Friday, October 19, 2007

Want to Help Out People Being Foreclosed Upon? LOWER PROPERTY TAXES!

Minneapolis, as you've surmised, is like any other major city in the US in that there's a leftist core and pretty much all the wealth producers have escaped to the suburbs. Oh sure, some like me who detested the concept of suburbia with the latest in Ambercrombie and Fitch and trophy wives driving aimlessly in an urban assault vehicle, stayed in the city, insistent the culture and "realness" of city life made it worth the lefter leaning yard signs and the occasional towing of the car and continued to contribute to GDP. But after your place gets broken into, the cops give you 2 rolling stop tickets because they're bored and the city of Minneapolis jacks up your property taxes 300% in 6 years with no noticeable improvement in city services or schools, all of the sudden having the appetizer platter at Applebee's, wearing the latest in Ambercrombie and Fitch doesn't look so bad.

And so I fled.

But now, like in pretty much every other major city throughout the US, city council members are scrambling to secure votes in the next election by calling for some level of assistance in helping the unfortunate people in their city that are facing foreclosure. Some advocate "crisis lines" to help people figure out a way to avoid foreclosure. Others are advocating bail outs calling on state and federal tax payers to bail their citizens out.

But here's a crazy idea I had. How about you lower the freaking property taxes? In many cases the reason people are facing foreclosure is that their ARM has reset and now they must shell out an additional $50-$100 a month (I'm not kidding, I've heard and read stories where they can't afford an extra $50-$100 a month). Well if that's the case, and so many of these poor unfortunate home owners are at risk of losing their homes, why don't you lower the property taxes to help them out? That would probably do more to help them keep their home than a crisis line.

Beyond which, lowering property taxes will also help in another regard;

It will increase the value of homes in the city.

In increasing the property taxes, what cities have done is decreased the net rents that can be received from renting out the property. The supply and demand for apartments and rentals is more or less independent of property taxes. Thus market rents are set. So if property taxes are increased, then the landlord must eat the extra costs. He can go ahead and try to increase rents to offset the increase in property taxes, but with so many affordable housing developments, chances are he's just going to have to eat it.

With these lower profits, this decreases the market value of a house or rental property. One of the three major valuation techniques used by appraisers is income approach, looking at what cash flows the property will provide. If property taxes were to be lowered, this would increase the net cash flow provided to the owner, and thus the appraised value of the property.

Of course the likelihood of this happening is zero. Most major cities' city councils are far left leaning, even Minneapolis has a Green party member if I recall correctly. And, if you were foolish enough like me to contact your city council member in the hopes of getting your property taxes lowered, you are always told there's not enough money and the reason your property taxes went up was through some weird, tangled logic that inevitably blamed the evil Republicans at the state. This is because democrats, socialists and other lefter leaning sorts stay in power by raising taxes on a minority and transferring the wealth to the majority effectively bribing the masses. So they are not going to lower taxes, even if it is on the poorer folk, because it's not in their nature. if anything, they're going to raise taxes on the rich and then try to provide some government service or program to bail these people out.

Thus, it seems time again to bring out what the left hates the most, and that is facts and statistics.

According to the City of Minneapolis property taxes have gone up 60% since 2000. Inflation however, has only gone up 20%.

Right off the bat you can tell, mathematically, that there is enough room to cut property taxes and provide these people a little relief. Secondly, and albeit anecdotally, instances of the city blowing money on a $200 million library, who knows how much on "green roof tops," and I recall a "sculpture" which was nothing more than a cube I saw in the city park that after some investigation I found cost $50,000 (If anybody wants me to make a cube, I'll cut them a deal for $30,000. We'll call them "Captain's Cubes" and I'll sign them and you can put them in parks or in your yard or something). Regardless, as always there is plenty of fat to trim from the city budget and pass onto the people.

The question is whether the council members are going to help out those unfortunately facing foreclosure with real help or whether they're going just help themselves.

I'm just happy I'm in the burbs.


Libertarian Jason said...

Excellent point.

Two years ago I took part in a forum about home ownership....Or rather, I should say, it was a forum organized by lefties for the purpose of bashing "predatory lenders"....

At the time, eminent domain was the hot thing and I made the point, "if you want people to keep their homes, then why do we let the government confiscate them to give to developers?"

