Deb's Lake Conroe Real Estate & Stuff! : Will County Taxes Rise if Property Values Drop?

Will County Taxes Rise if Property Values Drop?

Taxes Rising?This question can be posed for just about any County on the map.

This is an unusual Market Report. But, our Market may see changes very quickly.

Montgomery County is truly being affected at this point. This is really a scary question to ask since it does have an answer. First of all what would or could cause the property values to drop?

Obviously the economy has something to do with it as the Lender's hesitation to loan money causes a higher demand for qualified Buyers. So, it's a given that prices will drop when there are more Sellers and less Buyers.

At this point a verifiable qualified Buyer has a great deal of strength. With less Buyers, less homes will sell. Prices drop out of basic need for a sale and "voila" we have a Buyer's Market.

The question is, "will our County Taxes rise if our property values drop?"

Wait, there's more. We are all aware of the critical status of our drought. Lake Conroe may drop by 11 feet below normal level by January 2012 if the rain continues to evade us. This status is based upon the amount of allowed water acres to be drawn by The City of Houston. We are not going to deplete the lake in this amount of time as we should have a five year window allowed before it goes totally dry. But, what will happen, and has already begun to happen, is the stress and economic duress that water loss causes affects our local businesses.  Businesses losing revenue

All stores with gas pumps, restaurants, boat mechanics, marinas, jet ski rentals and boat rentals and basically everyone is feeling the drop in tourism.

Loss of income = Loss of value of the business.

If business values are dropping this is yet another reason our home prices may bottom out.

Oh yeah, the question is, "will our County Taxes rise if our property values drop?"

Unfortunately the answer is a resounding "maybe" with a "probably" following shortly thereafter. With property values dropping, both commercial and residential units will be paying a lower amount of tax based on value. The County will then be collecting much less than normal. The County, as most do, runs on a budget and their expenses must be met. Should the current Tax Rate not cover the needs of the County then invariably the overall Tax Rate must rise to fill in the gaps.

***Major Pep Talk!***

Gotta go back upLet's all just keep our chins up. All is going to get better. It's going to pour down rain, businesses are going to flourish, the Feds are going to relax with the Lending laws, Buyers will come back out in groves, our property values will strengthen and we will all recoup our equity. Our lives will turn around completely and our Taxes will drop!

Now, that's optimism. Get some too. We all need it. Thanks for reading.

 

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Comment balloon 23 commentsDeb Brooks • September 16 2011 05:33PM

Comments

Sure.  The rate will be increased to avoid a reduction in revenue.  Otherwise, county employee rosters would be reduced.  The last thing counties want to do is reduce staff.

Home buyers were hit very had about 5 years ago when hazard insurance rates skyrocketed around here.

We're just drowning in cost of owning a home.

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) about 7 years ago

Lenn, which brings me to the question...should we buy or rent? Horrible question for a Realtor® to have to consider. The world is changing!

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

Deb.  Home ownership is losing it's appeal but only because of matters out of our control.  We love our homes and we love the independence it gives us. 

Sadly, there is no hope for valuations returning for many years and many of us are saddled with property that simply isn't sound financially. 

Of course, when those tax rates are increased to keep the revenues up, it won't be easy to get them back down when values go up.  No matter, that's so far in the future it isn't even on the horizon.

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) about 7 years ago

Lenn, I agree. They are definitely matters out of our control! And, you are totally right that the new higher rates will most likely become the norm.

I know it will be many moons till we see a huge change but I also think of my Grandchildren and all they are going to have to deal with.

I always wanted them to have a better lifestyle than me...same for my children. Oh well, I'm getting too philosophical now! Thank you for your insight. Always appreciated!

Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

Deb, the only good thing is that property taxes are deductible.

 

Posted by Anna Dovger, Home Staging -The Woodlands, TX (Add Value Home Staging LLC, 281-704-6607) about 7 years ago

Anna, let's just hope they stay that way! You realize there are discussions in the White House about changing all that!

Scary!

Great to see you here. Looking forward to ice cream.

Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

Deb, maybe the rain will return soon, but your premise that MAYBE tax rates will rise to compensate for lowered values is something to really think about.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) about 7 years ago

If not property taxes, something else will be taxed..... money is needed to pay for the things we want or need (and those we don't want or need)..... if it does not come in from source, governemtn will find another, they are REALLY good at it....;)

Posted by Peter Pfann @ eXp Realty Pfanntastic Properties in Victoria, Since 1986., Talk To or Text Peter 250-213-9490 (eXp Realty, Victoria BC www.pfanntastic.com) about 7 years ago

Rain, rain, you need some rain.   You've raised some really good points here. 

 

Posted by Sondra Meyer:, See It. Experience It. Live It. (Star View Real Estate ) about 7 years ago

This is a great post that raise very good questions? I might send this post to my county successors office so they can read it.

 

Posted by James Muhammad, RE/MAX Champions (RE/MAX Champions) about 7 years ago

It's not as simple as just raising taxes. The other side of the equation is that expenses must be cut. Residents and government officials may face some very tough decisions in the next budgeting cycle.

