Strategic defaults: Why older Americans walk away from mortgages
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Reuters.com contributor Mark Miller is a journalist and author who writes about trends in retirement and aging. The opinions expressed here are his own.
When Ken Carpenter bought his two-bedroom Florida condominium in 2004, the investment looked like a no-brainer.
The 68-year-old retired General Motors quality engineer, who lives in Michigan, paid a little under $200,000 for the West Palm Beach apartment in a complex with a swimming pool, tennis courts and fitness facilities. His adult daughter, who lived there and had been renting, would move into the unit and pay rent. The apartment would also serve as a vacation property for Carpenter and his wife.
“I knew property values were rising, and I thought if worse came to worse and my daughter had to move out I could sell it and at worst wouldn’t lose anything,” Carpenter says.
Carpenter’s daughter moved to the West Coast in 2007. And while he’s been able to continue renting the apartment, Carpenter is losing $500 a month after paying the mortgage, insurance and condo association maintenance fees. A much bigger pain point is Florida’s collapsed housing market. The condo carries a $153,000 mortgage, but was assessed recently at just $80,000 — putting Carpenter deep underwater on the loan.
Now Carpenter is hoping to sell the condo — at a steep loss — to a third-party company that negotiates with banks to purchase underwater mortgages. But if that fails, he may decide to walk away from the condo, making a so-called “strategic default” on the loan.
Strategic defaults are quite different from defaults and foreclosures that occur when homeowners don’t have sufficient resources to make payments. The decision by homeowners with resources to walk away stems from the steep drop in housing values in some parts of the country — and their judgment that continuing to pay doesn’t make sense.
The decision for Carpenter is a tough one. He has a healthy retirement income of about $6,000 per month from his General Motors pension and Social Security, but finds that with the drag of the mortgage in Florida — plus a smaller mortgage on his Michigan home — he’s barely staying afloat. While his credit score remains high, he can’t save any extra cash for an emergency, and he is also building a credit card balance. “Walking away from this runs against every grain in my body — it’s a contract I signed. But it is slowly dragging me down,” Carpenter says.
Mortgage debt among older American homeowners like Carpenter rose during the years when the housing bubble was inflating — reversing the long-standing trend of declining debt as retirement approached. Some 63 percent of people in their late 50s and early 60s currently carry mortgage and home-equity debt, up from just 49 percent in 1989, according to the Joint Center for Housing Studies at Harvard University.
At the same time, older homeowners are sinking underwater on those mortgages at above-average rates. Last year, up to 22 percent of homeowners age 55 to 64 would have had to bring cash to a closing on the sale of a primary residence, according to the Center for Economic Policy Research, and up to 36 percent of homeowners age 45 to 54 were in the same boat.
That latter figure is much higher than the national average, which currently stands at 21 percent, according to research by IBISWorld.
“Retirees or baby boomers are more likely to strategically default on their underwater mortgages than their younger counterparts, as all of their wealth is less likely to be tied up in real estate assets,” says Robert Andrew, housing analyst with IBISWorld.
The housing market continues to be weighed down by high unemployment rates, foreclosures and tight lending standards. The recently expired federal tax credit for homebuyers provided some support, but IBISWorld expects prices to bottom out until later this year, and then rise only modestly for several years to come.
A big jump in strategic defaults could produce additional shock waves in the market — although walking away can carry a heavy cost — depending on where you live.
The credit scores of defaulters typically plunge, and banks can go after a borrower’s other personal assets in some states — although University of Arizona law professor Brent T. White notes that some states have non-recourse laws that prevent that from occurring.
White has written extensively on the ethical and legal issues surrounding strategic default. Key variables in a decision, he says, include how far underwater the loan has become and the prospects for a real estate recovery in a given market. “People need to consult with an attorney and a financial adviser before making any decision. But I don’t believe guilt and shame are good reasons to stay in a house,” White says.
Fannie Mae announced earlier this summer that strategic defaulters won’t qualify for new Fannie Mae-backed loans for seven years after their foreclosure, and that it will go to court when it can to recoup outstanding loan balances from borrowers.
In my next post, I’ll take a closer look at the debate over the ethical and moral issues surrounding strategic default.
