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Putting a price on the crisis

Email|Link|Comments (1) Posted by Binyamin Appelbaum November 8, 2007 01:02 PM

A new congressional study projects 22,292 Massachusetts homeowners will lose their homes to foreclosure by the end of 2009. The study by the Joint Economic Committee, available here, estimated the foreclosures will reduce property values by $3 billion and cost the comunitiesin the state almost $26 million in property tax revenues.

The study ranked Massachusetts only 19th among states in the number of expected foreclosures. But the state's relatively high property values mean Massachusetts ranks 6th in terms of the expected economic damage.

According to the authors, the studies methods and assumptions likely underestimate the total number of foreclosures, and the impact, over the next two years. For example, the study looked only at borrowers who took subprime loans.

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1 comments so far...

I don't understand how a decrease in property values will cost the communities $26 million in property tax revenues. In 2000 when the assessed value on homes was lower, the property tax rate was also much higher -- almost $20 per $1000 assessed in many of the desirable suburbs. If the property values decrease again, the tax rate will just increase to compensate. All towns still need a certain amount of revenue to operate regardless of the value of its housing stock.

Posted by Mike November 13, 07 09:47 AM