In the Las Vegas valley, where values in some areas have decreased by 50%, many of us are paying lower taxes based on the lower assessed values. Consequently our city leaders have been forced to restructure and make cuts. Some examples: the City of Henderson went to a four-day work week for most city hall staff; North Las Vegas renegotiated contracts with police and firefighters, considered closing rec centers, and laid off more than 200 employees. It's more about streamlining than maintaining.

Posted by John Novak, Henderson, Las Vegas and Summerlin Real Estate (Keller Williams Realty The Marketplace) about 7 years ago

Deb...

In GA, it's the law. The commissioner's take the budget and determine the millage rate by diving the amount by the total assessment.

The only thing that I can't figure out is why our taxes are UP nearly 40%.

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) about 7 years ago

Hello, Deb -

Just subscribed to your blog! My beautiful town of Austin, Texas is scrambling to collect money however they can. We now have water increases, electric increases, tax increases, a new 'entertainment tax' on car rentals (what?) oh, yea. We have tons of tourism now in Austin and now a projected growth from 756k people today to 3 million by 2030.

I've been in the real estate business for 29 years and the one thing I've learned is that nothing stays the same. Like gasoline for instance...I use to drive a little VW Bug around and paid 50 cents for a gallon of gasoline. Now it takes $50+ for me to fill my car up. Every time I watch the gas meter tick up to that amount it's still just astounds me. But, I pay it, go pick-up my customers, invite them into my car...smile, get happy and go make a sale! DONE.

Posted by Marisue Mullins (Marisue Mullins Real Estate) about 7 years ago

Gary, something is going to have to happen that's for sure. Maybe is a probably.

Pfann, Man oh man, they are going to get us coming and going. What are we gonna do?

Sondra, Oh yea, we need the rain like a boat needs water.

James, I'm afraid they will have some sad news for you.

 

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

John, no it isn't simple any way you look at it! I'm amazed at your Nevada tax base in the first place. You say your taxes have dropped almost 50% but just like Lenn and I were saying, our taxes are not dropping yet! They are holding tight and still need to rise to meet the demands of the county.

We have one of the highest rated School Systems in Texas. A lot of the tax dollars are spent there. They are not going to take cuts that could affect the system...thank heavens. A good School System is tough to find.

It makes sense to me that your taxing authorities have made a huge mistake. By cutting salaries, employees, and cutting back their hours they are allowing themselves to take a huge hit on  their cash flow. With all the people being affected by no $$$ it isn't going to help the economy any at all. How can they go out and purchase property?

Each County marches to the beat of their own drum. I am sorry to hear that your area has dropped 50% in value. That must be tough!!

You brought up a good point. Streamlining vs maintaining. Our County is choosing to maintain. For at least as long as they can. Although, the last open public meeting brought the tax raise into the forefront. sigh...

Thanks for coming by,

Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

Richard, you know...I've been wondering the very same thing. Why do they keep going up and up and up? If they were truly basing the rate on the actual value, which is what they are suppose to do, and they were using comps the way they are suppose to, why do the taxes keep going up?

I guess it's just to fill in the gap like my post pointed out. But, still, why on the property? if you can't sell it for that amount of money why would you be paying taxes for that amount?

This of course is a rhetorical question since none of us really know what goes on behind their closed doors.

Great question though.

Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

Marisue! Why thank you! I am so glad to have you as a subscriber and I shall reciprocate your deed and we can get to know each other. I'm very happy to meet you!

Austin is beautiful. I cannot believe those stats for increase of population though! That is just amazing and phenomenal. Scott and I had a lovely apartment in Steiner Ranch for a couple of years just to do a little Real Estate there and to enjoy Lake Travis. We both love the hill country and have discussed moving there eventually so I guess our two bodies would count too! LOL

How dry is Lake Travis now? This drought is so very sad. Now, gas prices? I hate talking about that. It's $80.00 to fill my tank from empty right now. My car requires the Supreme gas...seemed like no big deal once but now it's a big owie.

We've gotta just keep rocking and rolling don't we? Keep smiling by the way, it looks good on you!

Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

I think, with so much new construction that brings in new revenue, they should be able to keep taxes where they are.

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) about 7 years ago

Donna, yep. Now, we just have to keep the new construction flowing!

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

I think they do continue to rise because towns are in such hardship themselves.  When times were good, tax went up - not coming down because times are bad - they just look for new ways to tax.

Posted by Linda Edelwich, Glasotnbury Office's #1 Top Producing Agent-not on (William Raveis Real Estate) about 7 years ago

I'm not sure what language this is written in so I'm not sure what you said.  But I do know that here in our county, when values decline the officials just raise the levy rates so the revenue doesn't decline.

Posted by Janna Scharf, Coeur d'Alene Idaho Real Estate Expert (Keller Williams Realty Coeur d'Alene) about 7 years ago

Linda, yes they are. With the commercial and residential both dropping it must be tough to keep it afloat. One of these days they will yet again try to tax the tax. We will have another party!

Janna, I'm not sure why you are not seeing this in English? Are you not in the USA? This is weird. I am going to check into it. Thank you,

Deb

Posted by Deb Brooks (Brooks Prime Properties Wichita Falls Texas) about 7 years ago

Deb, I am seeing the same thing Janna is seeing.  It is a bunch of characters instead of letters.  --Krystal

Posted by Krystal Knott, Breckenridge CO Real Estate & All Summit County CO (LIV Sotheby's International Realty) about 7 years ago

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