Photo Caption: An empty mail box is seen at the front door of a foreclosed house in Miami Gardens, Florida September 15, 2009. REUTERS/Carlos Barria
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The forecast by “Soddy” in the 1920s was that this system of Anglo Judaic finance would last century and then become “impossible.” I suggest that the strategic default process is the first sign of the system becoming impossible. Thanks Adolph
When will AIG and Goldman Sacks be brought to court to account for the national tragedy they have caused this nation?
I worked over 10 years in banking and have held several high back office positions. During that time, I worked for four different large banks. The banking industry new very well that a collapse was coming, and that said collapse was going to hurt many people. When these issue were raised to the upper management teams, they would ignore us (we were in charge of Risk Mitigation) and would tell us not to over react. They would blow off the people that they had put in place to protect the client and the assets. Greed ruled the day and the upper management teams were more concerned with making their big bonuses than doing the right thing. The common phrase was “Get it while the getting is good and get out when it gets sour”. Now all of America is paying for their ignorance and greed and will continue to pay for many years to come. Even the government agencies that we were in contact with would not take it seriously (more often than not, those so called agencies are in the banks pockets).
The worst thing is that greed is still king and instead of forgiving the upside down mortgages as long as the people stay in their home and make the payments is not even a fathomable option. They want to have their cake and eat it too. We can all thank the banking industry and the government which is the ones ultimately responsible for letting this happen. If the government really wanted to help “The People”, they would step in, say ENOUGH IS ENOUGH, and instead of printing out more paper money for bail outs, they would make it so that properties that are upside down have the difference forgiven as long as the people stay and make the payments.
I worked over 10 years in banking and have held several high back office positions. During that time, I worked for four different large banks. The banking industry new very well that a collapse was coming, and that said collapse was going to hurt many people. When these issue were raised to the upper management teams, they would ignore us (we were in charge of Risk Mitigation) and would tell us not to over react. They would blow off the people that they had put in place to protect the client and the assets. Greed ruled the day and the upper management teams were more concerned with making their big bonuses than doing the right thing. The common phrase was “Get it while the getting is good and get out when it gets sour”. Now all of America is paying for their ignorance and greed and will continue to pay for many years to come. Even the government agencies that we were in contact with would not take it seriously (more often than not, those so called agencies are in the banks pockets).
The worst thing is that greed is still king and instead of forgiving the upside down mortgages as long as the people stay in their home and make the payments is not even a fathomable option. They want to have their cake and eat it too. We can all thank the banking industry and the government which is the ones ultimately responsible for letting this happen. If the government really wanted to help “The People”, they would step in, say ENOUGH IS ENOUGH, and instead of printing out more paper money for bail outs, they would make it so that properties that are upside down have the difference forgiven as long as the people stay and make the payments.
I would like to know where all the accountability went and why the government is not holding people accoutasble for their debt? A home is only worth as much as the money someone is whilling to pay for it and if you decided to purchase a condo and could not afford it then I say that it is not my problem. People should also be thrown in jail for walking away from a home while the rest of us law abiding citizens follow the rules. People today want instant gratification instead of saving for years and then purchasing a home and earning it. Shame on you for walking away from your responsibilities and passing your home onto the rst of the country to mop up!
- Daniel Weir
Credit. If you think it through corporate America has discovered that they can turn the people of the United States into indentured servants virtually for their entire lives by getting them to buy into inflated mortgages. Again if you look at the big picture the government has bailed out the big banks enabling them to hold onto defaulted mortgages at little to no expense.
There are at least two points of truth here; One, our home values are way overvalued. We have entered into a monopoly game where the large institutions hold the chips and we pay. If the government had left the market alone we would be seeing the property values falling and approaching the realistic level that they should be at. Two, if things turn out the way they are currently propped up to go, we will continue to see a widening between the classes. This will lead to very serious problems in the future.
When I was in school we were told the our government was a government by the people and for the people. Wrong! The proof is (this probably will not happen in our life time) if we were to take back our Goverment away from Corporations and do one thing only. Make it illegal for any corporation to own any property outside the incorporated areas of cities. We would again see affordable property. Our children would be able to afford housing.
We should pay back the government for bailing out the crooks cheats and speculators. We need a movement and solidarity, everyone underwater should let their property go and the rest of us should just stop paying any mortgage payment until the government gives us back our country.
