Reassessment rears its ugly head (Wilkinsburg, Butler: mortgages, houses, transfer)

[BrianTH]

Originally Posted by squarian

I think we know two things useful to making predictions: first, the past several attempts suggest there will be a loud howl of pain across the county, and second, the politicians' instinct for the popular cause seems to be pointing in the same direction.

But there is also a third thing we know: Wettick doesn't care about all that. And a fourth: the politicians can't get their act together to do anything.

Problem is, with so many tiny little jurisdictions, overlapping school and municipal, and no clear information at that moment of truth about revised millage rates, hardly anyone will know whether the new assessment means their taxes will go up or down.

Thanks to all the delays, it looks like the new millage rates are the first thing most people will learn--people in the City might learn them at about the same time, but outside the City it is looking like the new millages will be known before the individual property assessments go out:

Judge won't delay new Allegheny County assessment figures

In a nutshell, I think that is why the process is likely to be unstoppable if it gets to that point: people are going to want to defend the newer, lower millages.

[BrianTH]

Originally Posted by robrobrob

I think California locks in your purchase price as you assessed value. Years ago they passed a measure that made this the law. My friend has a house assessed at 600,000 and his neighbor has an assessement of 25,000 with a larger house.

That's Prop 13, from 1978. It allows 2% increases per year without a change of ownership, but that hasn't been enough to keep up with appreciation in many areas, hence such discrepancies.

It is also a total debacle--as it is structured it creates a highly inefficient property market which artificially restricts the supply of moderately-priced housing.

It has also shifted tax burden to other taxes and fees, and forced localities to rely on the state for more funding. I don't have an inherent problem with all that--I think in general we overrely on local property taxes in the U.S.--but when you combine those trends with California's dysfunctional state government, it becomes a more serious problem.

That said, you can imagine something broadly like Prop 13 that could be a good idea, but you would have to eliminate the different treatment after a sale, and unless you actually intended to phase out property taxes, you would want a more realistic adjustment mechanism. For example, you could do something like create (or borrow) a broad index of home prices, then apply that index to all assessments (regardless of ownership history), without having to do specific reassessments of each property.

[gg]

Does it say what date these assessments will be shown to the owners?

[robrobrob]

Originally Posted by BrianTH

That's Prop 13, from 1978. It allows 2% increases per year without a change of ownership, but that hasn't been enough to keep up with appreciation in many areas, hence such discrepancies.

It is also a total debacle--as it is structured it creates a highly inefficient property market which artificially restricts the supply of moderately-priced housing.

It has also shifted tax burden to other taxes and fees, and forced localities to rely on the state for more funding. I don't have an inherent problem with all that--I think in general we overrely on local property taxes in the U.S.--but when you combine those trends with California's dysfunctional state government, it becomes a more serious problem.

That said, you can imagine something broadly like Prop 13 that could be a good idea, but you would have to eliminate the different treatment after a sale, and unless you actually intended to phase out property taxes, you would want a more realistic adjustment mechanism. For example, you could do something like create (or borrow) a broad index of home prices, then apply that index to all assessments (regardless of ownership history), without having to do specific reassessments of each property.

I agree that a regular assessment is a good thing. But try telling that to the 75 year old lady that lives next door that has lived there for 50 years and gets by on Social Security. Sure she is sitting pretty because she has equity in her home but she has next to nothing to live off of. This argument doesn't sway me but but it does sway others. The blue haired old lady, that votes every year, getting pissed off because her taxes went up. Regardless of what the tax rate is taxes are going to go for people that have underassessed for years.

[BrianTH]

Originally Posted by h_curtis

Does it say what date these assessments will be shown to the owners?

That's all still up in the air.

[BrianTH]

Originally Posted by robrobrob

This argument doesn't sway me but but it does sway others.

It does sway others, and in general lots of bad housing policy is made because it is difficult to persuade politicians to care as much about future home buyers as present home owners.

But that is one of the many reasons I am glad in this instance that the Pennsylvania Constitution is not so easy to change.

Regardless of what the tax rate is taxes are going to go for people that have underassessed for years.

That's not quite right. If everyone in the relevant jurisdiction has been underassessed by the same amount, it will make no difference. If some people in the jurisdiction are underassessed more than others, the first group will see a tax increase, but the second group will see a tax decrease.

In fact, I am quite confident that a substantial number of people who are expecting a tax increase will actually get a tax decrease.

[robrobrob]

Originally Posted by BrianTH

It does sway others, and in general lots of bad housing policy is made because it is difficult to persuade politicians to care as much about future home buyers as present home owners.

But that is one of the many reasons I am glad in this instance that the Pennsylvania Constitution is not so easy to change.



That's not quite right. If everyone in the relevant jurisdiction has been underassessed by the same amount, it will make no difference. If some people in the jurisdiction are underassessed more than others, the first group will see a tax increase, but the second group will see a tax decrease.

In fact, I am quite confident that a substantial number of people who are expecting a tax increase will actually get a tax decrease.

I really think that those that have been getting a "bargain" for all of these are going to get slammed. These people more often than not have been in their house for years.

Then again, I have a friend who lives on the South Side and his house is assessed at 40. He will likely pay more and he should.

[gg]

Originally Posted by robrobrob

I really think that those that have been getting a "bargain" for all of these are going to get slammed. These people more often than not have been in their house for years.

Yeah some of the old people on fixed incomes are going to get crushed and will probably have to sell. Might be a ton of homes on the market after this reassessment. Probably going to be pretty ugly with the taxes being so high already.

[stburr91]

Originally Posted by h_curtis

Yeah some of the old people on fixed incomes are going to get crushed and will probably have to sell.

There will no doubt be some of that. I always say, there's a price to pay for progress. As the city improves (and real estate prices increase) many people will be priced/taxed out.

[BrianTH]

Originally Posted by robrobrob

I really think that those that have been getting a "bargain" for all of these are going to get slammed. These people more often than not have been in their house for years.

I guess it depends on what we are talking about. If the house in question was already underassessed in 2002, then that "bargain" may end. But otherwise, I don't think everyone realizes how much the total value in certain jurisdictions has appreciated, such that millages will be going down really quite substantially.

To put it in mathematical terms, this is a question of whether your house has appreciated more than the WEIGHTED average, not a simple average. And the implications of that are not very intuitive.

Then again, I have a friend who lives on the South Side and his house is assessed at 40. He will likely pay more and he should.

Those are the people really on the hook. If your house was expensive in 2002 and it is a bit more expensive now, that's not necessarily going to give you much exposure. But if your house was cheap in 2002 and is now considerably more expensive, your bill could go up substantially.