A surprise on the way for Temecula homeowners?

The housing recovery has made a lot of folks in Riverside County very happy. Temecula Homeowners finally have some equity they can talk about at neighborhood block parties. Realtors, Lenders, Escrow and Title folks are certainly happier with the higher sales prices and loan amounts.

But who in Riverside County have the biggest smiles?

It has to be Larry Ward and Don Kent.

Who are Larry and Don?

Larry is the the Riverside County Tax Assessor and Don is the Riverside County Tax Collector.

The increase in housing values will now let them start to refill the county tax coffers that were pretty much sucked dry when home values started to tank in 2008.

So assuming that assessed values mirror market values, Temecula  homeowners are likely to get a letter informing them of their good fortune; higher property taxes.

In Riverside County the tax year runs from July 1 to June 30 and taxes are paid in two installments. Due in February and September, (subject to penalty after April 10 and December 10).  It takes awhile for the County to re-assess all the properties, so the notices of increased taxes  are likely to be received sometime  in Q4.

What could it mean to homeowners?

Consider this hypothetical example. In tax year 2012-013 a home was assessed at $300,000. If Trulia was correct and home values in Riverside County did in increase 18.1%, the new assessed value would be $354,000. Let’s assume a basic tax rate of 1.03779% (special assessments and Mello Roos stay the same regardless of assessed value).

In this instance, the Temecula homeowner will likely receive a tax bill for an additional $560.77 right about the time they budget for the holidays.  Homeowners will be required to cut a check prior to December 10 for the taxes to remain current ($280.38 if divided between each installment)

If the homeowner impounds their taxes and pays the additional tax when due, they will see their payments increase $46.73/mo. If they don’t pay the lump sum their lender will pay the taxes for them. However, in order to bring their impound account balance to the mandated level, the homeowner can expect their payment to increase by an amount sufficient to cover the increased taxes and to reimburse the lender for advancing the tax payment on their behalf, or about $93.46/mo until the advancement is repaid.

These increases are not huge, but for many families any increase could negatively affect their lifestyles. An unexpected increase can also wreak havoc on holiday budgets.

If home values continue to climb, this scenario could play out every year until property taxes reach their pre-bubble levels.

The good news?

It’s an opportunity for us to prove we’re the area experts and put out the information in our farming materials and newsletters. We can’t change how Larry and Don will assess their properties, but we can let homeowners know what might be coming.

Of course I could be wrong