Property Tax Millstone

"If you have to ask about the taxes . . ."

Where: Park Lane in Minneapolis

What/Where: 4 BR/BA Rambler with over 4,000 square feet just southeast of Minneapolis' Cedar Lake

How much: $799k list price

Who (listed by): Agent/Broker -- Robert Landis

What jumps out at me skimming the stats on this new listing (actually, a cancel-and-relist) isn't the great location, the gorgeous .32 acre lot, or the surprising number of square feet (4,000, but it sure doesn't look it).

Rather, it's the $19,578(!) annual property tax bill that comes with!

That's based on an estimated property tax value of almost $1.2 million, which is sure to go down.

But not until 2011, because of the lag in how property taxes are determined.

In the meantime, the ultimate Buyer is going to have to have some pretty good cash flow.

Call it the housing market version of J.P. Morgan's famous line: 'if you have to ask how much the property taxes are . . . you can't afford them."

P.S.: All levity aside, these kinds of ball-and-chain tax bills are going to present increasingly steep obstacles selling upper bracket homes -- especially in high-tax cities like Minneapolis.

PPS: A cancel-and-relist is when the owner cancels the listing and the Realtor brings it back on new. That's standard procedure after a home's been on awhile -- in this case, since August. It's also standard practice to package that with a major price reduction, also true in this case: the owner dropped the price $100k.

The giveaway that this home has been on the market since Summer? The (very) green grass.

Housing Bears Shift Arguments

Key Factors Now: Job Losses, Historical Precedent

When it comes to predicting housing prices, I'm officially agnostic: in the short run, I have no idea what they're going to do (and neither does anyone else).

In the long run, I'm on record forecasting that they'll be higher: historically, at least, that's been a very safe bet (sort of the housing equivalent of JP Morgan's prediction about the stock market: 'it will fluctuate').

However, now that housing prices nationally have dropped about 30% from the peak, housing bears have been deprived of perhaps their biggest "gun": the argument that housing prices are still above historical trendline -- sometimes way above.

In fact, depending on the city, housing prices have reverted to levels prevailing in 2003, 2000 -- or even earlier (take a look at Detroit or Cleveland).

So, what arguments do housing bears cite now when they predict future housing market deterioration? Two things:

1) Recession-driven job losses; and 2) historical precedent suggesting that housing markets rebound slowly -- typically, much more slowly than the stock market, for example.

The first argument seems fair; the second, more in the spirit of "prediction by extrapolation."

After all, very few prognosticators called the current market accurately by looking in the rear-view mirror.