became outrageous is a sad state indeed: But for struggling families, retirees on a fixed income and countless other Americans, it’s a reality.
It boils down to which party is willing to invest in the other one: Homeowners confident that the value of their homes will again be strong enough to make paying higher taxes for a low-value year or two worth it or cities, who think trimming their budget to give homeowners a tax break until the market turns around is a fair option.
Should cities be able to increase taxes because the housing decline is a temporary situation and home values will again–at some point–rise? Or is it unfair to ask homeowners to pay more when their homes are worth less? Tell us what you think.