Seattle Bubble has moved! Redirecting...

You should be automatically redirected. If not, visit http://seattlebubble.com/blog/and update your bookmarks.

Off-topic comment? Interesting link?
Head over to the forums, or click here for open threads.

Tuesday, May 23, 2006

Homeowners To Fund Road Repairs?

What's the solution to Seattle's traffic problems? Well, apparently if you ask the Mayor, the solution is a tax hike... on homeowners.

Since 1998, voters have passed five levies: $117 million for education, $86 million for low-income housing, $72 million for the Seattle Center and community centers, $198 million for parks and $167 million for fire-fighting facilities.

The result is a four-fold increase over the past 10 years in what the average homeowner pays for levies. The owner of the average home in Seattle 10 years ago paid $104 for voter-approved levies. This year, the owner of the average home — assessed at $399,200 — will owe $459.

Today, Mayor Greg Nickels is expected to propose a new levy and other taxes — not for shiny new buildings, but to repair roads and bridges. His citizen advisory committee has suggested a levy of $25 million a year, and Nickels may choose to go higher.

"The need is clear, not only for the routine work of paving streets but also for the bigger projects, such as our aging bridges," Nickels said in his State of the City speech in March when he announced that he would explore a new way to fund repairs.
...
The new road-repair levy would signal a departure from how Seattle has used levies in the past. Previous levies were sold to the voters like Procter & Gamble products — offering something new and improved, such as new parks, fire stations and community centers.

This levy would improve roads but not pay for any new ones. The money would fill potholes, repaint crosswalks, repave roads — in other words, pay for tasks voters have come to expect government to include in its general budget.
Granted, Seattle homeowners seem only too happy to spend far more money than necessary for overpriced real estate and granite countertops—and a few hundred dollars per year isn't going to break anyone's bank. But what is the deal with begging for more money just to do (supposedly) routine maintence? What in the heck are they doing with the general budget?
Nickels said the city needs new money for road repairs to make up for funding that used to come from the state.
I don't quite buy that argument, and as it turns out, neither does the state legislature.
State Senate Transportation Chairwoman Mary Margaret Haugen, D-Camano Island, said she was "aghast" at Nickels' complaints about state funding. In the $8.5 billion gas-tax package the state passed in 2005, Seattle received $2.8 billion for projects like the viaduct and the 520 bridge, and an additional $2 million a year for maintenance, she said.

"The largest share certainly went to Seattle," Haugen said. "That was one of the things that people had heartburn about in the rest of the state."
So, we're getting billions of State dollars for all kinds of fancy projects, but we have to jack up the tax on (already stretched) homeowners to afford to fix potholes? Something just doesn't add up. I could be way off base here, but I can't help picturing Mayor Nickels sitting at his desk with dollar signs in his eyes, thinking about the soaring property "values" in Seattle and wondering just how much more in taxes the populous will tolerate.

This was cross-posted at both Seattle Bubble and Seattle Traffic.

(Sharon Pian Chan, Seattle Times, 05.22.2006)

22 comments:

Anonymous said...

Unless we wall off the Seattle border and tax those northend and southend deadbeats for using the in city streets, who better to pay?

The homeowners in the city get the highest tangible benefit from the road improvements, so it makes sense they should foot the bill. The monorail tax should have been a property tax as well. The people that get the real economic benefit from an infrastructure project like that are the property owners in the vicinity.

biliruben said...

Bring on an income tax! Otherwise, I agree with anon. Property owners (and renters who indirectly pay for property tax through rent) derive the most benefit for well maintained infrastructure. Well, that and business, and we can only give them money to bribe them to stay, right?

The state is full of it. Seattle is the engine that drives and pays for the vast majority of this state's needs. 2 million for infrastructure for the city would barely pay for a bike path or a couple miles of new sidewalk.

matt said...

Haven't you people heard? If Seattle is bubble-proof, which by the few month-to-month numbers we use to extrapolate wildly with, and prices will only go up! up! up! Than what's a little skim off that? People will always pay these inflated prices, they won't notice a little extra property tax! Its win! win! An infinite well of prosperity which the local governments will always have at their disposal, like cigarette tax, people won't stop smoking right?

We have reached a new paradym, a utopia of infinite wealth, a permently high plateau. Alchemy in our own backyards.

Anonymous said...

