A recent Seattle Times article announced what many financially troubled homeowners fear – property tax increases in Seattle and the rest of King County.
The article stated: “Declining property values will bring tax relief to some King County homeowners this year, but for others voter-approved levies and bonds will mean higher taxes.”
My sense is that the article is well-written. I would also include three other important factors in an analysis of the problems associated with falling real estate values.
But first some background — here’s the headline dated Feb. 10, 2011: “King County property tax going up as home prices fall.” The article stated average property taxes are jumping 8 percent in Seattle, 7.2 percent in Bellevue and 4.9 percent in Issaquah.
“In Seattle, where voters last year approved two school levies and construction bonds and home values rose a tad, the tax bill on a typical $453,300 house will rise by $324, or 8 percent, to $4,379,” wrote reporter Keith Ervin.
That’s true. School levies and construction bonds are factors. Again, my sense is that there are other salient reasons, as well, which I will explain a little later.
“Bills are going out as numerous homes are in or near foreclosure and Zillow.com calculates one-third of Seattle-area mortgage holders owe more money than their houses are worth,” Mr. Ervin added.
That’s my experience, too. Many homeowners are under a difficult financial strain.
Actually, the troubling percentage of such beleaguered underwater homeowners previously reported is 34.3 percent. (Here’s a full report: A Third of Seattle Homeowners Underwater Means More Foreclosures, Bankruptcies.)
In fact, my sense is that many homeowners face these challenging obstacles:
- Jurisdictions are raising tax rates to compensate for falling real estate values.
- Homeowners are paying more taxes for properties with dramatically decreased values.
- Mortgage modification programs are not helping a significant percentage of troubled homeowners.
Where can individuals turn to in these troubled times – where is their federal bailout program?
The only real sources of relief to troubled homeowners are the federal bankruptcy laws that give individuals or couples a fresh start under Chapter 7 or a chance to reorganize under Chapter 13.