Archive for March, 2008
Bailout Thoughts
I read this article in the New York Times this morning and I’ve been thinking about it for a good part of the day.
Short synopsis: not only were lower income home buyers sucked into adjustable rate mortgages and equity stripping, but so were higher income individuals. *gasp*
A few examples were given where “real estate consultants” and a lawyer were able to re-negotiate their mortgage terms with their lenders. Either their loans were refinanced into fixed interest rates or principal balances were reduced, or both. One of the “real estate consultants” had their principal balance reduced by 27%!
I know that a little over two weeks ago, Bernanke broached the subject of principal reductions as an alternative to simple interest rate reductions. I’m not a big fan of this suggestion and feel interest rate locks are more appropriate and fair to all those involved.
It’s like the stock market, if you buy a stock at $170 a share and it goes down to $2 a share (does that ever happen…), you lose out. Houses should be the same. If you pay $500,000 for a house and its value goes down to $350,000, that’s how it works. A house is called an “investment” for a reason. Sometimes investments go up, sometimes they go down. That’s the risk. The bank shouldn’t bail you out with principal reductions. That only hurts other homeowners that continue to dutifully pay their mortgages.
Perhaps most troubling is the nagging thought in the back of my mind about lower income buyers. Do they know that they can negotiate with the bank if they are in trouble? Has this even been presented as an option to them? Or is it only the more sophisticated buyers that know how to “work the system” to improve their situation?
Run Forrest, Run…in Greater Hartford
It’s time for running season in the Greater Harford area. If you’re a runner, would like to be a runner, or like to watch Forrest Gump, then the Hartford Marathon Foundation has an event for you.
On Wednesday, April 9 from 6:00pm-8:00pm, the HMF will hold a FREE Open House so you can learn more about running and triathlon training programs. The Open House will be held at the Riverfront Community Center at 300 Welles Street in Glastonbury.
This is a great opportunity to get off your duff, meet some new people and improve your health!
Potential Property Tax Increases in West Hartford
Tax revenue funds the services that cities and towns provide to their citizens. I think we all get that.
Earlier this week, the Courant reported on West Hartford’s town budget proposal. The initial budget proposal is up 7% from the 2007-2008 budget, to $216 million. Click here for the proposed budget. Click here for the Town Manager’s presentation of the proposed budget.
A portion of the article addressed the property tax increases that West Hartford property owners will see in 2008. Unlike 2007, the first year of a 5-year tax phase-in, property owners will not see uniform increases of 4%. According to the article, “About 63 percent of West Hartford homeowners would see a tax increase of 10 percent or less, and 37 percent would see a tax increase greater than 10 percent, under Francis’ proposed budget.”
This morning I finally had time to sit down and see which bucket I would fall in with the property that I own in West Hartford. I pulled out my handy little phase-in tax spreadsheet and plugged in my assessment values.
Well, lo and behold, I fall into the group of tax payers that may see a property tax increase of greater than 10%. My taxes would actually increase 35% from 2007 to 2008 if the budget remains the same and the proposed mill rate of 38.11 holds.
How are people on fixed incomes supposed to deal with these increases? Particularly given the fact that the proposed budget doesn’t even expand town programs, it just maintains the status quo.
I’ve found that there is a lot of confusion about how taxes are calculated. If you’d like help calculating yours, feel free to get in touch. I can send you my spreadsheet, or I can calculate them for you.
Also, the West Hartford Town Council has scheduled public hearings on the proposed budget for March 27 at 2 p.m. and April 3 at 6 p.m. at the West Hartford Town Hall legislative chamber. You might want to stop by if you’re interested in participating in the budget process.