Tuesday, February 1, 2011

Charlottesville Albemarle Property Tax Assessments Decline Again: Even So, They Mean Little to Buyers

Prediction: Charlottesville Albemarle area property tax assessments continue to decline, and this year, they'll be dropped from RE sales listings.

Declining Property Tax Assessments: Cville here.  Albemarle here.
Remember that mantra, "Charlottesville is a protected market"?  Nobody uses it any more, at least, not with a straight face.  After sliding since 2006, 2010 was the area's worst year of the housing downturn thus far.  See the ouch.  And more ouch.
Here are just some of the reasons why property tax assessment figures mean more to sellers than to buyers:


*"Fair Market Value": While Tax Assessments are supposed to indicate what a property would sell for at an arm's length transaction--the numbers don't take into account other factors, including how few sales there actually are.

 *Albemarle County flags foreclosures as "invalid sales" in Tax Records--the lower sales prices don't get calculated into "fair market value."  As Fannie Mae Homepath and Bank of America foreclosures are the fastest sellers in Albemarle County, excluding these serves the purposes of the County's money needs--not the homeowners tax bill.

*Tax Assessments are not appraisals: the assessors don't visit every property--they only go inside when the figure is challenged.

*Of course, assessments don't indicate how few qualified  buyers there are.   66% of all 2010 area sales were $300k or less.  This indicates cash-strapped buyers.

*Assessments are divorced from the high inventory (getting higher on a daily basis).  Inventory pushes prices down.

*Property Tax Assessments mean the most to homeowners who are trying to sell because they hope it indicates extrinsic value.

*The "protected market" phrase referred to major employers in the area--UVA, State Farm, DIA, Martha Jeff--indicating there would always be buyers.   Didn't happen.  Still not happening.

*When you think about it, if a real estate agent (and/or Realtor (TM))  is using a property tax assessment as a selling point, they've got nothing else.  Can they actually represent the best interests of a buyer or a seller?



Albemarle County Property Tax Assessment Declines by Magesterial District










16 comments:

Montpellier said...

I had a good chuckle yesterday when I was looking at the foreclosure at 127 Roys Pl in the city proper...for starters: how completely nuts is the notion of >$300k for a tiny house on a postage-stamp lot in what can only charitably be called one of the city's less-desirable neighborhoods. Add on to that the fact that the city still assesses it, how ever slightly, higher than the 2006 peak-of-the-bubble transaction price, and you get a real laugh.

Of course the realtors, lacking any real credibility of their own in the face of reality have started to cite this independent source, particularly when the sticky hysteresis of the assessment process suits them, just as they ridiculed those same valuations on the way up.

What's really gonna be fun to watch is the Assessors and the council when this thing deflates!

Jane said...

2013: the year City assessor Roosevelt Barbour thinks market will hit bottom.

Too early.

Mark said...

City assessments are here. I bought and sold in the city in December.

Bought for $14,500 under 2010 assessment = no change in 2011 assessment.

Sold for $76,500 above 2010 assessment = $70,000 increase in 2011 assessment.

Looks like the city trying to have it both ways.

Anonymous said...

So if the assessments in my 'hood (in AC) went UP by an average of 5% -- what's up with that??????

Jim Duncan said...

"Of course the realtors, lacking any real credibility of their own in the face of reality have started to cite this independent source, particularly when the sticky hysteresis of the assessment process suits them, just as they ridiculed those same valuations on the way up."

I know this - I have consistently said that assessments are irrelevant with respect to fair market value. I ignored them when they were going up as I have when they were going down.

Consumers look to them more than most good Realtors, IMHO.

Anonymous said...

This is a gloomy interpretation of fairly unremarkable data. City and County residential assessments are down a little (2% and 1%). Meh. It falls short of the levels of decline predicted on this website. Weren't bloggers here predicting 10% short-term declines in values about a year ago?

Montpellier said...

