While most every region our the country has experienced a double digit reduction in the value of real estate there has not be a commensurate reduction in property taxes based on property assessments. What this means to homeowners is that they are paying taxes on the "old value" of their home not the current value. It is unlikely that local governments will rise up and say we need to reduce your tax burden based on your loss in value. One example of what this means is happening in Phoenix, Arizona. In one subdivision there are currently in excess of 100 homes or about 20 percent of the total in some form of foreclosure and or auction. Home values that were in excess of $300,000 are now about $130,000. This is a greater than 50% reduction in value. How many homeowners are still paying property taxes based on the $300,000 price? Probably most or even all homeowners. Homeowners, sooner or later, will wake up and smell the coffee on this issue. How will local governments deal with this issue? Increase tax rates or reduce services or both?
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