What everyone is conveniently overlooking is that the banks were not the only ones opperating under the influence of greed and ignorance. The consumer is the one who created the implosion of the mortgage industry not the banks. It is true that the banks created the vehicle for consumers to make unwise, and at times completelty irrational, decisoions but they did not force any consumer to take any loan. This decision was the consumers alone and they saw an opportunity, just like the banks, to make quick, easy cash and let the assumption of doing so cloud their judgement. Just because a product is available doesnt mean that everyone should buy it. Lending agreements are the same as any other product consumers purchase in that they come with a price. If people werent willing to pay the price then the products wouldnt have sold and ultimately they would have been removed from the market. Sadly though, millions of people saw an opportunity to take out inflated equities and max out thier debt to get a small chunk of quick cash and they ran with it. I dont blame the banks for the problem, I blame the uneductaed consumer. I too worked in loss mitigation in the mortgage industry during the collapse and just left about 2 years ago. I spoke with these consumers daily and everyone of them knew that they were gettting in over their heads but chose to roll the dice instead of admit this to themselves at the time they made the choice to buy or refi a property. Now, the one thing that I do love about all of this are the real estate brokers who made a ton of cash during this period and began buying properties to flip. A bunch of them got in too late and got left with a bunch of properties they couldnt afford to pay for a nobody would buy. They are the ones who lied to the comsumers to make a commisson instead of protecting and educating them. The fact that the brokers were too “smart” for their own good and got screwed in the end is a sweet serving of poetic justice.
Unleash the dogs – let the IRS, FDIC, National Bank Examiners, etc really go after these corrupt banks and mortgage brokers. This was nothing more than an elaborate ponzi scheme that would make Bernie Madoff proud. Where did all this money go?!
Here’s a story of a man who was walking up a hill. My, how he enjoyed walking UP that hill, the sights he could see and the air, so fresh. Eventually, he saw that the hill was about to end and he would start to go back dow;, no longer ascending, he would be descending. This would not do, he thought. So he had someone start to build scaffolding at the top of the hill so he could continue to ascend, and enjoy the view and the fresh air.
How glorious it was, he would never have to descend again. But, little known to him; every step he took required more and more scaffolding as it had to bolster him even higher from a decline that was getting lower and lower.
Eventually, the scaffolding could no longer bear his weight. “But I have always been ascending! It won’t work for me to go back down! I shall push on.. I shall continue to go u…”
At that point, the scaffolding collapsed and the man fell so, so far.. down and down until he finally lay dead, at the bottom of the hill.
The End.
I think those that strategically default are guilty of only one thing: being gullible. The American dream is a nightmare. Work hard, become a success and buy a hou….,not anymore.
Regarding the moral question:
Homes cost so much because of a history of finance-profiteering. The banks are willing to make big loans, and therefore sellers can get big prices. This spirals upwards over time. Finally homes cost so much that you CAN NOT “save for years”. You’d be saving your whole life. (Why should a 2-bedroom apartment cost a MILLION dollars in 2010 in my neighborhood??) Banks profit from home loans, and for that they take RISK. The risk is that they might not be repaid. That risk is factored into the cost of borrowing.
However…
I get really annoyed by the fact that the fact that so many home-buyers were just trying to ride the speculation gravy train is completely ignored in the media I’ve read. EVERYBODY knew this couldn’t go on forever, and EVERYBODY was willing to play that game of musical chairs. EVERYBODY wanted to view housing (A basic human need) as a profit-game. EVERYBODY knew that one day, some people would be left holding the bag and some people would have already taken their profits. What many people DIDN’T know was that it would be so big and awful that it would drag down the entire world financial system. (Thanks to derivatives and other entanglements) The banks knew it, the people speculatively buying homes knew it, the people sitting out of the whole game (like me) knew it.
What makes me upset is that despite staying out of the mess, I ended up having to pay for it.
Banks will come after you hard with judge approved liens and the IRS can get real nasty
Am I supposed to feel sorry for a guy with a house in MI and a condo in FL?
Even so, older people should default if they Can’t handle the payments and can’t sell the house/condo – especially if they have a second one to live in.
Given the large number of retirees with MBAs there is nothing surprising about this trend.
So this guy makes $6k in Social Security and GM pension and can’t afford a $153k mortgage (plus the presumably tiny mortgage on his place in MI?) Does this guy have nothing saved? Obviously he thought it a great move if the place appreciated but now that the place has depreciated the bank and (indirectly) all of us are supposed to carry him when he chooses to default?
It strikes me as ridiculous that we blame the banks for this. Maybe in aggregate there’s some blame but certainly not as much as the individuals who make poor financial decisions themselves.