Jim - consumers started looking to them on the way up as a way of countering the spiraling inflation. But yes, fair enough: there are honest/good realtors - I've met a few - but the general prediction stands.

Anon - the declines aren't there for two reasons: the assessment process allows Assessors to game things a bit - some sales don't count and when properties are overpriced and don't sell...non-sales don't count. When I mention hysteresis, I'm implying that the values are slow to change.

Anonymous said...

Montpelier -- Haven't unsold and overpriced houses been on the market as long as there has been a market? To be sure, there are more unsold houses on the market today than was the case in 2006, but the numbers are probably not dramatically different than last year, or the year before. I don't see the omission of these properties as a factor in the comparative data, unless the method of counting these properties changed this year.

Waiting said...

@12.55, assessments are still built up on how they climbed at peak of bubble. $100k in one year? Not a real value. Assessments will never come down the way market value will. Local government would fall apart.

People who have been watching the market see how much prices have come down. And how much more they still have to go.

We've been on the market nearly 4 years. Spotchecking houses we were interested in but did not buy and the assessments have come down $30k-$50k.

We don't think assessments indicate "true" value but we would still not feel comfortable unless we paid below assessment. Far below, depending on neighborhood.

Anonymous said...

http://twitter.com/JimDuncan/status/32857080360607744

John Doe said...

Here's the issue, in a nutshell, when folks believe that tax assessments equal market value:

http://realcville.blogspot.com/2011/01/home-of-moment-910-rougemont-ave.html

Montpellier said...

"I don't see the omission of these properties as a factor in the comparative data, unless the method of counting these properties changed this year"

It's really quite simple: if nothing "sold" in a "valid transaction" in my neighborhood this year, then my assessment remains at the inflated bubble-level. If the only sales are foreclosures, then I'm stuck.

The point about non-sales is that my assessment represents a price at which my home would not sell. Yes, the mix of things is that skewed right now. It is different right now.

Anonymous said...

Jim, isn't your own post contradictory to what you assert here?

http://www.realcentralva.com/2011/02/03/four-positive-signs-about-the-charlottesville-real-estate-market/

Jim Duncan said...

Anonymous from February 4 at 1:14pm: (I really wish y'all would pick consistent handles)

I'm not conflicting myself at all assessments' trends may indicate stabilization. They're still bunk IMHO with respect to true market value, but since some are going up, some are going down (by lesser percentages) then perhaps the market is coming close to stabilization.

As I said at RealCentralVA -

"I’m under no illusions that our market continues to struggle, and underemployment is a significant issue."

But maybe, just maybe, we are seeing that the tunnel might not be infinitely long.

Am I grasping at straws for optimism? I really don't think so. Are there outliers? Always.

As always, I could be wrong.

John Doe said...

Optimism may turn out to be GREAT for buyers because the effect will be that fence-sitting SELLERS come on the market and raise inventory, push prices down.

Otherwise, too soon for trend spotting, IOHO.

Still, others are looking at assessments as a trend: Michael Guthrie CEO of Roy Wheeler Realty also wonders if assessments mean the market is improving

http://www.roywheeler.com/real-estate-blog/entry/do-albemarle-county-real-estate-assessments-mean-the-housing-market-is-reco/

IOHO, there's a lot of water-circling-the-drain in certain segments of the market, and the bottom is a ways off....

Vulnerable are those who bought in past 7 years, and those with 1st and 2nd mortgages, and those with (Option) ARMS. And the many who are already underwater (1 in 4 in VA) and can't refi--or sell. Especially the higher up in price you look. These people are vulnerable to short sales that don't close, and foreclosures.

See Nest's own 4th Quarter 2010 report from one month ago! Paragraph 4

http://www.nestrealtygroup.com/nest_report/4th-quarter-2010-charlottesville-real-estate-market-report/

john said...

Why couldn't some one gets real estate company to give him a at least figure of what his home worth?
-Tax Assessment Appeals