Friday, January 30, 2009

Charlottesville Redefines "Healthy"; Albemarle County Property Tax Values Drop

UPDATE at bottom of post.

The 2009 Property Tax Assessments were mailed today. The notice on the City's website trumpets "New Assessments Show a Continued Healthy Market."

If by "healthy" the City is referring to the fact that this is a terrific place to live, well, sure. But as there is currently a couple of years worth of inventory for sale in this market and more being put up daily--well, "healthy" isn't the first word that comes to mind. "Asking" and "sold" prices have farther to fall...and for some sellers, this is the opposite of "healthy."

The Daily Progress has another view of the situation, entitling an article "City's Assessment Growth Stagnates."

"Real-estate assessment growth is slowing to a near halt in Charlottesville, with the average existing home and commercial property values increasing only 1.69 percent last year after seeing double-digit growth just a few years ago."

The DP reports on the County's tax assessments as well: "Albemarle Assessed Property Values Drop":

"Overall assessed property values in Albemarle County have declined for the first time in at least a quarter of a century."

"Excluding new construction, 2009 property values declined 2.59 percent from 2008 values, according to assessments being mailed to property owners today."

Albemarle reassesses property every two years:

2003 was up 18.74% from 2001
2005 was up 27.21% from 2003
2007 was up 29.08% from 2005

Who coulda known the rise wouldn't continue?!

BTW? Tax assessments mean little to buyers, except for what they're going to owe if they purchase. Tax assessments mean much more to sellers, and to sellers' real estate agents. Ditto "sold comps."

Because this market has buyers coming from other places, buyers are very interested in the 25% decline in values that has already happened nationwide, where home prices are at 2004 levels. And buyers are interested in the fact that in major metropolitan areas, home prices are in freefall. The Charlottesville MSA isn't a major met area; it just has the prices of one.

Buyers are also interested in these numbers:
  • The national median price is $175,400
  • The median price in the south is +/- $155,000
The median price for a sold single family home in December 2008:
  • In the City $290K
  • In the County $390K
There are hundreds and hundreds of unsold properties in the City, County, and in the region with asking prices far more than this. Median prices might actually be higher if it weren't so darn hard to get a Jumbo....

UPDATE 1/30/09 evening:

The WSJ reports "Calls Grow to Cap Property Taxes," which includes issues many local homedebtors will find familiar:

"The values that cities and towns use to calculate tax bills are often based on house sales a year or more before the bills are issued. That means that many recent bills don't take into account the meltdown of 2008....In addition, cities...are facing a barrage of recession-related financial pressures, including cuts in state aid and investment losses. That is tempting many to look for added revenue from property taxes, one of the few revenue sources they control."

Locally, NBC29 reports on the story, and has a comment by Realtor Keith Davis, who says (echoing what we mentioned, above) "These are not appraisals, this is not a statement by the city of how much your house should sell for and your price indeed has gone up."

And don't miss the post and comments over at Cvillenews.

DP: City's Assessment Growth Stagnates
DP: Albemarle's Assessed Property Values Drop
City of Charlottesville Press Release

County of Albemarle Press Release
Albemarle's "State of the County" Bulletin


Anonymous said...

Your analysis is spot on. I am a BUYER with cash looking for a reasonable price in a depressed market. I am willing to risk further downturn. However, I am not willing to start at 2006 bubble prices.

I own a nice home in a close Virginia city which will get about 50% of a comparable C'ville list price. What gives?

Anonymous said...

Same here Anon. I've been reading this blog and watching this market regularly since August, and frankly, I've not noted any significant decline in listing prices, except for a few places. I'm looking at $750k+. And some of these homes have been on the market for over a year?! There seems to be quite a pile-up in unsold homes -- something has to give. I'm also astonished by the number of realtors here who continue to think this is a rational market at 2006 prices -- and, of course, a great time to buy. As soon as I hear this mantra, I make a note to eliminate them from consideration as a potential buyer's agent.

Anonymous said...

The two new lines around here are "the economy is going to turn in the second half of 2009" and "you better buy now because interest rates are going to go up in six months."

Even with the stimulus plan, the economy will stay bad for a long while.

Interest rates will probably be "fixed" lower, b/c otherwise nobody will be able to buy.

Have you been watching the new listings? A couple hundred since January began.

Real estate agents around here are now seem not only clueless but desperate.

What's the excuse for sellers? Just clinging to the past?

Anonymous said...

I have been watching this market also, and the only conclusion that I can draw is that there are a ton of "underwater" sellers. There is no other explanation except greed and ignorance, and I would really like to believe that people in Charlottesville are more savvy than that.
I won't go into the whole hubris theory, but you certainly wonder with the prices that are currently out there.

