Not long ago, soaring property values in North Idaho had many homeowners jittery, especially those on fixed incomes.
Their net worth was increasing handsomely, but so were their property taxes. That triggered anxiety for a lot of longtime residents who feared being taxed out of the homes where they built their lives and raised their children. They’d have to sell, forget about sentiment and move into lower-scale residences they could afford.
Times have changed. The recession and housing bubble took care of that.
For the third year in a row, Kootenai County’s property tax base has declined, losing nearly 25 percent during that period, from $16.6 billion at its peak in 2007 to $12.6 billion for 2010. In neighboring Spokane County, where the real estate boom wasn’t as spectacular, residential property values declined this year for the first time in 36 years. The one-year drop in Spokane County home values was nearly $1billion – from $23.2 billion in 2009 to $24.2 billion in 2010.
The Inland Northwest is not unique. According to a recent Rasmussen poll, only 27 percent of U.S. homeowners expect their home’s value to increase in the coming year. That’s lower than a month ago, although it’s more optimistic than a year ago. Fifty-two percent think the value will go up in the next five years.
Those sentiments mesh with the reality painted by assessors in both Spokane and Kootenai counties. Ralph Baker and Mike McDowell, respectively, note that the latest figures are based on 2009 transactions, so they reflect the status as of Jan. 1. Today, nearly halfway through 2010, the numbers continue to decline.
Obviously, the recession and the collapse of the feverish housing market are to blame for sinking values, but it’s intensified, according to Kim Cooper of the Coeur d’Alene Association of Realtors, by the pace of foreclosures. As lenders unload their losses they drag the market down even further.
While fixed-income property owners’ tax fears posed a real and serious concern in a robust market, the slipping value of homes across the region now is more troublesome. It robs homeowners of what’s often the largest component of their wealth. It dampens the construction market and the jobs it produces. And it seriously erodes local government’s revenues, forcing significant cutbacks in public services.
In time, conditions will improve. That Rasmussen poll, conducted a week ago, revealed that more than half of those questioned expect home values to rise over the next five years.
That may mean renewed upward pressure on property tax bills, but it beats a collapsing real estate base.