More carnage to come?

[TheServant]

Here's an interesting local story in a weekly column here in Oakland County Michigan, which makes up a portion of the metropolitan Detroit area. It is (or was?) the richest of the metro counties. The story feels a bit like an editorial, but has a plethora or housing related statistics, and focuses on how foreclosures and short-sales are bringing values down very quickly. It then ties these declines into the tax revenue implications.

Here are a few excepts related to this later aspect, which, I must admit, are quite startling to me in terms of the long term impact. I noticed this gentlemen is forecasting a local housing bottom in 2012, even with the rapid decline in prices during the past year. That would put our peak to trough at about 6 years.

"The next two-and-a-half years will see a decline in property tax (revenues) by one-third, and we've only seen a 4 percent decline so far, in terms of municipalities and what they are going to get," said Oakland County Deputy Executive Bob Daddow. "As bad as people have seen it with the revenues declining for municipalities, they haven't seen what's going to happen."

"It's pretty startling," he said. "A lot of cities, townships, and towns are going to be stunned. In the lakes neighborhoods, it depends on the individual neighborhoods and their exact rate, but no community will have a positive increase. It's inconceivable."

"Your home is your most valuable asset," he said. "Even if the market comes back, the homeowner will eventually benefit because the value of the home will rise, but municipalities won't benefit until 2020 or 2025, because (annual) taxable value (increases are) capped at 5 percent or the CPI (consumer price index). Either way, municipalities are hit," he said. "It's a solid half-generation to a generation before values and municipalities are back to where they were in 2008."