With increasing warnings of an economic meltdown due to the subprime crisis, the best thing Texas government entities could do is provide property tax relief, especially since Texas has the 5th highest foreclosure rate in the nation, which is increasing at a staggering annual rate of more than 60 percent in some counties like Collin.
This is partly due to Texas having the nation’s 13th highest property tax burden – and the 2nd highest property taxes as a percentage of the average home value. Unlike the mortgage (at least if its fixed), property taxes are particularly culpable in the foreclosure crisis because they go up uncontrollably, primarily due to skyrocketing appraisals.
Some of these foreclosures are actually performed by Texas counties for failure to pay property taxes, but even those foreclosures by mortgage companies are partly due to the property tax burden since every dollar paid in property taxes is one less dollar to pay off the mortgage.
The crisis is particularly severe in high-growth Texas counties. In 2006, the foreclosure rate in Collin County grew by a whopping 61 percent. Overall in the DFW metroplex, 38,909 homes were foreclosed upon, a 19 percent increase over 2005.Texas now has the highest percentage of homes in foreclosure since the 1980’s oil bust.
Things are also grim in the Houston area. Harris County has a foreclosure rate 2.3 times the national average while Foret Bend County’s rate is more than four times the national average at 1 in every 247 homes.
With 100 school districts seeking bond measures in November, some of which will result in an even heavier property tax burden, it is time for elected officials and voters throughout the state to consider whether whether the weight of big government is turning too many Texans’ dreams of home ownership into a nightmare and ultimately threatening our entire economy that is built on sound credit.