Monday, January 12, 2009

The housing crash and your property tax bill

Milwaukee seems to be weathering the housing crisis relatively well. Foreclosure rates in 2007 in metro Milwaukee were lower than in most other metro areas and housing prices in metro Milwaukee, alone among the largest 25 cities in the country, rose between Oct. 2007 and Oct. 2008. Other more current indicators, however, are more troubling to local homeowners.

The Milwaukee Rising blog of former Journal Sentinel reporter Gretchen Schuldt has analysis of the weekly home sales reports in the Sunday Milwaukee Journal Sentinel, comparing the sales price to the assessed value of each property. The most recent week analyzed has sales prices in the City of Milwaukee averaging 35% less than assessed value. The prior week averaged 43% less than assessed value. What makes these numbers especially troubling is that Milwaukee's assessments are as current as possible; the City reassesses property values annually as of Jan. 1.

While these low prices are a bargain hunter's dream, they are a mayor's nightmare--declining market values will drive down assessed values. For most of the past eight years, increases in assessed values have allowed the City to enjoy growth in the tax levy without raising tax rates. If home sales are routinely below assessed value in 2009, then assessments will be reduced, causing the city to either slash costs to accommodate a smaller levy or raise tax rates to maintain or grow the levy.

Increased tax rates would seem likely, but cuts in services will be considered as well. Milwaukee homeowners may soon feel the triple whammy of lost value, higher taxes, and fewer services.

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