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CAPITAL REGION
Counties see drop in mortgage tax receipts Local officials edgy about shaky economy
BY MARK ROBARGE Gazette Reporter

   A nationwide slump in home sales and the stock market turbulence surrounding the mortgage market are making local finance officers a bit edgy, or at least more conservative in budgeting, even though in the short run the effects are hard to read.
   In Glenville, for example, the fi scal officer says taxpayers should not feel any impact from a sharp decline in mortgage recording tax revenue, which is tied to house sales.
   Through July, the town has received about one-third less revenue — the town’s share of a 1.25 percent tax on all new mortgages that is collected and distributed by Schenectady County — than it did in the same period last year. Despite that $92,000 drop, however, town Comptroller George Phillips said the town should easily exceed the $750,000 in revenue it budgeted for the year.
   “We budgeted conservatively based on what could be happening on the mortgage tax because it’s a situation where it can go up and down volatilely,” Phillips said.
   Mortgage taxes makes up about 7 percent of the total revenue in the town’s $10.7 million budget for 2007.
   “It’s a significant piece, but it’s not earth-shattering,” he said.
   But it’s large enough that Phillips said its not worth the gamble of trying to predict how much the town could collect and add as much as possible to the budget.
   “It can [hurt taxpayers] if you budget it aggressively instead of adjusting for the reality of what’s going on in the market,” he said. “It’s hard to predict what’s going to happen in the market, so you have to be conservative with it.”
   Phillips said slumping housing sales may play a role in the sharp drop in mortgage tax revenue. Housing sales in Schenectady County for the first half of the year were down by 14 percent from 2006, according to the Greater Capital Association of Realtors
   Another factor, he surmised, may be the collapse of the $1.3 billion market for subprime mortgages. These mortgages often required little if any down payment and included smaller initial payments and were made available primarily to people with poor credit. Some couldn’t afford to make payments that rose when the lender increased the variable interest rate.
   Numbers from area counties reflect the volatility that concerns Phillips. Fulton County has collected about $45,000 less in mortgage taxes this year, a drop of about 15 percent, according to county Treasurer Bruce Ellsworth. Montgomery County is about on par with last year, according to county Treasurer Shawn Bowerman, even though home sales in the first half of the year were also down by 14 percent.
   The volatility can even be seen from month to month. Saratoga County is one of only two of the six counties served by the Greater Capital Association of Realtors in which home sales have not declined this year — through June, 1,434 homes had been sold in 2007, compared to 1,433 for the same period in 2006. But County Treasurer Samuel Pitcherelle said the $4.8 million in mortgage taxes collected from October 2006 through March 2007 was down 23.5 percent from the same period a year earlier.
   However, the $3.8 million collected from April through July has the county on pace to exceed the amount collected from April to September 2006 by as much as 20 percent, Pitcherelle explained.
   Schoharie County has apparently been immune to the decline. County Treasurer William Cherry said the county has collected about $219,000 so far this year, a pace that would put it well over the $300,000 budgeted for the year. First-half home sales in that county were also down 14 percent, but Cherry surmised that the county has not felt a pinch in mortgage tax revenues because the average price is up about 5 percent for the year, to $152,739.
   “That must be it,” he said.
   However, Cherry said he doesn’t think the county is out of the woods yet; he’s still waiting for the true backlash of the subprime market collapse.
   “With this credit crunch, I think there is going to be less people refinancing, there is going to be less mortgages available, but I think it’s too early to see that,” he said. “There’s been a real estate downturn to some extent, but this new credit crisis, that’s fairly recent, within the past few months. I don’t think we’re going to see that until we’re more like six months out.”
   The answer, at least in the mind of Phillips, Glenville’s comptroller, is to remain conservative.
   “Next year, just to adjust for the fact that the market is changing, we’ll probably be downward adjusting even more,” he said.

  
  
  

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“It can [hurt taxpayers] if you budget it aggressively instead of adjusting for the reality of what’s going on in the market,” he said. “It’s hard to predict what’s going to happen in the market, so you have to be conservative with it.”

That's how we got in this mess....reality as opposed to "what I deserve".....or...."What is value to me?"

This is just the ebb and flow of economics. For a few years it's a buyers market. Then it switches gears and it becomes a sellers market. Right now we are in a buyers market phase. This too shall pass. Ya just need to use some 'personal' common sense and live within your means.