Morris News Service
ATLANTA --- A new report shows Georgia homeowners are projected to lose $13 billion in property values in the next two years.
The report released this week by Georgia Watch, a consumer-advocacy organization that is lobbying for stricter controls on mortgage lending, calls the drop in property values a "spillover" from the record number of foreclosures.
According to the report, just in 2009, 1.8 million Georgia homes dropped in value by an average of $1,920. By 2012, another 1 million homes will lose value, and the average drop statewide will reach $4,657.
"The report paints a horrifying picture of the effects the foreclosure crisis has had on our state's families and economy," said Georgia Watch Deputy Director Danny Orrock. "In order to combat future catastrophe, state legislators must enact standards on how the riskiest loans are written, an issue we'll examine with the second part of this report."
Homeowners with no plans to sell won't feel the impact immediately, but local governments will as they see their tax digest shrink. Property-tax digests rarely decline much, so local governments have usually been able to count on a steady stream of property taxes, said Otis White, the president of Civic Strategies and a consultant to many local governments throughout the South. The current decline is the largest since the Great Depression and presents a headache for city and county commissioners.
"You really only have two choices: Cut services or service levels, or raise taxes," he said. "I think governments are doing both."
For example, garbage collection might drop to once a week or fire department response times might increase by a few minutes as fire stations are closed.
Local governments are bracing for a bigger blow as commercial real estate also drops in value because of a rash of retailers going bankrupt, he said.
But the Georgia Association of Realtors hopes homeowners don't wind up suffering as a result of either class of property decline.
"We don't necessarily think that homeowners should have to pay higher taxes because local governments haven't made their budgets," said Dana Bauguss, the president of the association and a broker in metro Atlanta.