This is an excellent point you make, and should the topic ever come up, I plan to use it.

--Libertarian Jason
Yearning to Breathe Free

Anonymous said...

The library is a sore spot with me. $200 mil and it's open, what 20 hours per week because of 'budget cuts'. Cripes, if we are going to build book palaces, least we can do is have them open now and then.

If you were going to cut property taxes, how much would you cut?

Anonymous said...

"Two years ago I took part in a forum about home ownership....Or rather, I should say, it was a forum organized by lefties for the purpose of bashing "predatory lenders""

Was it by chance put on by ACORN? When I bought my house back in the spring, my lender offered me a .75% break on my interest rate if I did a first time homebuyer education class with ACORN. I did some research on them and figured out they might as well call themselves "Communist Party USA", but I was willing to put up with their BS for a lower rate. Then I found some stuff that suggested that they use participation in their homebuyer's education class (which is allegedly part of ACORN's non-profit arm) to get touchy-feely "everybody should be able to afford their own home" grants from the feds. The article then alleged that ACORN uses that grant money for its (very much not non-profit) lobbying. ACORN's big issues are predatory lending (whatever "predatory" can mean in an entirely voluntary exchange), unionization, and a "living wage" (whatever that means).

I called my lender back and told him I was unwilling to be used as a pawn for commie bastards, even for .75%. He found another class with a different group (one that seemed to be much more geared towards actually producing successful homeowners).

Anonymous said...

But here's a crazy idea I had. How about you lower the freaking property taxes?

City tax rates are the only reason I live in the 'burbs. I would prefer to live either in the city or the country, but I can't afford the taxes of the safe neighborhoods in the city. Lower the freaking property taxes, indeed.

Anonymous said...

Maybe you could get a can of spray paint and graffiti "this stupid cube cost you $50k" on it.

Anonymous said...

God bless foreclosures, for those who tried to live higher than what they should :-)))

Unknown said...

I am a single father who raised his two children. One just finished a tour in Iraq and received the Bronze Star. The other is finishing High School.
My health kept me in and out of the hospital for several months. Between not being able to work and hospital bills, even with private health insurance, and forced bancruptcy, my house is about to be foreclosed on. It was certainly not above my means, nor extravagant.
I provided significantly to the locally economy for over 20 years. Now I am about to lose my home because the "golden parachute" crowd, and the government that was suppose to be overseeing them took money that should have been available to me for a decent interest rate that I could have afforded instead of the steadily increasing ARM I was forced into because of my health issues in attempt to keep my home. The bank asks "Didn't you read the loan documents that you signed?" That's just cold. Of course I read them. They said that if the prime lending rates went down, so would my interest rate, it went steadily up until the month before they started foreclosure. Besides that, I had one last project which would have netted me 160,000 net profit - unfortunately another one of the greedy rich unilaterally "renegotiated" the deal and took over 100,000 more than he agreed - My mother was dying and died before or as that project was completed. I had an auto accident which was not my fault right after she died. Too much to handle in my ill health. So... those greedy folks who made themselves rich off the backs of people like myself are living comfortably while people like myself are wondering where they and their children will live.
Anonymous said...
God bless foreclosures, for those who tried to live higher than what they should :-)))

Are you one of those who look down their noses at the working people trying to live as well as you, or do you truly think foreclosures are the results of people being greedy? No. It is the result of greedy people sucking the capital out of the market and putting into their private assets leaving the rest of us who have to finance our homes in order to have one. Now out in the cold when they are finished.
My home is a modest 1600 sq ft 3br 2 bath with a shop next door that I used to work out of.
My annual property taxes are 1,100 and my loan was 116,000 on a home that the county has appraised at 165,000 after my sweat equity completely remodeled it. I drive a 7 year old truck that is free and clear.
The amount of money that is going into the Stimulous Package could pay off all such homes with low or non interest repayment terms. The consumer money saved by such an arrangement would begin going back into the economy immediately and on an individual basis, rather than throwing Billions at failing banks which continue to pay outrageous salaries, party expenses, travel and entertainment expenses. The only people who benefit from this type of stimulous are again the already rich... instead of upgrades to individual homes, local purchases by individual beneficiaries of this Stimulus alternative.
It is enough to keep those of us negatively affected by this economy on our knees praying for help.