A Buyer said...

We've been "actively" looking since last Spring, have the preapproval letter, etc., We're ready to move. (And interest rates are even lower now). Except that there's nothing "good" enough to actually compell shelling out the half mil + that would be our comfortable price range. In other places in Virginia this gets you a great house among "existing homes" (we're uninterested in "new contstruction" due to poor materials and imho aesthetics and even worse inflated prices).

We see houses that are 1M that should be 700 or less, houses that start with 7's but should start with 5's, 5's that should be 3's, 3's that should start with 1's. We've watched some houses have price drops but it's not a market shift.

My husband got into researching the properties online. There probably are a LOT of sellers who are underwater. But you can also find houses that have had owners for 15, 20, 30 years, and they are offered at the same kooky price point as the others because the real estate agent has done the "market analysis" and seen what houses USED TO sell for. When there's a drop in price, it's usually 5%, just enough to catch your eye.

What sellers and the realtors don't seem to understand is that a house that sold during the bubble years is worth LESS THAN what it was worth then, especially true if it sold in the past 5 years.

The decline is 20 or 25% of THAT price, NOT 25% off the additional $100,000 that's been tacked on since the last time it sold!

Anonymous #2, we get the realtor junk mail. That line "it's a great time to buy" has been replaced with "Now is the time to buy."

"Now" is only the time to buy from the point of view of a real estate agent.

Anonymous #4, I think "ignorance" is a good word. The agents just don't know any better. They don't get much training and all they've ever known is list and sell. Now it requires work. They certainly aren't trained in seeing how the wider economy might impact housing sales. Seems like they all believe this is just a bump in the road rather than an entirely new chapter in the book of real estate.

Anonymous said...

I don't think it is the buyer's responsibility to throw up a low ball offer and see if it will stick. Looking at homes of interest and having the agents wax about good value when a property has obvious flaws plus is overpriced is a waste of my time. One agent refused to discuss the seller's motivation to negotiate and said "we are not allowed to ask why they are moving?" There are no recent comps on any properties because nothing has been selling. It is almost as if C'ville sellers are operating under the bigger fool principle which I find unproductive and extremely insulting.

A buyer said...

Anonymous, agree w/you. In terms of "ignorance," I think it's systemic. These people don't get much training even for their licenses, much less for anything else. Did you see that post here and at Cville weekly where the realtor association president said that out of work realtors were working in chain stores and restaurants? They don't have other skills besides retail. My point being that it's not great minds setting prices. There's also that thing about how "it's not agents that set the prices, it's sellers." My a$$, to put it politely. A seller hires an agent for professional advice. There's a lack of professional knowledge, it seems, around here. In fact, we are currently getting such a small amount of service or knowledge from our current buyer's agent that we're looking for a new one. If we didn't need somebody to unlock the doors to empty houses, we wouldn't even be bothering w/ an agent.

This agent said to us a couple of times that if we're staying in the house for 7-10 years it won't matter if the value declines by 10% because it will eventually go back up. I've also read this in NYTimes.

Well, really? It doesn't matter? What if for some reason we can't stay for that long? If house declines 10% then w/a $500K mortgage we've just flushed TWO YEARS of mortgage payments down the toilet. All in interest, not even making a dent in principal. AND will be in a bad position to sell.

Anonymous said...

The only driver of higher real estate prices in the near future will be hyperinflation. Even that is questionable given the oversupply of homes, the reduction in jobs and income, increased taxation, etc.

Like, a buyer, I see the average realtor as a middleman who adds no value to the equation. The lack of service level, knowledge and ability to coordinate a complex transaction is appalling. I also have worked with a so-called buyer's agent for over a year. The doggiest properties are heralded as being perfect and in pristine condition. I'm seriously considering approaching property owners directly in neighborhoods I am interested in looking for those who want to sell, but have not yet listed (cutting out the realtor as in a reverse FSBO). Seeing listings more than the last transaction price with mark up to cover 6% commission plus seller's moving/closing/profit is ludicrous in this market. Buyers also have homes to sell. We are not going to knowingly lose on both ends!

My own research of transfer and sq. footage data online is similar to the assessment of A Buyer's husband. Houses are easily overpriced by $200K, new homes and resales.

Real C'ville - The Bubble Blog said...

Thank you all for your comments. We will address some of these issues in a forthcoming post.

Anonymous said...

I can't find the Charlottesville Assessor (Mr. Barbour) listed as a homeowner himself in the City's records. If anyone else can, let us know.

Anonymous said...

Why is it that the City Assessor lives in the *County*? Could it be the lower tax rate he gets there?

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