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In a sign that the housing bubble has hit outside of Chicago, the property values fell drastically and schools and local governments are at a loss to fill the hole after a homes value fell from 400 million dollars to 120 thousand dollars overnight.

This week, however, things went downhill fast, as school systems and towns throughout Porter County, Ind., scrambled to fill gaping budget holes resulting from a colossal goof in the tax valuation of a modest two-bedroom house in Valparaiso.

And on Friday, the owner of the wildly overvalued ranch was scratching his head, wondering if it’s too late to sell.

“We’d sell it for 5 percent of that!” said Dennis Charnetzky, 32, who heard about the mistake that afternoon while working at his home remodeling business.

Pausing, he reconsidered: “At least I don’t owe $8 million in taxes.”

In October 2004, give or take, a real estate agent–or maybe a title company employee–checking on the value of the Valparaiso property on a county computer system apparently tapped the wrong key. Officials figure it was an accident.

The unidentified user stumbled onto a restricted screen, and then changed the value of the $120,000 house in the 1100 block of Chicago Street to $400 million. via the Chicago Tribune

We are so worried about hyping the Housing Bubble that I had to have some fun with you. It is interesting in this day and age how a large the ramifications of a single clerical error in a computer has created such trauma for a community.

So, guided by its computers, the county expected to collect taxes on this startling new abundance, and other taxpayers were asked to pay a little less. Budgets were built around the phantom figures.

“And that’s when the poop hit the fan,” the treasurer said.

Eighteen taxing districts from the city of Valparaiso, the county and the Valparaiso schools now find themselves in the position of having to return to the county an advance of $3,090,287.33 that was never collected.

That’s $1,700,192.51 from the Valparaiso Community Schools, which had counted on the money for their $38 million 2006 budget.

It’s also $1,045,527.33 back from the city of Valparaiso (2006 budget: $21.3 million), which had been mounting an aggressive city beautification effort, complete with street resurfacing and sidewalk repairs

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