All this talk of more property taxes reminded me of something I was thinking about the other day. The topic was "why is every homeowner in Seattle (and other bubble city) so excited that their houses are appreciating faster than they should?". The reason I ask that is that, when I think about it, I don't think the benefit is what everyone thinks it is. Clearly prices are going up everywhere "desireable" to live. Lots of middle america has lagged, but it has lagged becuase it is less desireable. The only benefit of my house going up in value is if I can sell it and move somewhere less expensive so I can pocket the difference. But in order to do that I have to move somewhere less desireable. More likely is that at some point I want to stay in the city I currently live in but move up to a better house and neighborhood. Certainly I can use all the money I made on my current house to do that, right? But rising prices not only won't help me in that case, they'll hurt me. If I started with a $250K house that appreciated 100% my house is now worth $500K. But I want to move up to a house that used to sell for $500K and it's now $1M. Exactly how does my $250K appreciation help me get into a house that is now $500K more? I would have been better off if housing prices were totally flat or even fell! So, lets see, I can't afford to move up and I don't want to move to middle america. All the while, my taxes are going up. So at some point I'll be priced out of my house since I over leveraged to buy it or HELOC'd to upgrade it or buy a new boat.

Ultimately, you don't get richer when assets inflate everywhere and taxes go up! Add to that the fact that homeowners are increasingly leveraged, earn too little for a too expensive house, have little if any savings and too much debt, and you have the perfect recipe for reduced consumer spending and a major recession. I guess that $1M house will be getting more affordable after all...

Anonymous said...

Uhm...you'll note that the article doesn't mention what the "average" Seattle home was worth 10 years ago. Saying that there was a four-fold increase in what the average homeowner pays in taxes is a lot different than saying that the average homeowner is taxed at four times the rate they were 10 years ago.

That said, I'm going to have to part ways with Tim on this one: Seattle desperately needs funding for infrastructure. I don't buy into the argument that the city is chronically wasteful -- I think there is a serious shortage of funding for "boring" urban necessities.

Eric D. said...

The U.S. seems to be engaging in a lot of economic alchemy these days. A never ending housing bubble, an ever-expanding economy even when gas prices and interest rates are going up. Not to mention energy alchemy- people love the sound of "biofuels" which is just a modern day "turn-lead-into-gold" scheme. The U.S. population is spending more than it's earning, and biofuels take more energy to create than they output. Time to wake up and smell the recession.

Anonymous said...

Some data that would be nice to have:

* Amount of property tax currently collected in Seattle.
* Where that property tax is spent

Until we know this data, how can we understand if this new tax is really necessary.

Anonymous said...

Homeowners are apparently happy and eager to run their property taxes up with all the enthusiasm over high RE prices.

So if they don't care, why should anybody else?

Anonymous said...

Check out the newest "Bubble Tracking" numbers for Seattle. We are finally making impressive gains in inventory.

meshugy said...

A number of houses I've been tracking in Ballard have all come up on
the Excise Tax Records. All of these houses sold in under a week with
multiple offers:

7332 EARL AV NW 98117 Asking:$489 Sold $500
7328 28TH AV NW 98117 Asking: $399 Sold $450

7029 26TH AV NW 98117Asking: $399 Sold $417

8034 22ND AV NW 98117 Asking: $425 Sold $451

3021 NW 61ST ST 98107 Asking: $524 Sold $557

1475 NW 80TH ST 98117 Asking: $424 Sold $437

7017 28TH AV NW 98117 Asking: $389 Sold $410
2832 NW 60TH ST 98107 Asking: $419 Sold $430

6702 JONES AV NW 98117 Asking: $349 Sold $389

7321 27TH AV NW 98117 Asking: $398 Sold $440

7024 CLEOPATRA PL NW 98117 Asking: $494 Sold $520

It seems like it's business as usual....a very competitive market with multiple bidders on nearly every sale. It's very hard to find a for
sale sign around Ballard that doesn't already have a sold sign on it.

Earlier this Spring I thought this sort of activity might slow down....but I'm now convinced we're in for another year of big median price gains. There's simply too much demand and too little inventory.

ballard watcher said...

So Mshugy, do you only tell us about the houses that sold over asking?

I find it curious that Ballard would be the ONLY neighborhood in Seattle where homes are not selling under or at least AT asking.

I mean, I know it's a popular neighborhood, but come on, considering what's happening in the rest of the city, I find this hard to believe.

Think I'll start doing some research of my own on Ballard.

