Providence's Finance Committee Votes in Favor of Tax Hike

Even Higher Rate Increase for Small Landlords

On July 14^th, the Providence City Council's Finance Committee voted to increase the property tax rates for residential and commercial property and eliminate the homestead exemption for owners of 1 – 5 non-owner occupied properties, (July 16^th  and July 20^th articles in the Providence Journal).  The full City Council will vote on July 26^th.

Details of the Proposed Increases:

25.5% increase in residential property tax rate: The residential property tax rate would increase from $24.21 per $1,000 of assessed value to $30.38.

Additional 33% rate hike for small landlords:  The Council will vote to repeal a homestead exemption for non-owner occupied rental properties of 1 – 5 units.  If approved, this will result in an additional 33% increase in the property tax rate for owners of these properties. This will mean a grand total of a 58.5% tax increase for some landlords.

17.8% increase in commercial property tax rate:   The commercial property tax rate would  raise the commercial rate from $28.60 per $1,000 of value to $33.70

When will these increases take effect?   Immediately? Retroactively? Property owners will receive revised tax bills in August, (July 16^th Providence Journal). 

Mayor Scott Avedisian in studio discussing T.F. Green's airport expansion plan.

Mayor Avedisian was a great guest explaining for almost the full hour about how the expansion of the T.F. Green runway was originally proposed a decade ago, and the positive and negative effects it will have on Warwick.

One thing we all learned was the train station stop at the airport is the closest air to rail connection in the country.  Hopefully this will attract commuters to Boston and other rail points to see the value in our housing and look to move the area.

Choosing a Smaller House Doesn't Always Mean You are an Empty Nester.

I was interviewed last week by Cheryl Phillips, Real Estate Contributor to GoLocalProv.com on the growing trend in buyers looking for smaller homes, regardless of how many people are living there.

"…Downsizing isn't just for empty nesters anymore. More people, including first time homebuyers, are moving into smaller homes and learning how to live with less. 

Just how much home space do you need? Can you live with fewer possessions? And what do you do with the stuff that takes up too much space?

These questions are important in a time when making a home buying decision is based on needs rather than wants…"

Click here for the rest of the article

The graph below represents the drop in 30 year fixed mortgage rates since April 21, 2010. Incredible. But it's also a reflection of our lagging economy and global fears of the world's economic stability.

Tax Credit Extension Would Allow Three More Months to Get Credits.

To qualify for the credit, buyers had to be under contract for a purchase by April 30. But under current law they have until June 30 to close on the sale.

Under the amendment, they would get an extra three months to close — useful for those who are experiencing delays in getting their mortgages approved or are somehow being affected by the many other issues that can arise and prevent a closing from occurring on time. The amendment would apply solely to buyers who entered a purchase contract by April 30.

"Because of this program's popularity and the time it takes to complete transactions such as short sales, I led the effort today to extend the closing deadline for this tax credit through September of this year — allowing lenders more time to clear a backlog of 180,000 potential home buyers nationwide," said Senate Majority Leader Harry Reid, in a news release after the amendment passed in the Senate this week.

The house had passed their own bill earlier in the year and now the two must iron out their differences.

My Take: Mixed

The Home Buyers tax credit was undoubtedly the shot in the arm that the housing market needed at the time.  Part one of the program which ended in November of last year, and the extension through this April which also added a credit for current homeowners was very successful. 

The reason stated to request an extension of the payout deadline was a backlog of thousands of mortgages that could not close on time.  Specifically noted where short sales and foreclosures. To take the first point regarding a backlog of volume, I completely disagree.  I consider 2005 to be the height of the bull market for real estate.  From January 1, 2005 to June 22, 2005 we had 4134 single-family homes at the closing table.  The same time this year there were just 3216.  So in Rhode Island's case anyway, it wasn't because of an incredible burden of volume.

Regarding short sales and foreclosures and the desire to give extra time to collect because of the delayed closings; I personally think that risk is part and parcel of buying such a property.  It is disclosed from the beginning that the closing date on a short sale or foreclosure is absolutely not written in stone.  People take the risk of a short sale or foreclosure because they are buying a property below market value.  The risk is the uncertainty of the closing date.  In my opinion the buyer has already been compensated, and fully knew the risks of going into contract on this kind of property.

We can do more with this money.

45 Years and Counting for the Gaspee Day Parade

From my Warwick, Rhode Island Page:

"Warwick holds claim to the first violent act against British rule when in 1772 local tax revolting patriots boarded the British ship Gaspee and destroyed it.  In history this was known as The Gaspee Affair, the first bloodshed of the American Revolutionary War.  Each year the Gaspee Day parade in Warwick is one of the state's most attended summer activities.  Participants in  full colonial dress march in an enormous parade through the streets of Pawtuxet and Gaspee neighborhoods."

Click an image below to view the pictures from the Gaspee Day Parade