We looked at a home in foreclosure recently (the bank wants $64,000...the previous owners trashed it...but it’s in a neighborhood of $200-300 thousand dollar homes.
The taxes, we were informed, would not be reassessed downward, at least not this year. So the taxes on the property will add over $400 to the mortgage and insurance.
No wonder they’re having a hard time moving foreclosed property!
In our county (Riverside) every homeowner got a letter from the assessor's office either revising or leaving as-is. Ours stayed as is, because we've owned the home for 22 years and we're still undervalued compared to current prices.
But what will happen is that the value of your neighbors houses will drop. If they try to get a line of credit, they will be told their house is worth less due to the foreclosure. If several happen in the neighborhood, their can be a substantial decrease. There were three foreclosures or distressed sales in our immediate neighborhood. Our house value dropped 35% when we went to get a line of credit a year ago. I'd hate to see the value today. You can say part of that is due to the market, but the market is down because of the flood of undervalued houses.
I have seen banks buy houses for $80k and sell them for $35. Some of them aren't trashed or missing plumbing, but just need updating.
Real estate taxes are assessed in arrears, the tax money due in 2009 is for the tax bill accrued in 2008.