The other side of the bubble

The incredible rise in property values has made lots of money for homeowners - at least those who have sold their homes. For those that just want to stay where they are, it's had the opposite effect. As values rise, so do taxes. It's been reported primarily as a problem for places like San Fransisco, where prices are stratopheric. But it's a problem in other places too:

PHILADELPHIA, PA - Mayor John F. Street and City Solicitor Romulo L. Diaz hosted a City Hall press conference today to unveil details of the City’s new Financial Hardship Guidelines and Conditional Forgiveness Policy, which will assist a significant percentage of delinquent Philadelphia real estate taxpayers in meeting their financial obligations.

“Homeownership is the American dream and Philadelphia has one of the highest rates of homeownership among major cities in the country,” Mayor Street said. “It is our goal in this Administration to create as many homeownership opportunities as possible. Although everyone has a responsibility to meet their obligations to pay their taxes, no hardworking family that makes a reasonable effort to comply with the law should lose their home because of delinquent real estate taxes. It was out of this sense of fairness and compassion that we created the Conditional Tax Forgiveness Program.”

In many communities in the greater Philly region, housing values have more than doubled in the last five years, and along with it comes a corresponding increase in taxes. While it may seem like local governments are winning the lottery, many can't keep No city or state, whether run by conservatives or liberals, wants to be in the forclosure business.

While I applaud Philadelphia for caring, I also wonder why they don't just lower property taxes to a level reflecting a reasonable amount of annual growth (is 4% OK?) from, say, five or six years ago, and avoid having to offer forgiveness in the first place? And no, I wouldn't buffer rate changes in a down market, either. Taxes should be like roller coasters - rise slowly, but fall fast and steep.

By the way, that was a rhetorical question. I already know the answer, same as you.