Just like the old joke regarding the 6 steps of a project, we are in steps we are in steps 5 and 6.
1 Enthusiasm
2 Disillusionment
3 Panic
4 Search for the guilty
5 Punishment of the innocent
6 Reward of the guilty
If I buy a PlayStation 3 for $350 on my credit card in March, can I default on paying off my card if Sony drops the price to $200 in May? After all, I would owe more on my PlayStation 3 than it is now worth!!
Over the past decades forces of greed and corruption successfully hyperinflated the housing market to milk the minions for cash, dumped it into deep decline (recalling the late 1980′s as a case in point), pumped it and dumped it again. These institutions are getting ready for another pump, and dump. Those at the wrong end of the pump are going to get dumped, while those who profit off those who get dumped, well, their bank accounts are going to get pumped. Get it?
Difference between what banks charge customers (you) in interest for loans (car notes, mortgages, HELOCs, etc.) and what these same banks pay customers (you) in interest for their interest bearing products (savings, CDs, IRAs, etc.) has grown so large that its ridiculous! You use to be able to get 5.25% APR compounded daily for savings accounts at most banks. Now you are lucky to get 3 tenths of one percent. Sure mortgage rates have fallen to historic lows, but, it is nearly impossible to qualify for the lowest rates.
That’s the problem right there–your grandfather’s bank in the 1960′s up through the 1990′s was satisfied paying him 1 dollar for every 3 dollars he paid it. Banks, given the right by a government they purchased and stole from us, now want you to pay them 20 or more dollars for every one dollar they pay you. And that gap keeps widening. It’s already become unsustainable as witness to the continuing crashing of our economy since mid-2008.
One day the banks and investment firms will want you to pay them 100 dollars for every one dollar they have to pay you. We also have Medical Doctors all wanting to be millionaires. And For-Profit hospitals wanting to earn billions in profit each from grotesquely overcharged products & services. And lawyers wanting to charge up to $300/hr. or more. And insurance companies also wanting to widen the gap to infinity between what they take and what they pay out in claims. And banks wanting to increase their take-in to pay-out gap to infinity too. Who is going to pay for all that river of cash the elite want flowing one-way to their ever growing giant family trusts/foundations? You guessed it–the masses–you and me! And with what incomes?
Those same entities above (including our government) want to keep our wage growth in check or shrink it via false-promise free trade agreements and an ever collapsing fiat currency. Why? We lose property; they get it cheaply. We get handed worthless fiat paper money; they get to hoard most of the world’s supply of precious metals.
We lose jobs; they get a source of cheap labor. We lose access to redress in our courts and representation from our politicians; they get little buddies of some import in their back pockets.
They don’t care about our fiat paper currency. It’s mainly used to suck value from our labor by sleigh-of-hand. They use stocks, precious metals, precious gems, real estate, durable capital goods, etc. as their medium of exchange up in their rarified air. They set their pay in fiat currency to adjust endlessly upward to stay ahead of inflation and the loss in the value of the dollar while we are told to tighten our belts, pay our taxes, and shut up!
And you wonder why our economy is failing?
“Unleash the dogs – let the IRS, FDIC, National Bank Examiners, etc really go after these corrupt banks and mortgage brokers. This was nothing more than an elaborate ponzi scheme that would make Bernie Madoff proud. Where did all this money go?!
Posted by noles2u | Report as abusive”
Noles, we all know where it went, just as CGR above and how many others have pointed out in the media and privately: the money went to those very banking/financial AND REAL ESTATE executives that were doing all of that underhanded greedy business, then it went to whereever they spent it. Of course, most of them probably did not spend it all, but still have the bulk of their stolen millions of dollars.
There are several good posts above, good insight. One of the truths is that the wealthy want a 2-class, caste system of them, and the serfs.
Personally, I think Obama is trying to fight against that, but he has a lot of people, money and power fighting against him.
Watch this: one of the real and basic tactics of the wealthy that they have been and are doing is the destruction of the public school system, by continuing to unrightfully criticize public schools and undermine public schools and public school teachers by their verbiage and especially by their crazy legislation against school teachers. The wealthy do not want a strong, affluent middle class of people that have learned to think, and to think for themselves.
The wealthy are indeed using a religion as a tool to manipulate the non-thinkers into believing public schools are inherently bad, and that everyone that does not blindly follow what the wealthy are telling them through the pulpits to do, is an evil, anti-Christian “liberal”.
