Redress News Wrap – Large Increases in Real Estate Assessments Put Many in Jeopardy of Tax Foreclosures in Milwaukee

Thousands of people in the Black and Hispanic communities in Milwaukee have managed to get a foothold during this hot housing market, but many now fear losing their homes to property tax foreclosures. The very high increases in the assessed values of their homes by the assessor’s office have not been clearly explained to city residents. The increases determined by the city don’t seem to match what they see as the market value of their homes. 

As the latest housing assessment came in the mail in Milwaukee, residents began to contact their elected officials to say they were worried about the large increases in property taxes that would put many of them in jeopardy of losing their homes to property tax foreclosures. A significant number of the most concerned residents were retirees who are now on a fixed income and can’t necessarily afford to pay much more than they currently do in property taxes. They paid their mortgages off years ago and know that they can’t lose their homes to a bank foreclosure. This is eerily reminiscent of the situation in 2006 when large assessment increases happened during a similar busy housing market. To some, this seems to be history repeating itself as thousands lost their homes to tax foreclosures back then. 

A hot housing market has led to a large increase in home values nationwide. The price of homes increased by nearly 20 percent from the first quarter of 2021 to the first quarter of 2022 according to the Federal Housing Finance Agency (FHFA) House Price Index.

For those looking to sell, this was a positive outcome during the pandemic. It also led to a large increase in assessed value of homes. The low interest rates and tremendously competitive housing market led to the overvaluation of homes across the country. CoreLogic, a leader in housing property data, analyzed 400 metro areas in the country in May. They found that 67.9 percent of housing markets were overvalued. In the same study they found just one fifth of the markets were normal and less than eight percent were undervalued.

One city’s assessed value data has caused consternation and a fear of homeowners losing their property due to increased property taxes. As property tax assessments came out this spring in Milwaukee, there was not only an increase in assessed value nearly 18 percent, there were stark disparities by race of homeowners. This was driven by the increase in houses being sold over the past two years in the city. In 2019 the median home sale price in Milwaukee was $138,000 and it increased to $172,000 by 2021. The average assessment went from $131,166 in 2021 to $154,469 in 2022. 

Of the eight aldermanic districts that saw increases above 20 percent, six were primarily Black districts and two were primarily Hispanic districts. These districts are also some of the lowest income areas in the city. The three lowest increases were in neighborhoods where Whites were the largest racial and ethnic group. 

Milwaukee Commissioner of Assessments Nicole Larsen, told residents to not fear large increases in property taxes due to the increased valuation. “If your increase is at or below that 13.23 percent increase, you probably won’t see a tax increase.” This was not comforting to those who realized their districts saw increases much higher than that threshold. Only two districts were below that mark. 

For those not wishing to sell their homes in a market that is now cooling significantly, there will most assuredly be a large increase in their property tax bill. With inflation being what it is, this will add an extra burden to those lower income residents who are already dealing with record high gas prices, extremely large increases in food prices not to mention the probable increases in the cost of heating their homes when the temperatures drop again later this year.

There were similar large increases in assessed values in 2006 prior to the housing bubble bursting. This led to nearly 10 million homeowners losing their homes to foreclosure between 2006 and 2014. The increase in home values from 2019-2020 is the largest year-over-year increase since 2005-2006. The city will levy taxes later this year based on these spring assessments. If the past is an indicator, the poorest residents in mostly Black and Hispanic neighborhoods will suffer the worst consequences of a hot housing market that they generally did not participate in. 

Unless policies and practices are implemented to redress the current overvaluation, and uneven assessments based on race in Milwaukee, more and more residents will be vulnerable to losing their homes to tax foreclosures. This will impact homeowners as well as those in the Black community, where 73 percent are renters who could lose their residence if landlords are foreclosed on. 

At the Redress Movement, we are interested in building community power to address these and other issues related to segregation by agitating for actions of redress responsive to segregation’s history. To engage with more news stories related to redress and to hear more about our work, sign up to join our mailing list and keep an eye out for news updates in this section of our website. Also be sure to explore our resource pages where you can learn more about the history and consequences of segregation, read through the vocabulary of segregation, or use our Citizens’ Guide to discover how segregation affects your community.

– The Redress Movement Research Team