Why ALL Real Estate Will Be Worth ZERO...
My guess is my business partner pays well over half a million dollars per year in property taxes alone....over $100K just on his private homes. Up until recently, it wasn't a big deal.
On one of his commercial properties, the value has dropped well over 50% in the past few years. Well over 50%, even the tax value has dropped as well.....YET the property taxes has INCREASED over the same period.....and now, the building is not generation suffcient income to simply pay the taxes and maintenance....NOT EVEN FACTORING ANY MORTGAGE IF THERE WAS ANY.....
Once a piece of real estate's cash flow drops below its ability to cover property taxes and maintenance, the property has ZERO economic value. The property my partner owns is now at that position. In other words, the property taxes on the building is more than the value of the building. Therefore, basically the government has become the landlord on that building.
The same gentleman who owns that building just handed back to the state he lives in a piece of land on the water that he paid over a million dollars cash a few years ago simply because the land couldn't cover the taxes of over $50K per year. The annual taxes on the land made the land have zero economic value.
Soon homes will be no different. In my neighborhood, annual property taxes are routinely over $15K per year and approach $50K for the nicer homes. Simply maintaining, insuring, and paying taxes costs the typical homeowner about $2K per month. That is a decent rent payment in many areas and property taxes are rising rapidly in our city even though values are dropping.
As governments run out of money, they will be forced to tax homes even more. Property taxes are a signifcant source of revenues for governments around the nation. We are already at the point on vacant land and commercial property where annual taxes paid exceed the value or income generating capabilities of the property, In those cases, the real estate is worthless.
Going forward, this will spread to homes....like it already has in much of Detroit and the rust belt. As more and more get fired, more and more go bankrupt, the taxes receipts will continue to decline and government will have to increase the taxes on those who can pay.....until there are so few left that government will have effectively consumed everyone's money.
It is not the end of the world....simply the mathematical consequence of Benny Bin Laden's Zombulation Policy of paying savers nothing, charging RELATIVELY criminal interest rates based on current savings rates, and cutting back credit on the private sector.....a private sector burdened with tens of trillions of dollars of EXISTING debt sucking the cashflow out of the system.
It truly is amazing how the Gardner Bros stand there silently as America gets Zombulated....don't they remember what their role as Fools started out as?