The same people that so rant about the constitution would have us all believe that the constitution specifically is based on the Christian religion, when in fact it specifically prohibits the government from being involved in or supporting any religion.
Lastly, some of the same people that cry the loudest about the bailout of AIG et al are the ones that most strongly support the corporate-backed people in congress and that were in the agencies that allowed the giant crooked scheme to go on.
No cost housing stimulus
Because of negative equity most underwater homeowners can’t sell their homes and they can’t refinance. Bankruptcy significantly damages credit ratings, limiting future ability to borrow, therefore default in not an option for most homeowners. Especially for homeowners that feel a moral obligation to meet their financial commitments. The unjustness of this predicament extends to all homeowners because the millions of underwater homeowners that are in this situation are locked-out of a housing market that desperately needs more buyers.
From the mortgage holders perspective, its an issue of hoping that the underwater homeowners will continue to embrace their moral, social, and ethical values in spite of the financial hopelessness of their long term situation.
We have a serious quagmire. Until this quagmire is resolved our housing market will continue to suffer because our housing market needs more participants. Additionally, the number of bank owned properties are increasing which is forcing serious downward pressure on home values.
Here’s the solution: “Equity Warrants”.
The underwater homeowner could issue their mortgage holder an Equity Warrant to cover their negative equity thereby allowing the homeowner to sell their home even though the proceeds may not be sufficient to completely pay-off the mortgage.
This Equity Warrant would grant rights to the borrowers future equity in any home they own. When and if, the borrower’s future equity equals the amount of the warrant, the lender would have the right to convert the warrant to a note secured by the home owners real equity.
The downside to the borrower is that someday the warrant will be converted to a note that will require interest and payments. The downside to the mortgage holder is that they will not receive full payoffs for existing loans. The upside to the mortgage industry would be a substantial reduction in the number of foreclosures.
However, to soften the impact, the warrants could be sold by the mortgage holders. As an ironic twist, instead of trading Credit Default Swaps, Wall Street could trade Equity Warrants.
This this system would create millions of potential homebuyers, thereby improving our economy.
What would it take to make this happen? An act of congress to require mortgage holders to accept Equity Warrants from underwater homeowners.
@ consult, i dont think ive ever read from anyone with such a poor understanding of economics. Its not like the banks came out of this with all their limbs, the problem here wasnt as much institutional as it was a combination of a lack of accountability and a poorly formatted corporate managing structure. The problem was bankers who were taking advantages of sub prime mortgages knew that in the event of defaults they would likely no longer be holding teir crrent positions, no longer be in the banking sector or no longer be working when everyone realized the early defaults indicated an unravelling of poorly planned and distributed mortgages wernt an anomoly. People have to understand that corporations arnt evil, as they can only represent the people that are currently in charge of them. The people in charge today arnt for the most part the same people whos shortsighted vision halted the global economy at a time when some are easily drawn into scapegoatism.
So let me get this straight…..
$6000 a month pension from a company the taxpayers had to bail out
$500 dollars a month for a Florida condo after receiving rent payment
A primary mortgage that is smaller than the condo mortgage.
So how is it that this man can’t stay afloat? We aren’t hearing the rest of the story. The condo is only costing him $500 a month and if he uses a good accountant he should also get some nice deductions for his monthly dues and other associated costs pertaining to that rental.
As a Florida condo owner I’m not too amused that my tax dollars are paying to bail out his pensioner, my Social Security dollars are paying for his SS pension that wasn’t mentioned in the article??? and now my property will also lose value if he walks away from it.
Sounds to me like another baby boomer that thought the golden fleece was his to take.
This is so complex an issue, and it is very unhelpful to try to blame the “uneducated consumer” or the “predatory lenders” or “Carter’s CRA” or any other specific conspiratorial villain.
The best analogy I can think of is the brazil nut tree and the strangler fig. Look it up if you need to.
You’ve got this big strong system of supply and demand that is the rock solid backbone of an economy. Sooner or later, invisible entities attach themselves to the process, siphoning off life and growing… until you end up with a dead tree and a thriving, towering parasite which has the general shape of size of the original tree. Blaming the bird that dropped the strangler seed can’t bring the original tree back. History holds that no lesson will be learned.
Many people and organizations contribute to this, both by acting, and not acting. Can you see the forest for the trees?