I'll post results here. Just want to make sure people are getting all the facts.

Anonymous said...

Delve a tad further into the Deed of Trusts on those homes and Shaazaaam!

The interest only 3-5 yr ARMS and 100% loan-to-value deals marches on! Rats! I was thinking those would be sensible fixed rate deals to be the norm again. Silly me to think that. After all, it's just going to be like that Bunny on tv.,the multiple offers just keep on going and going and going. I just crack myself up.

Thanks Meshguy for some afternoon quick-work-break-hesteria. Anybody got a smoke?

meshugy said...

hi ballard watcher...i posted all the houses I was watching. Mostly 3 bed room houses in Loyal Heights. They all sold over asking...I have no interest in fudging the data. I want to know what's going on...good or bad.

I'm not sure what you mean with your reference to other Seattle neighborhoods. Every single in neighborhood in Seattle had a big median price gains last month. See:


April Breakouts

From the sales data I'm seeing in Ballard, we'll probably see similar gains this month.

SourMash said...

I think Nickels has balls for floating this. Good for him.

He just might get checkbook liberal Seattle to bite, and if he doesn't, he's got a hobby horse to go to the legislature with next session.

"Crumbling infrastructure" gets a lot more play with business lobbyists than "urban improvement" or (heaven forbid) "decent schools".

Just talk up the sidewalks and bike paths, Greg, and compare it to the daily cost of a latte. They always buy that little passive-aggressive ploy.

Anonymous said...

Ballard is the de facto "starter" neighborhood in Seattle, so it doesn't really surprise me that it's still hot. Every polar-fleeced yuppie with a newly-excreted larva and an SUV stroller has it on her short list of desirable neighborhoods.

I think that Seattle is Special (tm), in the sense that the mid and high-end markets will decay long before places like Ballard start to tank. Places in-city that have already seen rapid appreciation (Queen Anne, Magnolia, Fremont, Wallingford) will be much more likely to depreciate, if only because the youngest, most naive buyers can't afford those neighborhoods without truly heroic financing.

The smart money will stop buying in the bubbliest neighborhoods first. Places like Ballard, that are still nominally working-class, will hold their value for a bit longer.

That's my theory, anyway.

Anonymous said...

Not incidentally, that is why I often find Meshugy's posts to be painfully naive -- I appreciate that he's probably correct about Ballard, I just don't think that Ballard is a good barometer for the housing market in Seattle.

Anonymous said...

Just picked up my kids from school and dropped by the grocery store on the way home.

Parked right next to a very nice late model Mercedes with a beautifully polished Gold license plate border which read: It pays to know a Realtor or something to that degree, with a NAR logo on it.

The other thing that caught my eye. The car is for sale. They want $22,950. Wish I had my camera.

Anonymous said...

We wish you had your camera too. A sign of things to come.

BTW, Fannie Mae's long-awaited report came out today.

Looks like they're in some deep doo-doo. We'll see what that holds for the US economy.

Ah! The wonder of over-priced housing and how it destabilizes all that it touches!

Anonymous said...

How are people finding the mortgage docs for properties? Steps please?

Anonymous said...

Meshugy, does your post have anything to do with the thread that Tim posted?

I thought it was about taxes, not that little dump hole Ballard...

Anonymous said...

I just saw an interview with James Lockhart of the OFHEO.

He said Fannie May does basically 2 things:

1) bundles mortgages to sell off .

2) holds mortgages

He said that they would no longer be allowed to hold mortgages.

Isn't this going to put a crimp in the mortgage industry? What affect is this going to have on things?

Anonymous said...

Searching for records such as recorded Deed of Trust, Notice of Default, Notice of Trustee Sale (foreclosure) etc, go here:

For example, Snohomish County Auditors Office:

http://198.238.192.100/

Click the "disclaimer" acknowledgement, then click "Search" of the Official Records, then in the 2nd drop down menu choose the document type and then enter the tax# id number (same as parcel number), or owner last name etc..

For quick sold prices, just go to www.Johnlscott.com or Realestate abc.com or zillow.com vs. searching the King or Snohomish county websites. They county websites tend to be a bit clunky. To find out the financing, check the Deed of Trust (s)on the most recent recording date(s). Click the image which will pull up the document in a PDF format. This will tell you approx. how much the homeowner financed and will generally mimic the actual lender Note.

Have fun exploring.