Minnesota Prairie Roots

Writing and photography by Audrey Kletscher Helbling

The continuing property value downward spiral December 8, 2010

Filed under: Uncategorized — Audrey Kletscher Helbling @ 8:47 AM
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THE ARRIVAL OF OUR 2011 PROPERTY tax statement in the mail last week has thrown me for a loop. I don’t know why, though, since my head hasn’t been stuck in the sand and I am acutely aware of plummeting property values.

Let’s consider the positive first. Our proposed 2011 tax, without special assessments, is dropping 22 percent. Yahoo. I like seeing that minus sign before a double digit number in the tax column.

If everything remains as projected, my husband and I will pay $506 in property taxes and $22 in special assessments next year. I can handle that.

About now some of you are probably wondering whether we live in a cardboard box with those “low” taxes. I assure you that we live in a modest, small-by-today’s-standards, old home along a busy street in Faribault.

Our modest Faribault home

Now back to those numbers on that statement. When I look at the taxable market value of our home, I’m not quite as enthusiastic. Let me restate that. I am not at all enthusiastic.

The value of our 1 ½-story, one bathroom, three-bedroom home has dropped 13 percent from $92,300 to $80,200. That’s a $12,100 decrease.

I am a bit surprised by this dip below $90,000, although I really shouldn’t be given how slowly houses are selling, if at all, in Faribault or anywhere. Yet, you like to think that your house is immune from devaluation. Clearly ours, once valued as high as $111,700 (in 2007), is not.

My curiosity piqued, I opened a file cabinet and pulled out past property tax statements and bills. I compared figures back to 1998.

Our proposed property tax and taxable market value on our home today nearly match those for 2003.

This current devaluation is all a bit depressing and would be even more so if we were trying to sell. But we’re not. The house is paid for and we have no specific reason to move.

That brings up another issue. When my husband and I purchased our house in October 1984, the fixed interest rate for our 30-year mortgage was 10 ¾ percent. Eight years later we refinanced to a 8 ¾ percent, 15-year loan, which we paid off early.

So, when I hear about mortgage rates hovering around four percent today, I feel a twinge of jealousy. Even factoring in today’s housing costs compared to 26 years ago, we could have bought so much more house with an interest rate that incredibly low.

But it is what it is and I’m glad we’ve stuck it out in the same house for nearly three decades. We’ve invested hours and hours of sweat equity and money to improve our house and it’s paid for. In today’s economy, I like that feeling of security.

HOW HAVE YOUR PROPERTY values and taxes changed, if at all? How does this affect you?

© Copyright 2010 Audrey Kletscher Helbling

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8 Responses to “The continuing property value downward spiral”

  1. Erika Says:

    Our house goes on the market tomorrow so this is a timely post! Our house value has dipped, and our taxes have gone down, but we are also lucky to live in a city with really low taxes in general.

    I bought this house really low and also have a ton of sweat equity so we are taking advantage of the low rates to move and buy a new house. We are pricing it where we still make money, but the new owners will be getting a nice deal.

    Hopefully I am still positive after it hits the market 😉

    • Audrey Kletscher Helbling Says:

      Erika, you are a brave, brave woman to put your house on the market at this time of year in Minnesota. But, if you price it right and your home needs little work (which seems like the case), someone may just snap it up. Good luck!

  2. I figure we will be in our house for many decades. When we tell people what we paid for our house they just about fall over. So many live in a house for three years and need to move to bigger and better. I like the idea of our kids coming home to the home they knew.
    As long as you’re staying put, enjoy those low taxes. The pendulum will swing once again.
    Dana

    • Audrey Kletscher Helbling Says:

      My sentiments exactly, Dana. Bigger and better is not necessarily better. Bigger mortgage. More house to clean. More space to heat. Yup, my small house suits me just fine, thank you.

  3. Lori Clark Says:

    When we received our proposed property tax statement last week we also noticed the value dropped. Unfortunately, our city hasn’t received the news that the economy sucks and the city taxes went UP!!! This has further led my hubby to prepare a letter to the editor which you can find at the following link. http://abcnewspapers.com/2010/12/02/letters-to-the-editor-for-dec-3-2010/ – I sincerely wish that more people would drop an email or a note to their local elected officials to let them know that it is a good thing to hold spending in check during these economic times. Most families and small business have, so why can’t government. If we don’t voice our opinion/oposition, then it is assumed that we are OK with the tax increases. Great discussion Audrey! Thank you, From my soap box…. Lori

    • Audrey Kletscher Helbling Says:

      I agree that government bodies should be examining ways to curtail spending in these difficult economic times. Fortunately, the city of Faribault seems to be doing that. The other day, in fact, city officials decided not to purchase new banners for the downtown area, slicing $12,000 – $14,000 from the budget.

      My biggest gripe is when government employees expect/demand pay increases when, in the private sector, individuals are losing jobs and/or taking pay cuts. I do realize that some government bodies are cutting staff and rightfully so if the need for those employees’ services no longer exists.

      This current economic situation is a struggle for all of us. I agree, Lori, that taxpayers need to speak out about inappropriate government spending.

  4. Gunny Says:

    Governments (at all levels) do NOT have a clue unless voters clue them in. I am thinking of selling my current home but I am afraid my Mrs. would not opt to do that in that she views to many positive things in our current situation.

    Property taxes here are considerably higher than in other states (I am in Texas), but less than some of those states where property tax assessors think that little shack out on that 1/8th acre is the Taj Mahal on a rolling field of landscaping.

    Property Taxes are not the only hook that cities go after. Our water bill is usually in the $20 a month category, with Summer months pushing it up to around $50 to $60. You can imagine our surprise, after taking two weeks off to go elsewhere, in our 30 day water billing cycle to get home to a $140 water bill for in excess of 23,000 gallons! My Mrs. and I use between 1500 to 2000 gallons per month! 23,000 gallons would take 5 trucks that haul 5,000 gallons each to deliver to my door. One would think that the water department MIGHT send someone out to see if I had drowned or filled an Olympic size pool (I do not have any pool). Meter readers are also not (sometimes) very bright and was caught giving me the water bill for the water consumed by my neighbor who had water sprinklers running just about every day (I did not have water sprinklers at the time).

    City governments in San Diego County (California) were caught red-handed skimming the fees charged for water consumption to pay for their pet projects.

    I have seen cities over-confident of their cities economic development, charging ever increasing fees, only to find themselves in the red due to lose of revenue. one city, people walked away from homes being unable to pay for them due to job lose in a shrinking employment market.

    May none of these issues touch your or those you love.


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