Exactly BDY2010. it was a dang poor example, but probably one the lowest income examples. There are many ‘joneses’ walking away from million dollar mortgages.
This guy also has his 401 and more… so I bet any other pensioners who live for a year on what he gets in pension a month would like a piece of his ‘walked away scotfree’ behind….
Unbelievable how few people are tied to mortgages. isn’t there such a thing as a ‘contract’ anymore?
Interesting and true article. Thanks for posting.
I strongly disagree with some postings here that say banks are not to blame. The FED is to blame and so are the banks.
Of course, the root of the problem is fiat money. But that is always conveniently ignored. Until the FED is audited, we are simply hacking at the branches of the tree. If we want to get to the root of problem, then let’s AUDIT THE FED.
The banks, mortgage brokers, realtors, appraisers, ratings agencies, and regulators all share some of the blame. But ultimately so do the people who chose to purchase at these inflated prices. In most cases they knew it was a foolish decision when they bought in, but were counting on appreciation to bail them out (and generate a tidy profit).
I have sympathy for people who lose their homes because they lose their jobs. I have no sympathy for self-styled “investors” who got burnt by a bad bet. Hope the banks go after their other assets.
Dear theobvious: As a matter of fact I have a Bachelor of Science in Business and Economics and quite likely more astute than you may know. The problems we are discussing have been building for years which leads me to the point that I would like to educate you. First look at the current world society starting today and go back to the great depression. At that point I would like to take you back 1500 years. The human race has lived in a cycle of approximately 50 years over this time and I suspect this cycle has existed in many societies of the human race extending back many thousands of years.
At the beginning of this cycle prices are stable and reasonable. As time passes we would experience inflation. Towards the end of the fifty years we would begin to experience hyper inflation followed by a collapse. In the past this collapse has always been followed by a violent period in our history.
After the great depression our governments and leaders have manipulated the markets and societies (the people) and in doing so have put off the correction that is due.
Well guess what, if you are reading in the news now you will notice that all of a sudden our leaders are worried about disinflation. Another word for disinflation is depression!
You can dispute my economic knowledge but watch. Yes consumers have been just as greedy as our aristocracy. We follow by example and something is wrong here. What you want to watch is that we will continue to see the markets decline. We are in an extended bear market and a correction is coming that is going to affect you me and everyone. If the governments are able to plug the holes in the bubble that burst it will only put off the inevitable.
Start planning for the future now, look to the past and see that we haven’t learned our lessons yet. As disinflation grows the merchants will keep less in stock. Our stores will begin to look like some of the poorer countries. We are going to find ourselves being more concerned about our next meal and guess what is going to happen in China. The first time in their lives and for many of them this is the first time in their history that they don’t have to count their grains of rice. They have enough to eat and even have disposable incomes. As we buy less of their goods and products they will all of a sudden find themselves in poverty again. They will not be happy with going hungry and as unrest grows know one truth. No government will take their blame but will blame another government. theobvious will happen. We are heading into world war lll. Guaranteed within the next ten years but my guess is theobvious will be sooner.
Sounds to me like just another way the baby boomers are willing to screw everyone who follows in their selfish foot steps, even their own flesh and blood!
Sounds to me like just another way the baby boomers are willing to screw everyone who follows in their selfish foot steps, even their own flesh and blood!
I’m 54 years old and am foreclosing. I’ll de dead and gone before my home returns to it’s original sales price. I see Fannie Mae/Mack as criminal in that they knew exactly how their fraudulent loans would effect the nation. I have no guilt or embarrassment. I am simply happy that my attorney protected me from future harassment by those very men in Fannie Mae/Mac who took $90 million in bonus money. I also laugh out loud when I think of the look on their faces when American home owners shot them the bird!!!
I purchased my home because I thought it was worth the asking price to me. It makes no difference to me what anyone says that home is worth; I pay what I agreed to pay and eventually it will be mine. As for the assessment, I only wish my state would reassess my home downward. My assessment has been going up $40,000 per year for the last ten years and is now probably double what the home is worth on the market. My property taxes are now $5,000 per year. If my property had been reassessed downward as it should have been they would probably be in the neighborhood of $3,000. The only people I believe have a reason to complain about falling property values are those who were treating their homes as bank accounts instead of as shelter and those who took out variable-rate loans that were guaranteed to readjust upwards, and in both cases they should have known what they were doing.